-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JrKRnQIIlYFf+Qhok0yjy3ERsVgnkxzhXZgtznnjT/LM6mS4oNcX8Qx9tJeK0+q8 e1wl96lFWpDHvD5hLsn+0A== 0000950144-97-004859.txt : 19970501 0000950144-97-004859.hdr.sgml : 19970501 ACCESSION NUMBER: 0000950144-97-004859 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 REFERENCES 429: 033-59369 FILED AS OF DATE: 19970430 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIEDMONT NATURAL GAS CO INC CENTRAL INDEX KEY: 0000078460 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 560556998 STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-26161 FILM NUMBER: 97591093 BUSINESS ADDRESS: STREET 1: 1915 REXFORD RD CITY: CHARLOTTE STATE: NC ZIP: 28211 BUSINESS PHONE: 7043643120 MAIL ADDRESS: STREET 1: P.O. BOX 33068 CITY: CHARLOTTE STATE: NC ZIP: 28233 S-3 1 PIEDMONT NATURAL GAS FORM S-3 AND P/E AMEND #1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997 REGISTRATION NO. 333- POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION NO. 33-59369 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-3 REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1 UNDER THE SECURITIES ACT OF 1933 --------------------- PIEDMONT NATURAL GAS COMPANY, INC. (Exact name of Registrant as specified in its charter) --------------------- NORTH CAROLINA 56-0556998 (State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization)
1915 REXFORD ROAD POST OFFICE BOX 33068 CHARLOTTE, NC 28233 (704) 364-3120 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) JOHN H. MAXHEIM CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER PIEDMONT NATURAL GAS COMPANY, INC. 1915 REXFORD ROAD, CHARLOTTE, NC 28211 (704) 364-3120 (Name, address, including zip code, and telephone numbers, including area code, of agent for service) --------------------- WITH COPIES TO: JERRY W. AMOS, ESQ. ARNOLD H. TRACY, ESQ. AMOS & JEFFRIES, L.L.P. COUDERT BROTHERS SUITE 1230 1114 AVENUE OF THE AMERICAS 230 NORTH ELM STREET NEW YORK, NEW YORK 10036-7703 GREENSBORO, NORTH CAROLINA 27401 (212) 626-4400 (910) 273-5569
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement as determined by market conditions and other factors. If the only securities being registered on this Form S-3 are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form S-3 are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------------ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------------ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [X] --------------------- CALCULATION OF REGISTRATION FEE
============================================================================================================================= PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2)(3) OFFERING PRICE(2)(3) FEE - ----------------------------------------------------------------------------------------------------------------------------- Debt Securities............................. $95,000,000 100% $95,000,000 $28,787.88 =============================================================================================================================
(1) Plus such additional principal amount as may be necessary such that, if Debt Securities are issued with an original issue discount, the aggregate initial offering price of all Debt Securities will equal $95,000,000. (2) Estimated solely for the purpose of calculating the registration fee. (3) Excluding accrued interest and accrued amortization of discount, if any, to the date of delivery. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY THEIR EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1 SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1 SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ * Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus included in this registration statement is a combined prospectus and also relates to Registration Statement No. 33-59369 previously filed by the registrant. This registration statement, which is a new registration statement, also constitutes Post-Effective Amendment No. 1 to Registration Statement No. 33-59369, and such Post-Effective Amendment No. 1 shall hereafter become effective concurrently with the effectiveness of this registration statement. This registration statement and the registration statement amended hereby are collectively referred to herein as the "Registration Statement." 2 Information contained herein is subject to completion or amendment. Registration Statements relating to these securities have been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time such registration statements become effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any State. SUBJECT TO COMPLETION DATED APRIL 30, 1997 PROSPECTUS - ------------------- PIEDMONT NATURAL GAS COMPANY, INC. $150,000,000 DEBT SECURITIES --------------------- Piedmont Natural Gas Company, Inc. (the "Company") intends to offer and issue from time to time in one or more series up to $150,000,000 aggregate principal amount of unsecured notes, debentures and other evidences of indebtedness (the "Debt Securities"). The Debt Securities may be offered as separate series in amounts, at prices and on terms to be determined when an agreement to sell is made or at the time or times of sale, as the case may be, and set forth in one or more supplements to this Prospectus (each, a "Prospectus Supplement"), which will be delivered to the offerees. The terms of each series of the Debt Securities, including, where applicable, the specific designation, aggregate principal amount, authorized denominations, interest rate or rates (which may be fixed or variable), maturity, any premium, any interest payment dates, any optional or mandatory redemption terms, the initial public offering price, the proceeds to the Company and any other terms of the offering of such series will be set forth in one or more Prospectus Supplements. Debt Securities may be issued with amounts payable in respect of principal of or premium or interest on the Debt Securities determined by reference to the value, rate or price of one or more specified indices. The Debt Securities may be sold (i) to or through underwriting syndicates represented by managing underwriters, or by underwriters without a syndicate, such underwriters to be designated at the time of sale; (ii) through agents designated from time to time; or (iii) directly by the Company. See "Plan of Distribution." The names of any underwriters or agents involved in the offering and sale of the Debt Securities and any applicable commissions or discounts will be set forth in the corresponding Prospectus Supplement. The net proceeds to the Company from such sale also will be set forth in such Prospectus Supplement. This Prospectus may not be used to consummate sales of Debt Securities unless accompanied by a Prospectus Supplement. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is April , 1997. 3 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by the Company can be inspected and copied at the following public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of this material may also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. The Company's Common Stock is listed on the New York Stock Exchange ("NYSE"), and reports, proxy statements and other information concerning the Company may be inspected and copied at the offices of the NYSE at 20 Broad Street, New York, New York 10005. This Prospectus does not contain all of the information set forth in the Registration Statements on Form S-3, of which this Prospectus is a part, and exhibits relating thereto which the Company has filed with the Commission under the Securities Act of 1933, as amended (the "1933 Act"). Reference is made to such Registration Statements and to the exhibits relating thereto for further information with respect to the Company and the Debt Securities offered hereby. Statements contained herein concerning the provisions of documents are necessarily summaries of such documents, and each statement is qualified in its entirety by reference to the copy of the applicable document filed with the Commission. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, previously filed by the Company with the Commission pursuant to Section 13 of the 1934 Act, are incorporated herein by reference: (a) Annual Report on Form 10-K for the year ended October 31, 1996; and (b) Quarterly Report on Form 10-Q for the quarter ended January 31, 1997. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Debt Securities hereby offered shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of the filing of such documents. The documents incorporated or deemed to be incorporated herein by reference are sometimes hereinafter called the "Incorporated Documents." Any statement contained herein or in the Incorporated Documents shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, in the accompanying Prospectus Supplement or in any subsequently filed Incorporated Document modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The information relating to the Company contained in this Prospectus does not purport to be comprehensive and is based upon information contained in the Incorporated Documents. Accordingly, the information contained herein should be read together with the information contained in the Incorporated Documents. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE INCORPORATED DOCUMENTS (OTHER THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE OFFICE OF THE SECRETARY, PIEDMONT NATURAL GAS COMPANY, INC., 1915 REXFORD ROAD, POST OFFICE BOX 33068, CHARLOTTE, NORTH CAROLINA 28233; TELEPHONE NUMBER (704) 364-3120. 2 4 THE COMPANY The Company is an energy and services company primarily engaged in the transportation and sale of natural gas and the sale of propane to over 615,000 residential, commercial and industrial natural gas and propane customers in North Carolina, South Carolina and Tennessee. The Company was incorporated in 1993 under the laws of the State of North Carolina under the name "PNG Acquisition Company" for the purpose of changing the state of incorporation of Piedmont Natural Gas Company, Inc., a New York corporation ("Old Piedmont"), from New York to North Carolina, and has succeeded to all assets, rights, liabilities and obligations of Old Piedmont as a result of the merger of Old Piedmont with and into the Company effective as of March 1, 1994. The Company, as the surviving corporation in the merger, changed its name immediately following the effective time of the merger to "Piedmont Natural Gas Company, Inc." The principal executive offices of the Company are maintained at 1915 Rexford Road, Post Office Box 33068, Charlotte, North Carolina 28233; telephone number (704) 364-3120. The Company's utility operations serve over 567,000 natural gas customers. The Company and its non-utility subsidiaries and divisions are also engaged in acquiring, marketing and arranging for the transportation of natural gas to large-volume purchasers and in the sale of propane and propane appliances to over 48,500 customers in the Company's three-state service area. The Company is also engaged in Tennessee in the retailing of residential and commercial gas appliances. In the Carolinas, the Company's service area is comprised of numerous cities, towns and communities including Anderson, Greenville and Spartanburg in South Carolina and Charlotte, Salisbury, Greensboro, Winston-Salem, High Point, Burlington and the Hickory area in North Carolina. In Tennessee, the service area is the Nashville metropolitan area, including portions of eight adjoining counties. The Company's propane market is in and adjacent to its natural gas markets in all three states. The Company is principally engaged in the gas distribution industry and has no other reportable industry segments. The Company's utility operations are subject to regulation by the North Carolina Utilities Commission ("NCUC") and the Tennessee Regulatory Authority ("TRA") as to the issuance of securities, and by those commissions and by the Public Service Commission of South Carolina as to rates, service area, adequacy of service, safety standards, extensions and abandonment of facilities, accounting and depreciation. The Company is also subject to or affected by various federal regulations. USE OF PROCEEDS Unless otherwise specified in the applicable Prospectus Supplement, the net proceeds from the sale of the Debt Securities will be used for general corporate purposes, including construction of additional facilities, the repayment of short-term debt and working capital needs. Pending such use, the Company may temporarily invest the net proceeds in investment grade securities. The Company may, from time to time, engage in additional capital financing of a character and in amounts to be determined by the Company in light of its needs at such time or times and in light of prevailing market conditions. If the Company elects at the time of an issuance of the Debt Securities to make different or more specific use of proceeds other than that set forth herein, such use will be described in the Prospectus Supplement. 3 5 RATIO OF EARNINGS TO FIXED CHARGES The following are the consolidated ratios of earnings to fixed charges for the twelve-month period ended January 31, 1997, and each of the fiscal years of the Company in the five-year period ended October 31, 1996:
TWELVE MONTHS ENDED YEARS ENDED OCTOBER 31, JANUARY 31, ------------------------------------ 1997 1996 1995 1994 1993 1992 ------------- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (unaudited)(1)......... 3.27 3.15 2.84 2.91 3.28 3.16
- --------------- (1) For purposes of computing the consolidated ratios, "earnings" represent the Company's net income from continuing operations plus applicable income taxes and fixed charges, and "fixed charges" represent interest expense, amortization of debt discount, premium and expense, and a portion of lease payments considered to represent an interest factor. DESCRIPTION OF DEBT SECURITIES The following description of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Securities") and the extent, if any, to which such general provisions may apply to the Offered Securities will be described in the Prospectus Supplement relating to such Offered Securities. The Debt Securities will be issued under an Indenture dated as of April 1, 1993, between Old Piedmont and Citibank, N.A., as trustee (the "Trustee"), as amended by the First Supplemental Indenture dated as of February 25, 1994, among the Company, Old Piedmont and the Trustee (as so amended, the "Indenture"). The Indenture has been filed as Exhibits 4.1 and 4.2 to the Registration Statements of which this Prospectus is a part. The following summary of certain provisions of the Indenture does not purport to be complete and is subject to and qualified in its entirety by reference to the provisions of the Indenture. Whenever particular sections or defined terms of the Indenture are referred to, it is intended that such sections or defined items shall be incorporated herein by reference. Unless otherwise indicated, capitalized terms shall have the meaning ascribed to them in the Indenture. GENERAL The Debt Securities may be issued from time to time in one or more series. Although the amount of Debt Securities offered hereby will be limited to the aggregate initial offering price described on the cover page of this Prospectus, the Indenture does not contain any limitations on the amount of Debt Securities that may be issued thereunder at any time or from time to time in one or more series. The Debt Securities will be unsecured obligations of the Company and will rank equally and ratably with all other unsecured indebtedness of the Company. As of March 31, 1997, the Company had issued and outstanding senior notes with an aggregate principal amount of $176,000,000 and medium-term notes with an aggregate principal amount of $225,000,000. Reference is made to the applicable Prospectus Supplement for the specific terms of the Offered Securities, including: (1) the specific title of the Offered Securities; (2) any limit on the aggregate principal amount of the Offered Securities; (3) the person to whom any interest on the Offered Securities will be payable, if other than the person in whose name that Offered Security is registered at the close of business on the record date for such interest; (4) the date or dates on which the principal of the Offered Securities is payable; (5) the rate or rates at which the Offered Securities will bear interest, if any, or the formula pursuant to which such rate or rates will be determined, and the date or dates from which any such interest will accrue, and the date or dates for any interest payable; (6) the place or places where the principal, premium (if any) and interest on the Offered Securities will be payable, and the method of such payment; (7) the period or periods within which the price or prices at which 4 6 and the terms and conditions upon which the Offered Securities may be redeemed, in whole or in part, at the option of the Company; (8) the obligation, if any, of the Company to purchase or redeem the Offered Securities pursuant to any sinking fund or analogous provision or at the option of holders thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which the Offered Securities will be redeemed or purchased, in whole or in part, pursuant to such obligation; (9) the denominations in which the Offered Securities will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (10) if the amount of payments of principal, premium (if any) or interest on the Offered Securities may be determined with reference to an index, the manner in which such amounts shall be determined; (11) whether the Offered Securities shall be issuable in whole or in part in the form of one or more Global Securities (as defined under "Exchange Registration and Transfer") and, if so, the securities depository or depositories for such Global Security or Securities (the "Depository") and the circumstances under which any such Global Security or Securities may be registered for transfer or exchange, or authenticated and delivered, in the name of a person other than such Depository or its nominee, other than as set forth in the Indenture; (12) if other than the principal amount thereof, the portion of the principal amount of the Offered Securities which shall be payable upon declaration of acceleration of the maturity thereof; (13) any modification, amendment or addition to the covenants of the Company; (14) whether the Offered Securities shall be subject to defeasance or covenant defeasance, or such other means of satisfaction and discharge as may be specified therein; (15) any additional Events of Default; and (16) any other terms or provisions of the Offered Securities not inconsistent with the provisions of the Indenture. Debt Securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. Special United States federal income tax considerations applicable to Debt Securities issued at an original issue discount are described under "Certain Federal Tax Considerations". GLOBAL SECURITIES The specific terms of the depository arrangements with respect to any Debt Securities represented by a Global Security will be described in the applicable Prospectus Supplement. Debt Securities will be issuable only in fully registered form. Debt Securities of a series may be represented, in whole or in part, by one or more permanent global book-entry securities (each a "Global Security") in a denomination or aggregate denomination equal to the portion of the aggregate principal amount of Debt Securities of such series to be represented by such Global Security. Any such Global Security shall bear the legend required by the Indenture and may not be registered in the name of or transferred to a person other than the Depository or its nominee unless (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository, or if the Depository ceases to be a clearing agency registered under the 1934 Act, (ii) the Company instructs the Trustee in accordance with the Indenture that the Debt Securities represented by such Global Security shall be so exchangeable and the transfer thereof so registerable, or (iii) there shall have occurred and be continuing an Event of Default with respect to the Debt Securities of such series. EXCHANGE REGISTRATION AND TRANSFER Debt Securities not represented by a Global Security may be presented for exchange or registration of transfer (with the form of transfer endorsed thereon duly executed) at the office or agency designated and maintained by the Company for such purpose. Such Debt Securities may be exchanged for a like aggregate principal amount of Debt Securities of other authorized denominations of such series. The transfer of such Debt Securities may also be registered in registry books kept at such office or agency (the "Debt Security Register"). No service charge shall be made for any exchange or registration of transfer of such Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. The Company shall not be required to exchange or register a transfer of (i) any Debt Securities of any series for a period of fifteen (15) days next preceding the mailing of the notice of any redemption of such Debt 5 7 Securities of such series to be redeemed, or (ii) any such series selected, called or being called for redemption except, in the case of any such series to be redeemed in part, the portion thereof not to be so redeemed. REDEMPTION Any terms for the optional or mandatory redemption of the Debt Securities will be set forth in the applicable Prospectus Supplement. Except as shall otherwise be provided with respect to the Debt Securities redeemable at the option of the holder, such Debt Securities will be redeemable only upon notice, by mail, not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption and, if less than all of the Debt Securities of any series are to be redeemed, the Trustee shall select the particular Debt Securities to be redeemed in such manner as it deems fair and appropriate. If less than all of the Debt Securities represented by a Global Security are to be redeemed, the beneficial interest to be redeemed will be selected by the Depository as described in the applicable Prospectus Supplement. COVENANTS The Indenture contains the covenants summarized below, which are applicable so long as any of the Debt Securities are outstanding. The Company will cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and will cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in conjunction therewith may be properly conducted; provided, however, that the foregoing shall not prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. The Company will not create, assume or suffer to exist, and will not permit any subsidiary to create, assume or suffer to exist, except in favor of the Company, any mortgage, pledge or other lien or encumbrance of or upon any of its properties or assets (including stock and other securities of subsidiaries) without making effective provisions to secure equally and ratably the Debt Securities then outstanding and other indebtedness entitled to be so secured, except that the Company or a subsidiary, without so securing the Debt Securities, may create, assume or suffer to exist (a) certain purchase money and existing liens in connection with property acquisitions and the extension, renewal or refunding of the same, (b) pledges of current assets, in the ordinary course of business to secure current liabilities, (c) liens on property to secure obligations to pay all or a part of the purchase price of such property only out of or measured by oil or gas production or the proceeds thereof, or liens upon production from oil and gas property or the proceeds of such production, to secure obligations to pay all or part of the expenses of exploration, drilling or development of such property only out of such production or proceeds, (d) mechanics' or materialman's liens, certain good faith deposits, deposits to secure public or statutory obligations, deposits to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for payment of taxes, assessments or similar charges and liens or security interests created in connection with bid or completion bonds, (e) liens arising by reason of deposits with, or the giving of security to, a governmental agency as a condition to the transaction of business or the exercise of a privilege or license, or to enable the Company or a subsidiary to maintain self-insurance or participate in any funds established to cover any insurance risks in connection with workmen's compensation, unemployment insurance, old age pension or other social security, (f) pledges or assignments of accounts receivable, including customers' installment paper, to banks or others (including to or by any subsidiary which is principally engaged in the business of financing the business of the Company and its subsidiaries) made in the ordinary course of business, (g) liens of taxes or assessments for the current year or not due or being contested in good faith and against which an adequate reserve has been established, (h) judgments or liens the finality of which is being contested and execution on which is stayed, (i) assessments or similar encumbrances the existence of which does not impair the use of the property subject thereto for the purposes for which it was acquired, (j) certain landlords' liens so long as the rent secured thereby is not in default, and (k) liens on the assets of any limited liability company organized under a limited liability 6 8 company act of any state which limited liability company is treated as a partnership for federal income tax purposes. Subject to the provisions described under "Consolidation, Merger or Sale", the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises of the Company and its subsidiaries; provided, however, that the Company shall not be required to preserve, or cause any subsidiary to preserve, any such right or franchise or to keep in full force and effect the corporate existence of any subsidiary if, in the judgment of the Company, preservation thereof is no longer desirable in the conduct of the business of the Company and the loss thereof is not disadvantageous in any material respect to the holders of any series of Debt Securities. Unless otherwise indicated in the Prospectus Supplement, the covenants contained in the Indenture and the Securities would not necessarily afford holders protection in the event of a highly leveraged or other transaction involving the Company that may adversely affect holders. CONSOLIDATION, MERGER OR SALE The Company will not consolidate with or merge into any other corporation or sell or convey all or substantially all of its assets to any person, firm or corporation unless (i) either the Company shall be the continuing corporation, or the successor corporation (if other than the Company) shall be a corporation organized and existing under the laws of the United States of America or a state thereof or the District of Columbia and such corporation shall expressly assume, by supplemental indenture, the due and punctual payment of the principal, premium (if any) and interest on all the Debt Securities and the performance of all of the covenants of the Company under the Indenture, (ii) the Company or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition, and (iii) the Company will have delivered to the Trustee an Opinion of Counsel as provided in the Indenture. PAYMENT AND PAYING AGENT The principal, premium (if any) and interest (if any) on Debt Securities not represented by a Global Security shall be payable in New York Clearing House Funds at the office or agency of the Paying Agent or Paying Agents as the Company may designate from time to time, provided that, at the option of the Company, interest may be paid by check mailed to the holders entitled thereto at their last addresses as they appear in the Debt Security Register. The Trustee is initially designated as the Company's sole Paying Agent and the principal corporate trust office of Citibank, N.A., in the Borough of Manhattan, the City of New York, is initially designated as the office where the Debt Securities may be presented for payment, for the registration of transfer and for exchange and where notices and demands to or upon the Company in respect of the Debt Securities or of the Indenture may be served. Unless otherwise indicated in the applicable Prospectus Supplement, interest payments shall be made to the person in whose name any Debt Security is registered at the close of business on the record date with respect to an interest payment date. All moneys paid by the Company to a Paying Agent for the payment of principal, premium (if any) or interest on any Debt Security of any series which remain unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company, and the holder of such Debt Security will thereafter look only to the Company for payment thereof. 7 9 DEFAULTS AND RIGHTS OF ACCELERATION The following are Events of Default under the Indenture with respect to a particular series of Debt Securities: (a) default in the payment of the principal or premium (if any) on any of the Debt Securities of such series when due and payable; (b) default in the payment of any installment of interest upon any of the Debt Securities of such series when due and payable, and continuance of such default for a period of thirty (30) days; (c) default in the payment of any sinking or purchase fund payment or analogous obligation when due and payable; (d) failure to observe or perform any other covenants or agreements of the Company for a period of ninety (90) days after written notice of such failure has been given as provided in the Indenture; (e) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company (including a default with respect to Debt Securities of any series other than that series) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company (including the Indenture) whether such indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay in excess of $50,000,000 principal amount of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto or shall have resulted in an excess of $50,000,000 of principal amount of such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of ten (10) days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in principal amount of the outstanding Debt Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" thereunder; or (f) certain events in bankruptcy, insolvency or other similar occurrences. The Indenture provides that if an Event of Default described in clause (a), (b), (c), (d) or (e) shall have occurred and is continuing, and in each and every such case, unless the principal amount of all the Debt Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debt Securities of all series affected thereby then outstanding, by notice in writing to the Company (and to the Trustee if given by securityholders) may declare the principal amount of all the Debt Securities (or, with respect to Discount Debt Securities, as defined below under "Certain Federal Tax Considerations", such lesser amount as may be specified in the terms of such Debt Securities) affected thereby to be due and payable immediately, or, if an Event of Default described in clause (f) shall have occurred and is continuing, and unless the principal of all the Debt Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of all the Debt Securities then outstanding, by notice in writing to the Company (and to the Trustee if given by securityholders), may declare the principal of all the Debt Securities (or, with respect to Discount Debt Securities, such lesser amount as may be specified in the terms of such Debt Securities) to be due and payable immediately. Upon certain conditions, such declarations may be annulled and certain past defaults may be waived by the holders of a majority of the principal amount of outstanding Debt Securities of such series. For information as to waiver of defaults, see "Meetings; Modification of the Indenture; Waiver." The Company will be required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. Under the Indenture, the Trustee must give to the holders of each series of Debt Securities notice of all uncured defaults with respect to such series within ninety (90) days after the occurrence of such a default; provided that, except in the case of default in the payment of principal, premium (if any) or interest on any of the 8 10 Debt Securities, the Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the holders of the Debt Securities of such series. MEETINGS; MODIFICATION OF THE INDENTURE; WAIVER The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66 2/3% in aggregate principal amount of all series of the Debt Securities to be affected at the time outstanding under the Indenture (voting as one class), to enter indentures supplemental to or modifying the Indenture or the rights of the holders of such Debt Securities, except that no such modification shall (a) extend the fixed maturity, reduce the principal amount or redemption premium (if any) or reduce the rate or extend the time of payment of interest on any Debt Security without the consent of the holder of each Debt Security so affected; or (b) reduce the percentage in principal amount of the outstanding Debt Securities, the consent of whose holders is required for any such modification, without the consent of the holders of all Debt Securities then outstanding. Without the consent of any holders of Debt Securities, the Company and the Trustee may enter into one or more supplemental indentures (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof) for any of the following purposes: (a) to evidence the succession of another corporation to the Company, or successive successions and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Eleven of the Indenture; (b) to add to the covenants of the Company for the protection of the holders of the Debt Securities, and to make the occurrence, or the occurrence or continuance, of a default in any of such additions, an Event of Default permitting the enforcement of all remedies provided in the Indenture, with such period of grace, if any, and subject to such conditions as such supplemental indenture may provide; (c) to provide for the issuance under this Indenture of Debt Securities, whether or not then outstanding, in coupon form (including Debt Securities registrable as to principal only) and to provide for exchangeability of such Debt Securities with Debt Securities issued hereunder in fully registered form and to make all appropriate changes for such purpose; (d) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of the Indenture under the Trust Indenture Act, or under any similar federal statute hereafter enacted, and to add to the Indenture such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act or any corresponding provision in any similar federal statute hereafter enacted; (e) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee; (f) to evidence and provide for the acceptance and appointment hereunder of a successor trustee with respect to the Debt Securities of one or more series and to add or change any provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts by more than one trustee; (g) to change or eliminate any provision of the Indenture or to add any new provision to the Indenture; provided that if such change, elimination or addition will adversely affect the interests of the holders of the Debt Securities of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when there is no Debt Security of such series remaining outstanding under the Indenture; (h) to provide collateral security for the Debt Securities; (i) to change any place where (1) the principal, premium (if any) and interest on Debt Securities of any series shall be payable; (2) any Debt Securities of any series may be surrendered for registration of transfer; (3) Debt Securities of any series may be surrendered for exchange; and (4) notices and demands to or upon the Company in respect of the Debt Securities of any series and the Indenture may be served; and (j) to establish the form or terms of Debt Securities of any series as permitted by the Indenture. 9 11 The Trustee is authorized by the Indenture to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Trustee's own rights, duties or immunities under the Indenture or otherwise. No supplemental indenture shall be effective as against the Trustee unless and until the Trustee has duly executed and delivered the same. The Indenture contains provisions for convening meetings of the holders of Debt Securities of a series. A meeting may be called at any time by the Trustee, and also by the Company or the holders of at least 25% in aggregate principal amount of the outstanding Debt Securities of any series if the Trustee fails to call the meeting upon request of the Company or such holders. Notice of every meeting of securityholders, setting forth the time and place in the Borough of Manhattan, the City of New York, of such meeting and in general terms the action proposed, shall be mailed to all holders of Debt Securities of the applicable series as the names and addresses of such holders appear on the Debt Security Register. Each holder of Debt Securities of a series with respect to which a meeting is being held (or such holder's proxy) shall be entitled to one vote for each $1,000 outstanding principal amount of Debt Securities held (or represented) by him. The vote upon any resolution submitted to any meeting of securityholders shall be by written ballot. The holders of a majority in principal amount of the outstanding Debt Securities of all series affected thereby (voting as one class) may waive compliance by the Company of covenants or conditions provided for in the Indenture. The holders of a majority in principal amount of the outstanding Debt Securities of each series may, on behalf of the holders of all the Debt Securities of such series, waive any past default under the Indenture, except a default (1) in the payment of principal, premium (if any) or interest on any Debt Security of such series, or (2) in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the holder of each outstanding Debt Security affected. COLLECTION OF INDEBTEDNESS, ETC. The Indenture also provides that in the event of a failure by the Company to make payment of principal, premium, interest, or any mandatory sinking fund requirements on the Debt Securities (and in the case of payment of interest or any mandatory sinking fund payment, such failure to pay shall have continued for thirty (30) days) the Company will, upon demand of the Trustee, pay to it, for the benefit of the holders of the Debt Securities, the whole amount then due and payable on the Debt Securities for principal or premium (if any) and interest, with interest on the overdue principal and, to the extent payment of interest shall be legally enforceable, upon overdue installments of interest at the rate borne by the Debt Securities. The Indenture further provides that if the Company fails to pay such amount forthwith upon such demand, the Trustee may, among other things, institute a judicial proceeding for the collection thereof. However, the Indenture provides that notwithstanding any other provision of the Indenture, the holder of any Debt Security shall have the right to institute suit for the enforcement of any payment of principal and interest on such Debt Security on the respective stated maturities expressed in such Debt Security and that such right shall not be impaired without the consent of such holder. The holders of a majority in principal amount of the Debt Securities of each series then outstanding under the Indenture shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee; provided, that the holders shall have offered to the Trustee reasonable indemnity against expenses and liabilities. SATISFACTION AND DISCHARGE Under the terms of the Indenture, the Company may satisfy and discharge its obligations under the Indenture if, at any time, (1) the Company shall have delivered to the Trustee for cancellation all Debt Securities of any series theretofore authenticated or (2) all such Debt Securities of such series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as 10 12 trust funds (a) an amount of money which will be sufficient, or (b) Government Obligations, the principal and interest on which when due, without any regard to reinvestment thereof, will provide monies which will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay at maturity or upon redemption all Debt Securities of such series not theretofore delivered to the Trustee for cancellation, including principal, premium (if any) and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be. If the conditions of either (1) or (2) above are satisfied, the Company shall also pay or cause to be paid all other sums payable by the Company under the Indenture with respect to such series, and then the Indenture shall cease to be of further effect with respect to the Debt Securities of such series, and the Trustee, on demand of and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging the Indenture with respect to the Debt Securities of such series. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with the Indenture or the Debt Securities of such series. In addition, under the Indenture the Company will be discharged from any and all obligations in respect of the Debt Securities of any series (except in each case for certain obligations to register the transfer or exchange of Debt Securities, replace stolen, lost or mutilated Debt Securities, maintain paying agencies and hold moneys for payment in trust) if the Company deposits with the Trustee, in trust, money, Government Obligations, or a combination thereof, in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, and interest on, Debt Securities of such series on the dates such payments are due in accordance with the terms of such Debt Securities. Such defeasance and discharge will become effective after the Company has, among other things, delivered to the Trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the holders of the Debt Securities of such series to recognize income, gain or loss for federal income tax purposes, or a copy of a ruling or other formal statement or action to such effect received from or published by the United States Internal Revenue Service (the "IRS"). NOTICES Any notice or demand required or permitted to be given or served by the Trustee or by the holders of Debt Securities to or on the Company may be given or served by postage prepaid first class mail addressed (until another address is filed by the Company with the Trustee) as follows: Piedmont Natural Gas Company, Inc., 1915 Rexford Road, Post Office Box 33068, Charlotte, North Carolina 28233, Attention: Ted C. Coble, Vice President and Treasurer and Assistant Secretary. Any notice, direction, request or demand by any securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, if given or made in writing at the principal corporate trust office of the Trustee in the Borough of Manhattan, the City of New York. Any notice to be given to the securityholders of the Debt Securities will be given by mail to the addresses of such holders as they appear in the Debt Security Register. TITLE The Company, the Trustee and any agent of the Company or the Trustee may deem the person in whose name such Debt Security shall be registered upon the books of the Company (which, in the case of Debt Securities represented by a Global Security, shall be the Depository or its nominee) to be the absolute owner of such Debt Security (whether or not such Debt Security shall be overdue and notwithstanding any notation of ownership or other writing thereon), for the purpose of receiving payment and for all other purposes. REPLACEMENT OF DEBT SECURITIES In case any Debt Security shall become mutilated or be destroyed, lost or stolen, the Company, in the case of a mutilated Debt Security shall, and in the case of a lost, stolen or destroyed Debt Security may in its discretion, provide a new Debt Security of the same series. The applicant for a substituted Debt Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, 11 13 and, in every case of destruction, loss or theft, the applicant shall also furnish evidence of the destruction, loss or theft of such Debt Security and of the ownership thereof. The Company may require the payment of a sum sufficient to cover any tax, governmental charge or other charges that may be imposed in relation to the issuance of a substituted Debt Security and in addition a further sum not exceeding two dollars for each Debt Security so issued in substitution. GOVERNING LAW The Indenture is and the Debt Securities will be governed by, and construed in accordance with, the laws of the State of New York. CONCERNING THE TRUSTEE Subject to the provisions of the Indenture relating to its duties, the Trustee will be under no obligation to expend or risk its own funds or to incur any personal financial liability in the performance of its duties under the Indenture, or to exercise any of its rights or powers under the Indenture, if there are reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Subject to such provisions, the holders of a majority in principal amount of the Debt Securities then outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture, or exercising any trust or power conferred on the Trustee. Citibank, N.A., Trustee under the Indenture, has commercial banking relationships with the Company. Citibank, N.A., is an affiliate of Citicorp Securities, Inc., which is one of the agents for the Company's medium-term note program. CERTAIN FEDERAL TAX CONSIDERATIONS The following summary of the principal Federal income tax consequences of the purchase, ownership and disposition of the Debt Securities is based upon the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as currently in effect and all subject to change at any time, perhaps with retroactive effect. It deals only with Debt Securities held as capital assets by initial purchasers (unless otherwise specified) and does not purport to deal with purchasers in special tax situations, such as foreign corporations, nonresident aliens, financial institutions, tax-exempt organizations, insurance companies, regulated investment companies, dealers in securities or currencies, persons holding Debt Securities as a hedge against currency risks or as a position in a "straddle" for tax purposes, or persons whose functional currency (as defined in section 985 of the Code) is not the United States dollar. Prospective purchasers of the Debt Securities should consult their own tax advisors concerning the application of Federal income tax laws to their particular situations as well as any consequences of the purchase, ownership and disposition of the Debt Securities arising under the laws of any other taxing jurisdiction. PAYMENTS OF INTEREST. Generally, payments of interest on a Debt Security will be taxable to a holder as ordinary interest income at the time such payments are accrued or are received, in accordance with the holder's regular method of accounting for Federal income tax purposes. ORIGINAL ISSUE DISCOUNT GENERAL. The following summary is a general discussion of the Federal income tax consequences to holders of the purchase, ownership and disposition of Debt Securities issued with original issue discount ("Discount Debt Securities"). For Federal income tax purposes, original issue discount is the excess of the stated redemption price at maturity of a Debt Security over its issue price, if such excess equals or exceeds a de minimis amount (generally defined as 1/4 of 1% of the Debt Security's stated redemption price at maturity multiplied by the number of complete years to its maturity from the issue date). The issue price of each Debt Security in an issue of Debt Securities is the first price at which a substantial amount of such issue of Debt Securities has been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, 12 14 placement agents, or wholesalers). The stated redemption price at maturity of a Debt Security generally is the sum of all payments provided by the Debt Security other than "qualified stated interest" payments. The term "qualified stated interest" generally means stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a single fixed rate. Generally, if a Debt Security bears interest for one or more accrual periods at a rate below the rate applicable for the remaining term of such Debt Security (e.g., Debt Securities with teaser rates or interest holidays), then for purposes of determining whether the Debt Security has original issue discount exceeding a de minimis amount, the Debt Security's stated redemption price at maturity is treated as equal to the Debt Security's issue price plus the greater of "foregone interest" or the excess of the Debt Security's stated principal amount over its issue price. The amount of "foregone interest" is the amount of additional stated interest that would be required to be payable on the Debt Security during the period of the teaser rate, holiday or shortfall so that all stated interest would be qualified stated interest. Payments of qualified stated interest on a Debt Security are taxable to a holder as ordinary interest income at the time such payments are accrued or are received, in accordance with the holder's regular method of tax accounting. A holder of a Discount Debt Security having a maturity of more than one year from the date of issue must include original issue discount in income as ordinary interest for Federal income tax purposes as it accrues under a constant yield method in advance of receipt of the cash payments attributable to such income, regardless of such holder's regular method of tax accounting. In general, the amount of original issue discount included in income by the initial holder of a Discount Debt Security is the sum of the daily portions of original issue discount with respect to such Discount Debt Security for each day during the taxable year on which such holder held such Discount Debt Security. The "daily portions" of original issue discount on any Discount Debt Security are determined by allocating to each day in an accrual period a ratable portion of the original issue discount allocable to that accrual period. An "accrual period" may be of any length and the accrual periods may vary in length over the term of the Discount Debt Security as long as (i) each accrual period is no longer than one year, and (ii) each scheduled payment of principal or interest occurs either on the final day of an accrual period or on the first day of an accrual period. The amount of original issue discount allocable to each accrual period is generally equal to the difference between (i) the product of the Discount Debt Security's adjusted issue price at the beginning of such accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual period and appropriately adjusted to take into account the length of the particular accrual period) and (ii) the amount of any qualified stated interest payments allocable to such accrual period. The "adjusted issue price" of a Discount Debt Security at the beginning of the first accrual period is simply the issue price. Thereafter, the "adjusted issue price" of a Discount Debt Security is the sum of the issue price plus the amount of original issue discount previously includible in the gross income of the holder reduced by the amount of any payment previously made on the Discount Debt Security other than a payment of qualified stated interest. Under these rules, holders generally will have to include in income increasingly greater amounts of original issue discount in successive accrual periods. ACQUISITION PREMIUM. A holder who purchases a Discount Debt Security for an amount that is greater than its adjusted issue price as of the purchase date and less than or equal to the sum of all amounts payable on the Discount Debt Security after the purchase date, other than payments of qualified stated interest, will be considered to have purchased the Discount Debt Security at an "acquisition premium." Under the acquisition premium rules, the amount of original issue discount which a holder must include in its gross income with respect to such Discount Debt Security for any taxable year (or portion thereof in which the holder holds the Discount Debt Security) will be reduced by an amount which would be the daily portion for such day multiplied by the acquisition premium fraction. The numerator of the "acquisition premium fraction" is the excess of the holder's adjusted basis in the Debt Security immediately after its purchase over the adjusted issue price of the Debt Security, and the denominator is the sum of the daily portions for such Debt Security for all days after the date of purchase and ending on the stated maturity date (i.e., the total original issue discount remaining on the Debt Security). Alternatively, rather than applying the acquisition premium fraction to reduce the daily portion of accrued original issue discount, a holder of a Debt Security may elect to compute original issue discount by treating the purchase as a purchase at original issuance and applying the mechanics of the constant yield method. Prior to 13 15 making this election, holders of Debt Securities should consult their own tax advisors concerning the potential Federal income tax consequences to their particular situations. DEBT SECURITIES SUBJECT TO CONTINGENCIES. In general, if a Debt Security provides for an alternative payment schedule or schedules applicable upon the occurrence of a contingency or contingencies and the timing and amounts of the payments that comprise each payment schedule are known as of the issue date, then the yield to maturity of the Debt Security is determined by assuming that the payments will be made according to the Debt Security's stated payment schedule. If based on all of the facts and circumstances as of the issue date, it is more likely than not that the Debt Security's stated payment schedule will not occur, then the yield to maturity of the Debt Security is computed on the payment schedule most likely to occur. Generally, special rules apply for determining the yield to maturity on Debt Securities which are subject to certain options. If the Company has an unconditional option or options to redeem a Debt Security or the holder has an unconditional option or options to cause the Debt Security to be repurchased, then (i) in the case of an option or options of the Company, the Company will be deemed to exercise or not exercise an option or combination of options in a manner that minimizes the yield on the Debt Security, and (ii) in the case of an option or options of the holder, the holder will be deemed to exercise or not exercise an option or combination of options in a manner that maximizes the yield on the Debt Security. If a contingency (including the exercise of an option) actually occurs, or does not occur, contrary to the assumptions made pursuant to the rules described above ("a change in circumstances"), then, solely for purposes of the accrual of original issue discount, the yield to maturity of the Debt Security is redetermined by treating the Debt Security as reissued on the date of the change of circumstances for an amount equal to its adjusted issue price on that date. ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. A holder of a Debt Security may elect to include in gross income all interest that accrues on the Debt Security by using the constant yield method described in "Original Issue Discount -- General" with certain modifications. For the purposes of this election, interest includes stated interest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. In applying the constant yield method to a Debt Security with respect to which this election has been made, (a) the issue price of the Debt Security will equal the electing holder's adjusted basis on the Debt Security immediately after acquisition, (b) the issue date of the Debt Security will be the date of acquisition by the electing holder, and (c) no payments on the Debt Security will be treated as payments of qualified stated interest. The election must be made for the taxable year in which the holder acquires the Debt Security and will generally apply only to the Debt Security (or Debt Securities) identified by the holder in a statement attached to the holder's timely filed Federal income tax return. The election may not be revoked without the consent of the IRS. If a holder makes the election with respect to a Debt Security with "amortizable bond premium" (as described in "Amortizable Premium"), then the electing holder is deemed to have elected to apply amortizable bond premium against interest with respect to all debt instruments with amortizable bond premium (other than debt instruments the interest on which is excludible from gross income) held by the electing holder as of the beginning of the taxable year in which the Debt Security (with respect to which the election is made) is acquired or thereafter acquired. The deemed election with respect to amortizable bond premium may not be revoked without the consent of the IRS. If the election to apply the constant yield method to all interest on a Debt Security is made with respect to a "Market Discount Debt Security" (as described in "Market Discount"), the electing holder will be deemed to have made an election to include market discount in income currently over the life of all debt instruments acquired during the first taxable year the election applies and all subsequent tax years. The election to currently include market discount in income may not be revoked without the consent of the IRS. Prior to making an election to treat all income of a Debt Security (or other debt instrument) as original issue discount, holders should consult with their own tax advisors as to the consequences resulting from such an election with respect to their own particular situations. 14 16 VARIABLE RATE DEBT INSTRUMENTS Generally, floating rate Debt Securities and indexed Debt Securities ("Variable Debt Securities") are subject to special rules whereby a Variable Debt Security will qualify as a "variable rate debt instrument" if (a) its issue price does not exceed the total noncontingent principal payments due under the Variable Debt Security by more than an amount equal to the lesser of (i) 0.015 multiplied by the product of the total noncontingent principal payments and the number of complete years to maturity from the issue date or (ii) 15% of the total noncontingent principal payments, (b) it provides for stated interest, paid or compounded at least annually, at (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate, and (c) a qualified floating rate or objective rate in effect at any time during the term of the Debt Security is set at a current value of that rate (i.e., the value of the rate on any day that is no earlier than three months prior to the first day on which the value is in effect and no later than one year following that first day). A "qualified floating rate" is any variable rate where variations in the value of such rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Variable Debt Security is denominated. Although a multiple of a qualified floating rate will generally not itself constitute a qualified floating rate, a variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35 will constitute a qualified floating rate. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Variable Debt Security together will constitute a single qualified floating rate. Two or more qualified floating rates will be conclusively presumed to meet the requirements of the previous sentence if the values of all rates on the issue date are within 25 basis points of each other. A variable rate is not a qualified floating rate if it is subject to certain restrictions (including caps, floors, governors, or other similar restrictions) unless, generally, such restrictions are fixed throughout the term of the Debt Security or are not reasonably expected to significantly affect the yield on the Debt Security. An "objective rate" is a rate other than a qualified floating rate that is determined using a single fixed formula and is based upon objective financial or economic information. Despite the foregoing, a variable rate of interest on a Variable Debt Security will not constitute an objective rate if it is reasonably expected that the average value of such rate during the first half of the Variable Debt Security's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Variable Debt Security's term. A "qualified inverse floating rate" is any objective rate where such rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the qualified floating rate (disregarding yield restrictions such as caps, floors or governors). Generally, if a Variable Debt Security provides for stated interest at a fixed rate for an initial period of less than one year followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period, and the value of the variable rate on the Variable Debt Security's issue date is intended to approximate the fixed rate, then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be. A fixed rate and a variable rate will be conclusively presumed to meet the previous requirements if the value of the variable rate on the issue date of the Variable Debt Security does not differ from the value of the fixed rate by more than 25 basis points. If a Variable Debt Security provides for stated interest at a single qualified floating rate or objective rate that is unconditionally payable in cash or in property (other than debt instruments of the issuer) at least annually, then (a) all stated interest with respect to the Debt Security is qualified stated interest, and (b) the amount of original issue discount, if any, is determined under the general original issue discount rules (as described in "Original Issue Discount -- General") by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective rate (other than a qualified inverse floating rate), a fixed rate that reflects the yield that is reasonably expected for the Debt Security. 15 17 If a Variable Debt Security does not provide for stated interest at a single qualified floating rate or objective rate, or at a single fixed rate (other than at a single fixed rate for an initial period), the amount of qualified stated interest and original issue discount on the Debt Security are generally determined by (i) determining a fixed rate substitute for each variable rate provided under the Variable Debt Security (generally, the value of each variable rate as of the issue date or, in the case of an objective rate that is not a qualified inverse floating rate, a rate that reflects the yield that is reasonably expected for the Debt Security), (ii) constructing the equivalent fixed rate debt instrument (using the fixed rate substitute described above), (iii) determining the amount of qualified stated interest and original issue discount with respect to the equivalent fixed rate debt instrument (by applying the general original issue discount rules as described in "Original Issue Discount -- General"), and (iv) making the appropriate adjustments for actual variable rates during the applicable accrual period. If a Variable Debt Security provides for stated interest either at one or more qualified floating rates or at a qualified inverse floating rate and in addition provides for stated interest at a single fixed rate (other than a single fixed rate for an initial period), the amount of interest and original issue discount are determined as in the immediately preceding paragraph with the modification that the Variable Debt Security is treated, for purposes of the first three steps of the determination, as if it provided for a qualified floating rate (or qualified inverse floating rate, if the Debt Security provides for a qualified inverse floating rate) rather than the fixed rate. The qualified floating rate (or qualified inverse floating rate) replacing the fixed rate must be such that the fair market value of the Debt Security as of the issue date would be approximately the same as the fair market value of an otherwise identical debt instrument that provides for a qualified floating rate (or qualified inverse floating rate) rather than a fixed rate. CONTINGENT DEBT INSTRUMENTS Final regulations concerning the proper tax treatment of certain contingent payment debt instruments (other than Variable Debt Securities and Debt Securities subject to alternate payment schedule contingencies discussed above) were issued in June 1996 and are applicable to contingent payment debt instruments issued after August 12, 1996. Under the final regulations, original issue discount on a contingent payment debt instrument is determined by reference to a "comparable yield" which, in general, is the yield for fixed rate debt instruments of the same issuer having similar terms and conditions, including "the level of subordination, term, timing of payments, and general market conditions." Once the "comparable yield" has been determined, a projected payment schedule must be prepared which will generate the comparable yield and original issue discount calculations are based on the projected payment schedule. If actual payments are more or less than the projected payments, corresponding upward or downward adjustments to income are made in the year of actual payment. In the event the Company issues Debt Securities that are subject to these regulations, it will prepare the necessary projected payment schedule and furnish it to holders of such Debt Securities who will normally be bound thereby. Holders of Debt Securities that are subject to the contingent payment debt regulations should consult their own tax advisors concerning the application of the regulations and the appropriate tax treatment of Debt Securities classified as contingent payment debt instruments. SHORT-TERM DEBT SECURITIES Generally, a cash basis holder of "Short-Term Debt Securities" (i.e., Debt Securities having a fixed maturity date not more than one year from the date of issue) is not required to accrue original issue discount for Federal income tax purposes unless it elects to do so. An election by a cash basis holder applies to all short-term obligations acquired on or after the beginning of the first taxable year to which the election applies, and for all subsequent taxable years unless the consent is secured from the IRS to revoke the election. Accrual basis holders and certain other holders, including banks, regulated investment companies, dealers in securities, common trust funds, holders who hold Short-Term Debt Securities as part of certain identified hedging transactions, certain pass-through entities and cash basis holders who so elect, are required to accrue original issue discount on Short-Term Debt Securities on either a straight-line basis or, at the election of the holder, under the constant yield method (based on daily compounding). In the case of a holder not required and not electing to include original issue discount in income currently, any gain realized on the sale or retirement of the Short-Term Debt Security will be ordinary income to the extent of the original issue discount accrued on a straight-line basis (unless an 16 18 election is made to accrue the original issue discount under the constant yield method) through the date of sale or retirement. Holders who are not required and do not elect to accrue original issue discount on Short-Term Debt Securities will be required to defer deductions for interest on borrowings allocable to Short-Term Debt Securities in an amount not exceeding the deferred income until the deferred income is realized. MARKET DISCOUNT A Debt Security, other than a Short-Term Debt Security, will be treated as purchased at a market discount (a "Market Discount Debt Security") if the amount for which a holder purchased the Debt Security is less than (i) the Debt Security's issue price (as determined above under "Original Issue Discount -- General"), (ii) the Debt Security's stated redemption price at maturity (in the case of a subsequent purchaser), or (iii) the Debt Security's "revised issue price" (in the case of a Discount Debt Security), and such excess is greater than or equal to 1/4 of 1% of such Debt Security's stated redemption price at maturity multiplied by the number of complete years to the Debt Security's maturity. If such excess is not sufficient to cause the Debt Security to be a Market Discount Debt Security, then such excess constitutes de minimis market discount. The Code provides that, for these purposes, the "revised issue price" of a Debt Security generally equals its issue price, increased by the amount of original issue discount that has accrued over the term of the Debt Security. Any gain recognized on the retirement or disposition of a Market Discount Debt Security will be treated as ordinary income to the extent that such gain does not exceed the accrued market discount on such Debt Security. Alternatively, a holder of a Market Discount Debt Security may elect to include market discount in income over the life of the Debt Security. Such election shall apply to all debt instruments with market discount acquired by the electing holder during the first taxable year to which the election applies and all subsequent tax years. This election may not be revoked without the consent of the IRS. Market discount on a Market Discount Debt Security will accrue on a straight-line basis unless the holder elects to accrue such market discount using a constant yield method. Such an election shall apply only to the Debt Security with respect to which it is made and may not be revoked. A holder of a Market Discount Debt Security that does not elect to include market discount in income currently generally will be required to defer deductions for interest in borrowings allocable to such Debt Security in an amount not exceeding the accrued market discount on such Debt Security until the maturity or disposition of such Debt Security. AMORTIZABLE PREMIUM Generally, if a holder purchases a Debt Security for an amount that is greater than the sum of all amounts payable on the Debt Security after the purchase date other than payments of qualified stated interest, such holder will be considered to have purchased the Debt Security with "amortizable bond premium" equal in amount to such excess. A holder of such a Debt Security may elect to amortize such premium using a constant yield method over the remaining term of the Debt Security and may offset interest otherwise required to be included in respect of the Debt Security during any taxable year by the amortized amount of such excess for the taxable year. However, if the Debt Security may be optionally redeemed after the holder acquires it at a price in excess of its stated redemption price at maturity, special rules would apply which could result in a deferral of the amortization of some bond premium until later in the term of the Debt Security. Any election to amortize bond premium with respect to any Debt Security (or general debt obligation) applies to all taxable debt obligations held by the holder at the beginning of the first taxable year to which the election applies and to all debt obligations thereafter acquired in all subsequent tax years. The election may not be revoked without the consent of the IRS. DISPOSITION OF A DEBT SECURITY Except as discussed above, upon the sale, exchange or retirement of a Debt Security, a holder generally will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (other than amounts representing accrued and unpaid interest) and such holder's adjusted tax basis in the Debt Security. A holder's adjusted tax basis in a Debt Security generally will equal such holder's initial investment in the Debt Security increased by any original issue discount included in income and any accrued market discount included in income, decreased by the amount of any payments that are not deemed qualified 17 19 stated interest payments and amortizable bond premium applied to reduce interest with respect to such Debt Security. Such gain or loss generally will be long-term capital gain or loss if the Debt Security were held for more than one year. BACKUP WITHHOLDING Backup withholding of Federal income tax at a rate of 31% may apply to payments made in respect of the Debt Securities to registered owners who are not "exempt recipients" and who fail to provide certain identifying information (such as the registered owner's tax identification number) in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Payments made in respect of the Debt Securities to a holder must be reported to the IRS, unless the holder is an exempt recipient or establishes an exemption. In addition, upon the sale of a Debt Security to (or through) a broker, the broker must withhold 31% of the entire purchase price, unless either (i) the broker determines that the seller is a corporation or other exempt recipient or (ii) the seller provides, in the required manner, certain identifying information. Such a sale must also be reported by the broker to the IRS, unless the broker determines that the seller is an exempt recipient. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or a credit against such beneficial owner's Federal income tax provided the required information is furnished to the IRS. PLAN OF DISTRIBUTION The Debt Securities may be sold (i) to or through underwriting syndicates represented by managing underwriters, or by underwriters without a syndicate, such underwriters to be designated at the time of sale; (ii) through agents designated from time to time; or (iii) directly by the Company. The applicable Prospectus Supplement will set forth the terms of the offering of the Debt Securities, including the name or names of any underwriters or agents, the purchase price of such Debt Securities and the proceeds to the Company from such sales, any underwriting discounts, agency commissions and other items constituting underwriters' or agents' compensation, any initial public offering price, any discounts or concessions to be allowed or reallowed or paid to dealers and the securities exchanges, if any, on which such Debt Securities may be listed. If underwriters are used in the sale, the Debt Securities will be acquired by the underwriters for their own accounts and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Such Debt Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate, all of which underwriters in either case will be designated in the Prospectus Supplement corresponding to such offering. Unless otherwise set forth in the applicable Prospectus Supplement, under the terms of the underwriting agreement, the obligations of the underwriters to purchase such Debt Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of such Debt Securities if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Debt Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of the Debt Securities with respect to which this Prospectus is delivered will be named, and any commission payable by the Company to such agent will be set forth, in the corresponding Prospectus Supplement. Unless otherwise indicated in the corresponding Prospectus Supplement, any such agent will be acting on a reasonable best-efforts basis for the period of its appointment. If so indicated in the applicable Prospectus Supplement, the Company may authorize underwriters or agents to solicit offers by certain institutions to purchase Debt Securities from the Company at the public offering price set forth in such Prospectus Supplement pursuant to delayed delivery contracts ("Delayed Delivery Contracts") providing for payment and delivery on the future date or dates stated in the Prospectus Supplement. The amount of Debt Securities to be sold under each Delayed Delivery Contract and the aggregate amount of Debt Securities to be sold under all Delayed Delivery Contracts will be set forth in the Prospectus Supplement. Institutions with 18 20 which Delayed Delivery Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions, but shall in all cases be subject to the approval of the Company in its sole discretion. The obligations of the purchaser under any Delayed Delivery Contract to pay for and take delivery of Debt Securities will not be subject to any conditions except that (i) the purchase of Debt Securities by such institution shall not at the time of delivery be prohibited under the laws of any jurisdiction to which such institution is subject; and (ii) any related sale of Debt Securities to underwriters shall have occurred. A commission set forth in the applicable Prospectus Supplement will be paid to underwriters or agents soliciting purchases of Debt Securities pursuant to Delayed Delivery Contracts accepted by the Company. The underwriters or agents will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. All Debt Securities will be new issues of securities with no established trading market. Any underwriters to whom Debt Securities are sold by the Company for public offering and sale may make a market in such Debt Securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any Debt Securities. Underwriters and agents may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the 1933 Act, or to contribution with respect to payments which the underwriters or agents may be required to make in respect thereof and to reimbursement by the Company for certain expenses. Underwriters and agents also may be customers of, engage in transactions with, or perform other services for the Company in the ordinary course of business. LEGAL OPINIONS The validity of the Debt Securities will be passed upon for the Company by Amos & Jeffries, L.L.P., P.O. Box 787, Greensboro, North Carolina 27402. Jerry W. Amos, a partner in that law firm and General Counsel to and a Director of the Company, beneficially owned 56,510 shares of the Company's Common Stock as of March 31, 1997. Certain legal matters in connection with the issuance of the Debt Securities will be passed upon for any underwriters or agents by Coudert Brothers, 1114 Avenue of the Americas, New York, New York 10036-7703. EXPERTS The consolidated financial statements and the related financial statement schedule incorporated in this Prospectus by reference from the Company's Annual Report on Form 10-K for the year ended October 31, 1996, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm, given upon their authority as experts in auditing and accounting. 19 21 PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the various expenses to be paid by the Registrant in connection with the sale and distribution of the Debt Securities being registered hereby, other than underwriting or broker dealer fees, discounts and commissions. All amounts are estimated except for the Securities Act registration fee. Securities Act registration fee............................. $ 28,787.88 Printing and engraving...................................... $ 35,000 Legal fees and expenses..................................... $ 65,000 Accounting fees and expenses................................ $ 25,000 Rating agency fees.......................................... $ 60,000 Blue Sky fees and expenses.................................. $ 2,500 Trustee's Fees and Expenses................................. $ 5,000 Miscellaneous expenses...................................... $ 5,000 ----------- Total.................................................. $226,287.88 ===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The following provisions of the North Carolina Business Corporation Act govern indemnification of officers and directors of the Company: SECTION 55-8-50. POLICY STATEMENT AND DEFINITIONS. (a) It is the public policy of this State to enable corporations organized under this Chapter to attract and maintain responsible, qualified directors, officers, employees and agents, and, to that end, to permit corporations organized under this Chapter to allocate the risk of personal liability of directors, officers, employees and agents through indemnification and insurance as authorized in this Part. (b) Definitions in this Part: (1) "Corporation" includes any domestic or foreign corporation absorbed in a merger which, if its separate existence had continued, would have had the obligation or power to indemnify its directors, officers, employees, or agents, so that a person who would have been entitled to receive or request indemnification from such corporation if its separate existence had continued shall stand in the same position under this Part with respect to the surviving corporation. (2) "Director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if his duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director. (3) "Expenses" means expenses of every kind incurred in defending a proceeding, including counsel fees. (4) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding. (4a) "Officer," "employee," or "agent" includes, unless the context requires otherwise, the estate or personal representative of a person who acted in that capacity. II-1 22 (5) "Official capacity" means (i) when used with respect to a director, the office of director in a corporation; and (ii) when used with respect to an individual other than a director, as contemplated in G.S. 55-8-56, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation. "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise. (6) "Party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (7) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. SECTION 55-8-51. AUTHORITY TO INDEMNIFY. (a) Except as provided in subsection (d), a corporation may indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if: (1) He conducted himself in good faith; and (2) He reasonably believed (i) in the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; and (ii) in all other cases, that his conduct was at least not opposed to its best interests; and (3) In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. (b) A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (a)(2)(ii). (c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of no contest or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. (d) A corporation may not indemnify a director under this section: (1) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (2) In connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. (e) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation that is concluded without a final adjudication on the issue of liability is limited to reasonable expenses incurred in connection with the proceeding. (f) The authorization, approval or favorable recommendation by the board of directors of a corporation of indemnification, as permitted by this section, shall not be deemed an act or corporate transaction in which a director has a conflict of interest, and no such indemnification shall be void or voidable on such ground. SECTION 55-8-52. MANDATORY INDEMNIFICATION. Unless limited by its articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding. SECTION 55-8-53. ADVANCE FOR EXPENSES. Expenses incurred by a director in defending a proceeding may be paid by the corporation in advance of the final disposition of such proceeding as authorized by the board of directors in the specific case or as authorized or required under any provision in the articles of incorporation or bylaws or by any applicable resolution or contract upon receipt of an undertaking by or on II-2 23 behalf of the director to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation against such expenses. SECTION 55-8-54. COURT-ORDERED INDEMNIFICATION. Unless a corporation's articles of incorporation provide otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice the court considers necessary may order indemnification if it determines: (1) The director is entitled to mandatory indemnification under G.S. 55-8-52, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court- ordered indemnification; or (2) The director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standard of conduct set forth in G.S. 55-8-51 or was adjudged liable as described in G.S. 55-8-51(d), but if he was adjudged so liable his indemnification is limited to reasonable expenses incurred. SECTION 55-8-55. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION. (a) A corporation may not indemnify a director under G.S. 55-8-51 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in G.S. 55-8-51. (b) The determination shall be made: (1) By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding; (2) If a quorum cannot be obtained under subdivision (1), by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding; (3) By special legal counsel (i) selected by the board of directors or its committee in the manner prescribed in subdivision (1) or (2); or (ii) if a quorum of the board of directors cannot be obtained under subdivision (1) and a committee cannot be designated under subdivision (2), selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or (4) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination. (c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b)(3) to select counsel. SECTION 55-8-56. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS. Unless a corporation's articles of incorporation provide otherwise: (1) An officer of the corporation is entitled to mandatory indemnification under G.S. 55-8-52, and is entitled to apply for the court-ordered indemnification under G.S. 55-8-54, in each case to the same extent as a director; (2) The corporation may indemnify and advance expenses under this Part to an officer, employee, or agent of the corporation to the same extent as to a director; and (3) A corporation may also indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract. II-3 24 SECTION 55-8-57. ADDITIONAL INDEMNIFICATION AND INSURANCE. (a) In addition to and separate and apart from the indemnification provided for in G.S. 55-8-51, 55-8-52, 55-8-54, 55-8-55 and 55-8-56, a corporation may in its articles of incorporation or bylaws or by contract or resolution indemnify or agree to indemnify any one or more of its directors, officers, employees, or agents against liability and expenses in any proceeding (including without limitation a proceeding brought by or on behalf of the corporation itself) arising out of their status as such or their activities in any of the foregoing capacities; provided, however, that a corporation may not indemnify or agree to indemnify a person against liability or expenses he may incur on account of his activities which were at the time taken known or believed by him to be clearly in conflict with the best interests of the corporation. A corporation may likewise and to the same extent indemnify or agree to indemnify any person who, at the request of the corporation, is or was serving as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise or as a trustee or administrator under an employee benefit plan. Any provision in any articles of incorporation, bylaw, contract, or resolution permitted under this section may include provisions for recovery from the corporation of reasonable costs, expenses, and attorneys' fees in connection with the enforcement of rights to indemnification granted therein and may further include provisions establishing reasonable procedures for determining and enforcing the rights granted therein. (b) The authorization, adoption, approval, or favorable recommendation by the board of directors of a public corporation of any provision in any articles of incorporation, bylaw, contract or resolution, as permitted in this section, shall not be deemed an act of corporate transaction in which a director has a conflict of interest, and no such articles of incorporation or bylaw provision or contract or resolution shall be void or voidable on such grounds. The authorization, adoption, approval, or favorable recommendation by the board of directors of a nonpublic corporation of any provision in any articles of incorporation, bylaw, contract or resolution, as permitted in this section, which occurred prior to July 1, 1990, shall not be deemed an act or corporate transaction in which a director has a conflict of interest, and no such articles of incorporation, bylaws provision, contract or resolution shall be void or voidable on such grounds. Except as permitted in G.S. 55-8-31, no such bylaw, contract, or resolution not adopted, authorized, approved or ratified by shareholders shall be effective as to claims made or liabilities asserted against any director prior to its adoption, authorization, or approval by the board of directors. (c) A corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify him against the same liability under any provision of this Chapter. SECTION 55-8-58. APPLICATION OF PART. (a) If articles of incorporation limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles. (b) This Part does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent to the proceeding. (c) This Part shall not affect rights or liabilities arising out of acts or omissions occurring before July 1, 1990. The Company's By-Laws provide that the Company shall indemnify and hold harmless its directors, and officers of the Company who are also directors or who are designated by the Board of Directors from time to time as indemnified officers ("indemnified officers") against any obligation to pay any judgment, settlement, penalty, fine (including any excise tax assessed with respect to an employee benefit plan) and reasonable expenses, including but not limited to attorneys' fees of opposing parties ("Liabilities") and for any expenses incurred with respect to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, and any appeal therein (and any inquiry or investigation that could II-4 25 lead to such a proceeding) (a "Proceeding"), including any Proceeding brought by or on behalf of the Company itself, arising out of their status as directors or officers of the Company. The Company shall also indemnify its directors and indemnified officers for their service at the Company's request as a director, officer, partner, trustee, employee or agent or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The Company shall not, however, indemnify a director or indemnified officer against Liabilities or expenses incurred on account of activities of such person that at the time taken were known or believed by him or her, or a reasonable person would have or should have known, to be clearly in conflict with the best interests of the Company, The By-Laws further provide that the Company shall indemnify each director and indemnified officer for his or her reasonable costs, expenses and attorneys' fees incurred in connection with the enforcement of the rights to indemnification granted therein, if it is determined that such director or indemnified officer is entitled to indemnification thereunder. The Company's Articles of Incorporation, as amended, contain the following provisions: ARTICLE 8: A director of the Corporation shall not be personally liable to the Corporation or any of its shareholders for monetary damages for any breach of duty as a director, except for liability with respect to (i) acts or omissions not made in good faith that the director at the time of such breach knew or believed were in conflict with the best interests of the Corporation, (ii) any liability under N.C.G.S. sec. 55-8-33 (liability for unlawful distributions), (iii) any transaction from which such director derived an improper personal benefit, or (iv) acts or omissions occurring prior to the date on which this Article 8 became effective. As used herein, the term, "improper personal benefit" does not include a director's compensation or other incidental benefit for or on account of service as a director, officer, employee, independent contractor, attorney or consultant of the Corporation. If the North Carolina General Statutes are amended after approval by the Corporation's shareholders of this Article 8 to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the North Carolina General Statutes, as so amended. No amendment or repeal of the provisions of this Article 8 shall apply to or have an effect on the liability or alleged liability of any director of the Corporation for or with respect to any act or failure to act on the part of such director occurring prior to such amendment or repeal. The provisions of this Article 8 shall not be deemed to limit or preclude indemnification of a director by the Corporation for any liability which has not been eliminated by the provisions of this Article 8. The Company has obtained and maintains a policy for directors' and officers' liability insurance. The policy is designed to protect the Company in the event it is required to pay any amounts to its directors and officers as indemnification against loss arising from certain civil claims, including certain claims under the 1933 Act, which might be made against its directors and officers by reason of any alleged "breach of duty," neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted, while acting in their respective capacities as directors or officers of the Company. Reference is made to the form of Underwriting Agreement and Agency Agreement filed as Exhibits 1.1 and 1.2 hereto, respectively, which contain provisions for indemnification of the Company, its directors, officers, and any controlling persons by underwriters against certain liabilities for information furnished by such underwriters expressly for use in this Registration Statement. II-5 26 ITEM 16. LIST OF EXHIBITS. 1.1 Form of Underwriting Agreement 1.2 Form of Agency Agreement 4.1 Indenture dated as of April 1, 1993, between Piedmont Natural Gas Company, Inc., and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of Form S-3 Registration Statement No. 33-59369 filed by the Registrant on August 9, 1995) 4.2 First Supplemental Indenture dated as of February 25, 1994, between PNG Acquisition Company, Piedmont Natural Gas Company, Inc., and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.2 of Form S-3 Registration Statement No. 33-59369 filed by the Registrant on August 9, 1995) 4.3 Form of Debt Security* 4.4 Form of Master Global Note* 5.1 Opinion of Amos & Jeffries, L.L.P., regarding legality of securities being registered 12.1 Computation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12 of Form 10-Q for the quarterly period ended January 31, 1997) 23.1 Consent of Amos & Jeffries, L.L.P. (included in Exhibit 5.1) 23.2 Independent Auditors' Consent 24.1 Powers of Attorney 25.1 Statement of Eligibility of Trustee on Form T-1
- --------------- * The Company will file any forms of Debt Securities not previously so filed in a current report on Form 8-K. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: A. Post-Effective Amendments (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)(ii) above do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment of any of the securities being registered which remain unsold at the termination of the offering. II-6 27 B. Filings Incorporating Subsequent Documents by Reference The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Indemnification Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-7 28 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement and Post-Effective Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, State of North Carolina, on the 30th day of April, 1997. PIEDMONT NATURAL GAS COMPANY, INC. By: /s/ JOHN H. MAXHEIM ------------------------------------ John H. Maxheim Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement and Post-Effective Amendment No. 1 have been signed by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE ---------- ----- ---- /s/ JOHN H. MAXHEIM Director, Chairman of April 30, 1997 - ----------------------------------------------------- the Board, President John H. Maxheim and Chief Executive Officer /s/ DAVID J. DZURICKY Senior Vice President -- April 30, 1997 - ----------------------------------------------------- Finance (Principal David J. Dzuricky Financial Officer) /s/ BARRY L. GUY Vice President and April 30, 1997 - ----------------------------------------------------- Controller (Principal Barry L. Guy Accounting Officer) JERRY W. AMOS* Director April 30, 1997 - ----------------------------------------------------- Jerry W. Amos Director - ----------------------------------------------------- C.M. Butler III SAM J. DIGIOVANNI* Director April 30, 1997 - ----------------------------------------------------- Sam J. DiGiovanni JOHN W. HARRIS* Director April 30, 1997 - ----------------------------------------------------- John W. Harris MURIEL W. HELMS* Director April 30, 1997 - ----------------------------------------------------- Muriel W. Helms JOHN F. MCNAIR III* Director April 30, 1997 - ----------------------------------------------------- John F. McNair III
II-8 29
SIGNATURES TITLE DATE ---------- ----- ---- NED R. McWHERTER* Director April 30, 1997 - ----------------------------------------------------- Ned R. McWherter WALTER S. MONTGOMERY, JR.* Director April 30, 1997 - ----------------------------------------------------- Walter S. Montgomery, Jr. DONALD S. RUSSELL, JR.* Director April 30, 1997 - ----------------------------------------------------- Donald S. Russell, Jr. JOHN E. SIMKINS, JR.* Director April 30, 1997 - ----------------------------------------------------- John E. Simkins, Jr. *By: /s/ DAVID J. DZURICKY ----------------------------------------------- David J. Dzuricky (Attorney-in-Fact)
II-9 30 INDEX TO EXHIBITS 1.1 Form of Underwriting Agreement 1.2 Form of Agency Agreement 4.1 Indenture dated as of April 1, 1993, between Piedmont Natural Gas Company, Inc., and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of Form S-3 Registration Statement No. 33-59369 filed by the Registrant on August 9, 1995) 4.2 First Supplemental Indenture dated as of February 25, 1994, between PNG Acquisition Company, Piedmont Natural Gas Company, Inc., and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.2 of Form S-3 Registration Statement No. 33-59369 filed by the Registrant on August 9, 1995) 4.3 Form of Debt Security* 4.4 Form of Master Global Note* 5.1 Opinion of Amos & Jeffries, L.L.P., regarding legality of securities being registered 12.1 Computation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12 of Form 10-Q for the quarterly period ended January 31, 1997) 23.1 Consent of Amos & Jeffries, L.L.P. (included in Exhibit 5.1) 23.2 Independent Auditors' Consent 24.1 Powers of Attorney 25.1 Statement of Eligibility of Trustee on Form T-1
- --------------- * The Company will file any forms of Debt Securities not previously so filed in a current report on Form 8-K. EX-1.1 2 FORM OF UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 2 PIEDMONT NATURAL GAS COMPANY, INC. DEBT SECURITIES UNDERWRITING AGREEMENT , 199 ----------- -- - - -------------------------------- - -------------------------------- As [Representative(s) of] the Several Underwriters, ---------------------- ---------------------- ---------------------- Gentlemen: Piedmont Natural Gas Company, Inc., a North Carolina corporation (the "Company"), confirms its agreement with the several Underwriters listed in Schedule A hereto (the "Underwriters", which term may refer to a single Underwriter if only one is listed in Schedule A) as follows: 1. DESCRIPTION OF SECURITIES. The Company proposes to issue and sell to the several Underwriters securities of the title, amount and particular terms set forth or referred to in Schedule B hereto ("Securities"). The Securities are to be issued under the Indenture, dated as of April 1, 1993, between Piedmont Natural Gas Company, Inc., a New York corporation (the "Predecessor Company"), and Citibank, N.A., as trustee (the "Trustee"), as amended by the First Supplemental Indenture, dated as of February 25, 1994, among the Company, the Predecessor Company and the Trustee (collectively, the "Indenture"). 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to, and agrees with, each Underwriter that: 3 (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Act"). Two registration statements on such form (with the file numbers set forth in Schedule B hereto) with respect to the Securities, including a prospectus, have been prepared by the Company in conformity with the requirements of the Act, the Trust Indenture Act of 1939, as amended ("Trust Indenture Act") and the rules and regulations ("Rules and Regulations") of the Securities and Exchange Commission ("Commission") thereunder and filed with the Commission and have become effective. Such registration statements and prospectus may have been amended or supplemented prior to the date of this Agreement; any such amendment or supplement was so prepared and filed, and any such amendment filed after the effective date of the registration statement to which it relates has become effective. No stop order suspending the effectiveness of either registration statement has been issued, and no proceeding for that purpose has been instituted or threatened by the Commission. A prospectus supplement ("Prospectus Supplement") setting forth the terms of the Securities and of their sale and distribution has been or will be so prepared and will be filed pursuant to Rule 424(b) of the Rules and Regulations on or before the second business day after the date hereof (or such earlier time as may be required by the Rules and Regulations). Copies of such registration statements and prospectus, any such amendment or supplement and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement (including one fully executed copy of the registration statements and of each amendment thereto for each of you and for counsel for the Underwriters) have been delivered to you. Such registration statements, as they may have heretofore been amended, are collectively referred to herein as the "Registration Statements" and individually referred to herein as a "Registration Statement", and the final form of prospectus included in the Registration Statements, as supplemented by the Prospectus Supplement, is referred to herein as the "Prospectus". Each form of Prospectus, or Prospectus and Prospectus Supplement, if any, heretofore made available for use in offering the Securities is referred to herein as a "Preliminary Prospectus". Any reference herein to a Registration Statement, the Prospectus, any amendment or supplement thereto or any Preliminary Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms "amend", "amendment" or "supplement" with respect to a Registration Statement or Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. (b) Each part of the Registration Statements, when such part became or becomes effective, each Preliminary Prospectus (if any) on the date of filing thereof with the Commission, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the Closing Date (as hereinafter defined), conformed or will conform in all material respects with the requirements of the Act, the Trust Indenture Act and the Rules and Regulations; each part of the Registration Statements, when such part became or becomes effective, did not or will not contain an untrue statement of a material fact or omit to state a material fact required to be stated 2 4 therein or necessary to make the statements therein not misleading; each Preliminary Prospectus (if any), on the date of filing thereof with the Commission, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the Closing Date, did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing shall not apply to statements in or omissions from any such document in reliance upon, and in conformity with, written information furnished to the Company by you, or by any Underwriter through you, specifically for use in the preparation thereof. The Indenture, including any amendment and supplement thereto, pursuant to which the Securities will be issued, conforms, or, in the case of any amendment or supplement filed after the date of this Agreement, will conform with the requirements of the Trust Indenture Act and the rules and regulations of the Commission thereunder. (c) The financial statements of the Company and its subsidiaries set forth in the Registration Statements and Prospectus fairly present the financial condition of the Company and its subsidiaries as of the dates indicated and the results of operations and cash flows for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise stated therein). (d) The Company and each of its significant subsidiaries within the meaning of Regulation S-X (individually, a "Subsidiary", and collectively, the "Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business; and all of the outstanding shares of capital stock of each subsidiary have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Prospectus, all outstanding shares of capital stock of the subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest and any other security interests, claims, liens or encumbrances. (e) The Indenture and the Securities have been duly authorized, the Indenture has been duly qualified under the Trust Indenture Act, executed and delivered and constitutes, and the Securities, when duly executed, authenticated, issued and delivered as contemplated hereby and by the Indenture, will constitute, valid and legally binding obligations of the Company enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3 5 (f) There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries of a character required to be disclosed in the Registration Statements which is not adequately disclosed in the Prospectus, there is no statute required to be described in the Prospectus that is not described as required, and there is no franchise, contract or other document of a character required to be described in the Registration Statements or Prospectus, or to be filed as an exhibit, which is not described or filed as required, and the description in the Registration Statements and Prospectus of statutes, legal and governmental proceedings, contracts and other documents are accurate and fairly present the information required to be shown. (g) The Company's authorized equity capitalization is as set forth in the Prospectus (if contained therein). (h) The execution, delivery and performance of the Indenture, of this Agreement and of any Delayed Delivery Contracts (as hereinafter defined), the issuance and sale of the Securities, the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with, result in a breach of, or constitute a default under the Articles of Incorporation or By-laws of the Company or the terms of any indenture or other agreement or instrument to which the Company or any of its subsidiaries is a party or bound, or any statute, rule, order or regulation applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries; and the Company has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement. (i) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Securities by the Company, except such as have been obtained and made under the Act and the Trust Indenture Act and as may be required under state securities laws and such other approvals as have been obtained. (j) This Agreement has been, and any Delayed Delivery Contracts will be, duly authorized, executed and delivered by the Company. (k) The Company and its subsidiaries have all necessary franchises or permits for natural gas operations in all communities now served, except as set forth in the Registration Statements and except where the failure to be so authorized by franchise or permit does not materially affect the right of the Company or such subsidiary to the use of its properties or the conduct of its business; and the franchises of the Company and its subsidiaries referred to in the Registration Statements are good and valid except for and subject only to such defects as may be set forth or referred to in the Registration 4 6 Statements, and such others as do not materially affect the right of the Company or such subsidiary to the use of its properties or the conduct of its business, and said franchises impose no materially burdensome restrictions. (l) The Company is not a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 3. PURCHASE, SALE AND DELIVERY OF SECURITIES. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price set forth in Schedule B hereto, the amount of Securities set forth opposite the name of such Underwriter in Schedule A hereto less the reduction for such Underwriter's portion of any Contract Securities determined as provided below. If so authorized in Schedule B hereto, the Underwriters may solicit offers from investors of the types set forth in the Prospectus to purchase Securities from the Company pursuant to delayed contracts ("Delayed Delivery Contracts"). Such contracts shall be substantially in the form of Exhibit I hereto but with such changes therein as the Company may approve. Securities to be purchased pursuant to Delayed Delivery Contracts are herein called "Contract Securities". When Delayed Delivery Contracts are authorized in Schedule B, the Company will enter into a Delayed Delivery Contract in each case where a sale of Contract Securities arranged through you has been approved by the Company but, except as the Company may otherwise agree, such Delayed Delivery Contracts must be for at least the minimum amount of Contract Securities set forth in Schedule B hereto, and the aggregate amount of Contract Securities may not exceed the amount set forth in such Schedule. The Company will advise you not later than 10:00 A.M., New York City time, on the third full business day preceding the Closing Date (or at such later time as you may otherwise agree) of the sales of Contract Securities that have been so approved. You and the other Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The amount of Securities to be purchased by each Underwriter as set forth in Schedule A hereto shall be reduced by an amount that shall bear the same proportion to the total amount of Contract Securities as the amount of Securities set forth opposite the name of such Underwriter bears to the total amount of Securities set forth in Schedule A hereto, except to the extent that you determine that such reduction shall be otherwise than in such proportion and so advise the Company; provided, however, that the total amount of Securities to be purchased by all Underwriters shall be the total amount of Securities set forth in Schedule A hereto less the aggregate amount of Contract Securities. The Securities to be purchased by the Underwriters will be delivered by the Company to you for the accounts of the several Underwriters at the office specified in Schedule 5 7 B hereto against payment of the purchase price therefor by the method, in the funds, on the date and at the times specified in such Schedule B, or at such other time not later than eight full business days thereafter as you and the Company determine, such time being herein referred to as the "Closing Date". If Schedule B indicates that the Securities are to be delivered in definitive form, such Securities shall be in such authorized denominations and registered in such names as you may request upon at least two business days' prior notice to the Company and will be made available for checking and packaging at the office at which they are to be delivered at the Closing Date (or such other office as may be specified for that purpose in Schedule B) at least one business day prior to the Closing Date. If Schedule B indicates that the Securities are to be delivered in global book-entry form, such Securities shall be in the denominations specified in the applicable letter of representations between the Company, the Trustee and The Depository Trust Company ("DTC"), shall be registered in the name of DTC or a nominee of DTC and shall be made available for checking at the office at which they are to be delivered at the Closing Date (or such other office as may be specified for that purpose in Schedule B) at least one business day prior to the Closing Date. It is understood that you, acting individually and not in a representative capacity, may (but shall not be obligated to) make payment to the Company on behalf of any other Underwriter for Securities to be purchased by such Underwriter. Any such payment by you shall not relieve any such Underwriter of any of its obligations hereunder. The Company will pay to you, at the Closing Date, for the account of each Underwriter any commission or other compensation that is specified in Schedule B hereto. Such payment will be made by certified or official bank check or checks in New York Clearing House (next day) funds or, if specified in Schedule B, may be deducted by you from the purchase price of the Securities. 4. COVENANTS. The Company covenants and agrees with each Underwriter that: (a) The Company will cause the Prospectus Supplement to be filed as required by Section 2(a) hereof (but only if you have not reasonably objected thereto by notice to the Company after having been furnished a copy a reasonable time prior to filing) and will notify you promptly of such filing. During the period in which a prospectus relating to the Securities is required to be delivered under the Act, the Company will notify you promptly of the time when any subsequent amendment to either Registration Statement has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to either Registration Statement or the Prospectus or for additional information; it will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statements or Prospectus that, in your reasonable opinion, may be necessary or advisable in connection with the distribution of the Securities by the Underwriters; it will file no amendment or supplement to the Registration Statements or Prospectus (other than any prospectus supplement relating to the offering of other securities registered under 6 8 the Registration Statements or any document required to be filed under the Exchange Act that upon filing is deemed to be incorporated by reference therein) to which you shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing; and it will furnish to you at or prior to the filing thereof a copy of any such prospectus supplement or any document that upon filing is deemed to be incorporated by reference in the Registration Statements or Prospectus. (b) The Company will advise you, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness of either Registration Statement, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Securities is required to be delivered under the Act, the Company will comply as far as it is able with all requirements imposed upon it by the Act and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof and the Prospectus. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement either Registration Statement or the Prospectus to comply with the Act, the Company will promptly notify you and will amend or supplement such Registration Statement or the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (d) The Company will use its best efforts to qualify the Securities for sale under the securities laws of such jurisdictions as you reasonably designate and to continue such qualifications in effect so long as required for the distribution of the Securities, except that the Company shall not be required in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction. The Company will also arrange for the determination of the eligibility for investment of the Securities under the laws of such jurisdictions as you reasonably request. (e) The Company will furnish to the Underwriters copies of the Registration Statements, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statements or Prospectus that are filed with the Commission during the period in which a prospectus relating to the Securities is required to be delivered under the Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case 7 9 as soon as available and in such quantities as you may from time to time reasonably request. (f) The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company's current fiscal quarter, an earnings statement (which need not be audited) covering a 12-month period beginning after the date upon which the Prospectus Supplement is filed pursuant to Rule 424 under the Act that shall satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder. (g) The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all authorized expenses incident to the performance of its obligations hereunder, will pay the expenses of printing all documents relating to the offering, and will reimburse the Underwriters for any expenses (including fees and disbursements of counsel) incurred by them in connection with the matters referred to in Section 4(d) hereof and the preparation of memoranda relating thereto, for any filing fee of the National Association of Securities Dealers, Inc. relating to the Securities, for any fees charged by investment rating agencies for rating the Securities and, if the Securities are issued in global book-entry form, for any fees charged by DTC. If the sale of Securities to be purchased by the several Underwriters as provided for herein is not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the several Underwriters for all reasonable out-of-pocket disbursements (including fees and disbursements of counsel) incurred by the Underwriters in connection with their investigation, preparing to market and marketing the Securities or in contemplation of performing their obligations hereunder. The Company shall not in any event be liable to any of the Underwriters for loss of anticipated profits from the transactions covered by this Agreement. (h) The Company will apply the net proceeds from the sale of the Securities as set forth in the Prospectus and Prospectus Supplement. (i) The Company will not, directly or indirectly, offer or sell, or determine to offer or sell, any debt securities that are substantially similar to the Securities (except under prior contractual commitments) during the period beginning at the time of execution of this Agreement and ending on the first business day after the Closing Date without your prior written consent. 8 10 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several Underwriters to purchase and pay for Securities as provided herein shall be subject to the accuracy, as of the date hereof and the Closing Date (as if made at the Closing Date), of the representations and warranties of the Company herein, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) No stop order suspending the effectiveness of either Registration Statement shall have been issued and no proceeding for that purpose shall have been instituted or, to the knowledge of the Company or any Underwriter, threatened by the Commission, and any request of the Commission for additional information (to be included in either Registration Statement or the Prospectus or otherwise) shall have been complied with to your satisfaction. (b) No Underwriter shall have advised the Company that either Registration Statement or the Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in your opinion is material, or omits to state a fact that in your opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) Except as contemplated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statements and the Prospectus, there shall not have been any change, on a consolidated basis, in the capital stock, long-term debt of the Company and its subsidiaries, or any adverse change, or any development involving a prospective adverse change, in the condition (financial or other), business, prospects, net worth or results of operations of the Company and its subsidiaries, or any change in the rating assigned to any securities of the Company, that, in your judgment, makes it impractical or inadvisable to offer or deliver the Securities on the terms and in the manner contemplated in the Prospectus. (d) You shall have received the opinion of Amos & Jeffries, L.L.P., counsel for the Company, dated the Closing Date, to the effect that: (i) The Company and each of its significant subsidiaries within the meaning of Regulation S-X (individually a "Subsidiary" and collectively the "Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business; and all of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid 9 11 and non-assessable, and, except as otherwise set forth in the Prospectus, all outstanding shares of capital stock of the Subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest and, to the best knowledge of such counsel, any other security interest, claims, liens or encumbrances; (ii) The Indenture and the Securities have been duly authorized, the Indenture has been duly qualified under the Trust Indenture Act, executed and delivered, the Securities purchased by the Underwriters have been duly executed, authenticated, issued and delivered, and the Indenture and such Securities constitute, and any Contract Securities, when executed, authenticated, issued and delivered in the manner provided in the Indenture and the Delayed Delivery Contracts, will constitute, valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iii) To the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries of a character required to be disclosed in the Registration Statements by Item 103 of Regulation S-K which is not disclosed in the Prospectus, there is no statute required to be described in the Prospectus that is not described as required, and there is no franchise, contract or other document of a character required to be described in the Registration Statements or Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings, contracts and other documents are accurate and fairly present the information required to be shown; (iv) The Registration Statements have become effective under the Act, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Act specified in such opinion on the date specified therein, and, to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statements or of any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act; 10 12 (v) Each part of the Registration Statements, when such part became effective, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the Closing Date, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act and the Rules and Regulations; such counsel has no reason to believe that either any part of the Registration Statements, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission or at the Closing Date, included an untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial or statistical data included in any of the documents mentioned in this clause; (vi) The Company's authorized equity capitalization is as set forth in the Prospectus (if contained therein). (vii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Securities by the Company, except such as have been obtained and made under the Act and the Trust Indenture Act and as may be required under state securities laws and such other approvals (specified in such opinion) as have been obtained; (viii) The execution, delivery and performance of the Indenture, this Agreement or any Delayed Delivery Contracts, the issue and sale of the Securities, the consummation of the other transactions herein contemplated or the fulfillment of the terms hereof will not conflict with, result in a breach of, or constitute a default under the Articles of Incorporation or By-laws of the Company or the terms of any indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is a party or bound, or any statute, rule, order or regulation known to such counsel to be applicable to the Company or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries; and the Company has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement; 11 13 (ix) This Agreement and any Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company. (x) The Company and its Subsidiaries have all necessary franchises or permits for natural gas operations in all communities now served, except as set forth in the Registration Statements and except where the failure to be so authorized by franchise or permit does not, in the opinion of such counsel, materially affect the right of the Company or such Subsidiary to the use of its properties or the conduct of its business; and the franchises of the Company and its Subsidiaries referred to in the Registration Statements are good and valid except for and subject only to such defects as may be set forth or referred to in the Registration Statements, and such others as do not, in the opinion of such counsel, materially affect the right of the Company or such Subsidiary to the use of its properties or the conduct of its business, and said franchises impose no materially burdensome restrictions; and (xi) To the best knowledge of such counsel, the Company is not a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of the State of South Carolina and Tennessee, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to the Underwriters and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. A copy of any such opinion of other counsel shall be delivered to the Underwriters. (e) You shall have received from Coudert Brothers, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Company, the validity of the Securities, the Registration Statements, the Prospectus and other related matters as you reasonably may request, and such counsel shall have received such papers and information as they request to enable them to pass upon such matters. In rendering their opinion, such counsel may rely upon the opinion of Amos & Jeffries, L.L.P., referred to above as to all matters governed by North Carolina law. 12 14 (f) At or prior to the time of execution of this Agreement and at the Closing Date, you shall have received a letter from Deloitte & Touche LLP, dated the date of delivery thereof, to the effect set forth in Exhibit II hereto. (g) You shall have received from the Company a certificate, signed by the Chairman, the President or a Vice President, and by the principal financial or accounting officer, of the Company, dated the Closing Date, to the effect that, to the best of their knowledge based upon reasonable investigation: (i) The representations and warranties of the Company in this Agreement are true and correct, as if made at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) No stop order suspending the effectiveness of either Registration Statement has been issued, and no proceeding for that purpose has been instituted or is threatened, by the Commission; and (iii) Since the date of this Agreement, there has occurred no event required to be set forth in an amendment or supplement to the Registration Statements or Prospectus that has not been so set forth and there has been no document required to be filed under the Exchange Act and the rules and regulations of the Commission thereunder that upon such filing would be deemed to be incorporated by reference in the Prospectus that has not been so filed. (h) The Company shall have furnished to you such further certificates and documents as you shall have reasonably requested. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to you. The Company will furnish you with such conformed copies of such opinions, certificates, letters and other documents as you shall reasonably request. 6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any part of the Registration Statements when such part became effective, or in either Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by it in connection with 13 15 investigating or defending against such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by you, or by any Underwriter through you, specifically for use in the preparation thereof. (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any part of the Registration Statements when such part became effective, or in either Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made therein in reliance upon and in conformity with written information furnished to the Company by you, or by such Underwriter through you, specifically for use in the preparation thereof, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending against any such loss, claim, damage, liability or action as such expenses are incurred. The Company acknowledges that the statements set forth in the penultimate paragraph of the cover page, under the heading "Plan of Distribution" in any Preliminary Prospectus and the Prospectus and under the heading "Underwriting" in the Prospectus Supplement constitute the only information furnished in writing by or on behalf of such Underwriters for inclusion in the documents referred to in the forgoing indemnity, and you confirm that such statements are correct. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party (i) shall not relieve it from any liability which it may have to any indemnified party under such subsection unless and to the extent such failure prejudices the indemnifying party of substantial rights or defenses and (ii) shall not relieve it, in any event, from any liability that it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to appoint counsel satisfactory to such indemnified party to represent the indemnified party in such action; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to appoint counsel to defend such action and approval by the indemnified party of such counsel, the indemnifying party will not be 14 16 liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (plus any local counsel), approved by the Underwriters in the case of paragraph (a) of this Section 6, representing the indemnified parties under such paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) If the indemnification provided for in this Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering of the Securities (before deducting expenses) received by the Company bear to the total compensation or profit (before deducting expenses) received or realized by the Underwriters from the purchase and resale, or underwriting, of the Securities. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro rata allocations (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the first sentence of this subsection (d). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim that is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the 15 17 amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Company under this Section 6 shall be in addition to any liability that the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 6 shall be in addition to any liability that the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company (including any person who, with his consent, is named in the Registration Statements as about to become a director of the Company), to each officer of the Company who has signed the Registration Statements and to each person, if any, who controls the Company within the meaning of the Act. 7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties and agreements of the Company herein or in certificates delivered pursuant hereto, and the agreements of the several Underwriters contained in Section 6 hereof, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any controlling persons, or the Company or any of its officers, directors or any controlling persons, and shall survive delivery of and payment for the Securities. 8. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter or Underwriters shall fail to take up and pay for the amount of Securities agreed by such Underwriter or Underwriters to be purchased hereunder, upon tender of such Securities in accordance with the terms hereof, and the amount of Securities not purchased does not aggregate more than 10% of the total amount of Securities set forth in Schedule A hereto, the remaining Underwriters shall be obligated to take up and pay for (in proportion to their respective underwriting obligations hereunder as set forth in Schedule A hereto except as may otherwise be determined by you) the Securities that the withdrawing or defaulting Underwriter or Underwriters agreed but failed to purchase. (b) If any Underwriter or Underwriters shall fail to take up and pay for the amount of Securities agreed by such Underwriter or Underwriters to be purchased hereunder, upon tender of such Securities in accordance with the terms hereof, and the amount of Securities not purchased aggregates more than 10% of the total amount of Securities set forth in Schedule A hereto, and arrangements satisfactory to you and the Company for the purchase of such Securities by other persons are not made within 36 hours thereafter, this Agreement shall terminate. In the event of any such termination the Company shall not be under any liability to any Underwriter (except to the extent provided in Section 4(g) and Section 6 hereof) nor shall any Underwriter (other than an Underwriter who shall have failed, otherwise than for some reason permitted under this Agreement, to purchase the amount of Securities agreed by such Underwriter to be purchased 16 18 hereunder) be under any liability to the Company (except to the extent provided in Section 6 hereof). 9. TERMINATION. You shall have the right by giving notice as hereinafter specified at any time at or prior to the Closing Date, to terminate this Agreement if (i) the Company shall have failed, refused or been unable, at or prior to the Closing Date, to perform any agreement on its part to be performed hereunder, (ii) any other condition of the Underwriters' obligations hereunder is not fulfilled, (iii) trading of securities generally on the New York Stock Exchange shall have been suspended, or minimum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required on such exchange, (iv) a banking moratorium shall have been declared by Federal or New York authorities, or (v) any outbreak or escalation of hostilities, declaration of war by Congress, any other substantial national or international calamity or emergency shall have occurred since the execution of this Agreement that, in your judgment, makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Securities to be purchased by the Underwriters. Any such termination shall be without liability of any party to any other party except that the provisions of Section 4(g) and Section 6 hereof shall at all times be effective. If you elect to terminate this Agreement as provided in this Section, the Company shall be notified promptly by you by telephone, telex or telecopy, confirmed by letter. 10. NOTICES. All notices or communications hereunder shall be in writing and if sent to you shall be mailed, delivered, telexed or telecopied and confirmed to you at the address set forth for that purpose in Schedule B hereto, or if sent to the Company, shall be mailed, delivered, telexed or telecopied and confirmed to the Company at 1915 Rexford Road, Charlotte, North Carolina 28211, Attention: Ted C. Coble, Vice President and Treasurer. Notice to any Underwriter pursuant to Section 6 hereof shall be mailed, delivered, telexed or telecopied and confirmed to such Underwriter's address as it appears in such Underwriter's questionnaire or other notice furnished to the Company in writing for the purpose of communications hereunder. Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. 11. PARTIES. This Agreement shall inure to the benefit of and be binding upon the Company and the Underwriters and their respective successors and the controlling persons, officers and directors referred to in Section 6 hereof, and no other person will have any right or obligation hereunder. No purchaser of any Securities from any Underwriter shall be construed a successor or assign by reason merely of such purchase. In all dealings with the Company under this Agreement, you shall act on behalf of each of the several Underwriters, and any action under this Agreement taken by you or by any one of you designated in Schedule B hereto will be binding upon all the Underwriters. 17 19 12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 18 20 _________________ If the foregoing correctly sets forth the understanding between the Company and the several Underwriters, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and the several Underwriters. Alternatively, the execution of this Agreement by the Company and its acceptance by or on behalf of the Underwriters may be evidenced by an exchange of telecopied or other written communications. Very truly yours, PIEDMONT NATURAL GAS COMPANY, INC. By ------------------------------ Name: Title: ACCEPTED as of the date first above written [on behalf of ourselves and as Representative(s) of the other Underwriters named in Schedule A hereto]. [Name(s) of Representative(s)] By ------------------------------- By ----------------------------- Name: Title: 19 21 SCHEDULE A
Amount of Securities to be Underwriter Purchased ----------- ----------- ------------------- Total . . . . . . . . . . . . . . . . . . . . . . . . . .$ ===================
22 SCHEDULE B Registration Statement No. 33-59369 and 333- ----- Titles of Securities: Amounts of Securities: Purchase Price: Delayed Delivery: Closing- Office for delivery of Securities: Office for payment for Securities: Date and time of Closing: Method of Payment: Type of Funds: Underwriting Commission/Discount- Amount: Method of payment: Address for notices per Section 10: Name of Underwriter to act per Section 11: Form of Securities: Particular terms of the Securities- Interest: Maturity: 23 Other terms: 22 24 EXHIBIT I PIEDMONT NATURAL GAS COMPANY, INC. [Title of Securities] DELAYED DELIVERY CONTRACT , 199 ----------------- -- - Piedmont Natural Gas Company, Inc. c/o --------------------------------- [As Representative of the Several Underwriters,] --------------------- --------------------- --------------------- Gentlemen: The undersigned hereby agrees to purchase from Piedmont Natural Gas Company, Inc. (the "Company"), and the Company agrees to sell to the undersigned, [If one delayed closing, insert -- as of the date hereof, for delivery on __________, 199_ (the "Delivery Date")] $__________ principal amount of the Company's _______________ (the "Securities"), offered by the Company's Prospectus relating thereto, receipt of a copy of which is hereby acknowledged, at a purchase price of ___% of the principal amount thereof plus accrued interest, if any, from _________ to the Delivery Date and on the further terms and conditions set forth in this contract. [If two or more delayed closings, insert - The undersigned will purchase from the Company as of the date hereof, for delivery on the dates set forth below, Securities in the amounts set forth below:
DELIVERY DATE AMOUNT ------------- ---------- ------------- ----------
25 Each of such delivery dates is hereinafter referred to as a Delivery Date.] Payment for the Securities that the undersigned has agreed to purchase for delivery on a Delivery Date shall be made to the Company by [certified or official bank check] [wire transfer] of [next day] [immediately available] funds [payable to the order of the Company] [to the Company's account at ________] on that Delivery Date upon delivery to the undersigned of the Securities to be purchased by the undersigned for delivery on that Delivery Date in [definitive] [book-entry] form [and in such denominations and registered in such names as the undersigned may designate by written or telecopied communication addressed to the Company not less than five full business days prior to that Delivery Date. If no request is received, the Securities will be registered in the name of the undersigned and issued in a denomination equal to the total amount of Securities to be purchased by the undersigned on that Delivery Date.] The obligation of the Company to make delivery of and accept payment for, and the obligation of the undersigned to take delivery of and make payment for, Securities on a Delivery Date shall be subject only to the conditions that (1) investment in the Securities shall not at that Delivery Date be prohibited under the laws of any jurisdiction in the United States to which the undersigned is subject, which investment the undersigned represents is not prohibited on the date hereof, and (2) the Company shall have sold to the Underwriters the amount of Securities to be sold to them pursuant to the Underwriting Agreement referred to in the Prospectus mentioned above. Promptly after completion of the sale to the Underwriters, the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. It is understood that the acceptance of this contract and any other similar contracts is in the Company's sole discretion and, without limiting the foregoing, need not be on a first-come, first-served basis. If this contract is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned when such counterpart is so mailed or delivered. 2 26 This contract shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, [Name of Purchaser] By -------------------------------- Name: Title: ---------------------------------- ---------------------------------- (Address of Purchaser) Accepted, as of the above date. PIEDMONT NATURAL GAS COMPANY, INC. By -------------------------------- Name: Title: 3 27 EXHIBIT II 1. They are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of the Act and the Rules and Regulations. 2. In their opinion, the financial statements and any schedules audited by them and included or incorporated by reference in the Registration Statements and Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act, as applicable, and the published rules and regulations of the Commission thereunder. 3. They have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS 71, Interim Financial Information, on the unaudited financial statements included in the Company's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus. 4. On the basis of a reading of the latest unaudited financial statements made available by the Company and its subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and the audit committee of the Company and the Subsidiaries; and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company and its subsidiaries, nothing came to their attention which caused them to believe that: (A) any material modifications should be made to the unaudited financial statements, if any, included or incorporated by reference in the Prospectus, for them to be in conformity with generally accepted accounting principles; (B) the unaudited financial statements, if any, included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act and the published rules and regulations of the Commission thereunder; (C) the unaudited capsule information, if any, included in the Prospectus does not agree with the amounts set forth in the unaudited consolidated financial statements from which such capsule information was derived or was not determined on a basis substantially consistent with that of the audited financial statements included in the Prospectus; (D) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than five days prior to the date of 28 such letter, there was any change in the capital stock (except for the issuance of Common Stock under the Company's Employee Stock Purchase Plan, Executive Long-Term Incentive Plan and Dividend Reinvestment and Stock Purchase Plan) or any increase in short-term indebtedness or consolidated long-term debt or any decrease in total common stock equity of the Company and consolidated subsidiaries; or, at the date of the latest available balance sheet read by such accountants, there was any increase in consolidated net current liabilities or any decrease in consolidated net assets, as compared with amounts shown on the latest balance sheet included in the Prospectus; or (E) for the period from the date of the latest income statement included in the Prospectus to the date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year, in consolidated operating revenues, utility operating income or net income; except in all cases set forth in clauses (D) and (E) above for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter. 5. They have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Prospectus (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter. All financial statements and schedules included in material incorporated by reference into the Prospectus shall be deemed included in the Prospectus for purposes of this subsection. References to the Prospectus in this Exhibit II include any supplement thereto at the date of the letter. 2 EX-1.2 3 FORM OF AGENCY AGREEMENT 1 EXHIBIT 1.2 $150,000,000 PIEDMONT NATURAL GAS COMPANY, INC. MEDIUM-TERM NOTES, SERIES C AGENCY AGREEMENT ________________, 1997 [Name and Address of Agents] Dear Sirs: 1. INTRODUCTION. Piedmont Natural Gas Company, Inc., a North Carolina corporation (the "Issuer"), confirms its agreement with each of you (individually, an "Agent" and collectively, the "Agents") with respect to the issue and sale from time to time by the Issuer of up to $150,000,000 aggregate principal amount of its Medium-Term Notes, Series C, Due Not Less Than Nine Months from Date of Issue registered under the registration statements referred to in Section 2(a) (any such Medium-Term Notes, being hereinafter referred to as the "Securities", which expression shall, if the context so admits, include any permanent global Security). Securities may be sold pursuant to Section 3 of this Agreement or as contemplated by Section 11 of this Agreement in an aggregate amount not to exceed the amount of Registered Securities (as defined in Section 2(a) hereof) registered pursuant to such registration statements reduced by the aggregate amount of any other Registered Securities sold otherwise than pursuant to Sections 3 and 11 of this Agreement. The Securities will be issued under the Indenture, dated 2 as of April 1, 1993, between Piedmont Natural Gas Company, Inc., a New York corporation (the "Predecessor Company"), and Citibank, N.A., as trustee (the "Trustee"), as amended by the First Supplemental Indenture, dated as of February 25, 1994, among the Issuer, the Predecessor Company and the Trustee (collectively, the "Indenture"). The Securities shall have the terms described in the Prospectus referred to in Section 2(a) as it may be amended or supplemented from time to time, including any supplement to the Prospectus that sets forth only the terms of a particular issue of the Securities (a "Pricing Supplement"). Securities will be issued, and the terms thereof established, from time to time by the Issuer in accordance with the Indenture and the Procedures (as defined in Section 3(d) hereof). 2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and warrants to, and agrees with, each Agent as follows: (a) The Issuer meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Act"), and the rules and regulations ("Rules and Regulations") of the Securities and Exchange Commission (the "Commission") and has filed with the Commission two registration statements on such form (Nos. 33-59369 and 333-_____), including a prospectus, relating to debt securities of the Issuer, including the Securities (the "Registered Securities"), which have become effective under the Act. Such registration statements, as amended as of the Closing Date (as defined in Section 3(e) hereof), are hereinafter referred to as the "Registration Statements", and the prospectus included in such Registration Statements, as supplemented as of the Closing Date, including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus". Any reference in this Agreement to amending or supplementing the Prospectus shall be deemed to include the filing of materials incorporated by reference in the Prospectus after the Closing Date and any reference in this Agreement to any amendment or supplement to the Prospectus shall be deemed to include any such materials incorporated by reference in the Prospectus after the Closing Date. The Registration Statements, as they may be amended or supplemented, meet the requirements set forth in Rule 415(a)(1)(x) and (a)(2) under the Act and comply in all material respects with said Rule. (b) On the effective date of the registration statements relating to the Registered Securities, such registration statements conformed in all respects to the requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the Rules and Regulations and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on the Closing Date, the Registration Statements and the Prospectus, and at each of the times of acceptance and of delivery referred to in Section 6(a) hereof and at each of the times of amendment or supplementing referred to in Section 6(b) hereof 2 3 (the Closing Date and each such time being herein sometimes referred to as a "Representation Date"), the Registration Statements and the Prospectus as then amended or supplemented will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and none of such documents will include any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, except that the foregoing does not apply to statements in or omissions from any of such documents based upon written information furnished to the Issuer by any Agent specifically for use therein. The Indenture, including any amendment and supplements thereto, pursuant to which the Securities will be issued, will conform with the requirements of the Trust Indenture Act and the rules and regulations of the Commission thereunder. (c) The financial statements of the Issuer and its subsidiaries set forth in the Registration Statements and Prospectus fairly present the financial condition of the Issuer and its subsidiaries as of the dates indicated and the results of operations and cash flows for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise stated therein). (d) The Issuer and each of its significant subsidiaries within the meaning of Regulation S-X (individually a "Subsidiary" and collectively the "Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business; and all of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Prospectus, all outstanding shares of capital stock of the Subsidiaries are owned by the Issuer either directly or through wholly owned subsidiaries free and clear of any perfected security interest and any other security interest, claims, liens or encumbrances. (e) The Indenture and the Securities have been duly authorized, the Indenture has been duly qualified under the Trust Indenture Act and executed and delivered and constitutes, and the Securities, when duly executed, authenticated, issued and delivered as contemplated herein and in the Indenture, will constitute, valid and legally binding obligations of the Issuer enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, arrangement or other similar 3 4 laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law). (f) There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Issuer or any of its subsidiaries of a character required to be disclosed in the Registration Statements which is not disclosed in the Prospectus, there is no statute required to be described in the Prospectus that is not described as required, and there is no franchise, contract or other document of a character required to be described in the Registration Statements or Prospectus, or to be filed as an exhibit, which is not described or filed as required, and the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings, contracts and other documents are accurate and fairly present the information required to be shown. (g) The Issuer's authorized equity capitalization is as set forth in the Prospectus (if contained therein). (h) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Securities by the Issuer, except such as have been obtained and made under the Act and the Trust Indenture Act and as may be required under state securities laws and such other approvals as have been obtained. (i) The execution, delivery and performance of the Indenture or this Agreement, the issue and sale of the Securities, the consummation of the other transactions herein contemplated or the fulfillment of the terms hereof will not conflict with, result in a breach of, or constitute a default under the Articles of Incorporation or By-laws of the Issuer or the terms of any indenture or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or bound, or any statute, rule, order or regulation applicable to the Issuer or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Issuer or any of its subsidiaries; and the Issuer has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement. (j) This Agreement has been duly authorized, executed and delivered by the Issuer. 4 5 (k) The Issuer and its subsidiaries have all necessary franchises or permits for natural gas operations in all communities now served, except as set forth in the Registration Statements and except where the failure to be so authorized by franchise or permit does not materially affect the right of the Issuer or such subsidiary to the use of its properties or the conduct of its business; and the franchises of the Issuer and its subsidiaries referred to in the Registration Statements are good and valid except for and subject only to such defects as may be set forth or referred to in the Registration Statements, and such others as do not materially affect the right of the Issuer or such subsidiary to the use of its properties or the conduct of its business, and said franchises impose no materially burdensome restrictions. (l) The Issuer is not a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 3. APPOINTMENT AS AGENTS; AGREEMENT OF AGENTS; SOLICITATIONS AS AGENTS. (a) Subject to the terms and conditions stated herein, the Issuer hereby appoints each of the Agents as an agent of the Issuer for the purpose of soliciting or receiving offers to purchase the Securities from the Issuer by others. So long as this Agreement shall remain in effect with respect to any Agent, the Issuer shall not, without the consent of any such Agent, solicit or accept offers to purchase Securities otherwise than through one of the Agents (except as contemplated by Section 11 hereof); provided, however, that, subject to all of the terms and conditions of this Agreement and any agreement contemplated by Section 11 hereof, the foregoing shall not be construed to prevent the Issuer from selling at any time any Registered Securities in a firm commitment underwriting pursuant to an underwriting agreement that does not provide for a continuous offering of such Registered Securities. (b) On the basis of the representations and warranties contained herein, but subject to the terms and conditions herein set forth, each Agent agrees, as agent of the Issuer, to use its reasonable best efforts when requested by the Issuer to solicit offers to purchase the Securities upon the terms and conditions set forth in the Prospectus, as from time to time amended or supplemented. Upon receipt of notice from the Issuer as contemplated by Section 4(b) hereof, each Agent shall suspend its solicitation of offers to purchase Securities until such time as the Issuer shall have furnished it with an amendment or supplement to the Registration Statements or the Prospectus, as the case may be, contemplated by Section 4(b) and shall have advised such Agent that such solicitation may be resumed. 5 6 The Issuer reserves the right, in its sole discretion, to instruct the Agents to suspend solicitation of offers to purchase the Securities commencing at any time for any period of time or permanently. As soon as reasonably practicable, but in any event not later than one Business Day after receipt of notice from the Issuer, the Agents will forthwith suspend solicitation of offers to purchase Securities from the Issuer until such time as the Issuer has advised the Agents that such solicitation may be resumed. For the purpose of the foregoing sentence, "Business Day" shall mean any day that is not a Saturday or Sunday, and that in The City of New York is not a day on which banking institutions generally are authorized or obligated by law or executive order to close. The Agents are authorized to solicit offers to purchase Securities as described in the Prospectus, as amended or supplemented and only in a minimum aggregate amount of $100,000. Each Agent shall communicate to the Issuer, orally or in writing, each reasonable offer to purchase Securities received by it as agent. The Issuer shall have the sole right to accept offers to purchase the Securities and may reject any such offer, in whole or in part. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Issuer, to reject any offer to purchase Securities received by it, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. No Security which the Issuer has agreed to sell pursuant to this Agreement shall be deemed to have been purchased and paid for, or sold by the Issuer, until such Security shall have been delivered to the purchaser thereof against payment by such purchaser. (c) At the time of delivery of, and payment for, any Securities sold by the Issuer as a result of a solicitation made by, or offer to purchase received by, an Agent, the Issuer agrees to pay such Agent a commission in accordance with the schedule set forth in Exhibit A hereto. (d) Administrative procedures respecting the sale of Securities (the "Procedures") shall be agreed upon from time to time by the Agents and the Issuer. The initial Procedures, which are set forth in Exhibit B hereto, shall remain in effect until changed by agreement among the Issuer and the Agents promptly confirmed in writing. Each Agent and the Issuer agree to perform the respective duties and obligations specifically provided to be performed by each of them herein and in the Procedures. The Issuer will furnish to the Trustee a copy of the Procedures as from time to time in effect, and will furnish the Trustee a copy of the Procedures promptly after any change therein. 6 7 (e) The documents required to be delivered by Section 5 hereof shall be delivered at the office of Coudert Brothers, 1114 Avenue of the Americas, New York, New York 10036, not later than 10:00 A.M., New York City time, on the date of this Agreement or at such later time as may be mutually agreed by the Issuer and the Agents, which in no event shall be later than the time at which the Agents commence solicitation of purchases of Securities hereunder, such time and date being herein called the "Closing Date". (f) Each Agent agrees to keep and maintain confidential any information provided by the Issuer pursuant to the second sentence of Section 4(c) or Section 4(g) and known by such Agent to be non-public, until such information is announced or otherwise disclosed to the general public. 4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with the Agents that it will furnish to Coudert Brothers, counsel for the Agents, four (4) signed copies of the registration statements relating to the Registered Securities, including all exhibits, in the form that they became effective and of all amendments thereto and that, in connection with each offering of Securities, (a) The Issuer will advise each Agent promptly of any proposal to amend or supplement the Registration Statements or the Prospectus and will afford the Agents a reasonable opportunity to comment on any such proposed amendment or supplement (other than any Pricing Supplement that relates to Securities not purchased through or by such Agent); and the Issuer will also advise each Agent of the filing and effectiveness of any such amendment or supplement and of the institution by the Commission of any stop order proceedings in respect of the Registration Statements or of any part thereof and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act and no suspension of solicitation of offers to purchase Securities pursuant to Section 3(b) or this Section 4(b) shall be in effect (any such time and any time when either any Agent shall own any Securities with the intention of reselling them or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred being referred to herein as a "Marketing Time"), any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading, or if it is necessary at any such time to amend the Prospectus to comply with the Act, the Issuer will promptly notify each Agent to suspend solicitation of offers to purchase the Securities; and if the Issuer shall decide to amend or supplement the Registration Statements or the Prospectus, it will promptly advise each Agent by telephone (with confirmation in writing) and, 7 8 subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance and will supply any such amended or supplemented Prospectus to such Agent in such quantities as such Agent may reasonably request. Notwithstanding the foregoing, if, at the time any such event occurs or it becomes necessary to amend the Prospectus to comply with the Act, any Agent shall own any of the Securities with the intention of reselling them, or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred, the Issuer, subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance and will supply any such amended or supplemented Prospectus to such Agent in such quantities as such Agent may reasonably request. Neither the Agents' consent to, nor their delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 5. (c) The Issuer will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, on or prior to the date on which the Issuer makes any announcement to the general public concerning earnings or concerning any other event which is required to be described, or which the Issuer proposes to describe, in a document filed pursuant to the Exchange Act, the Issuer will furnish the information contained or to be contained in such announcement to each Agent, confirmed in writing and, subject to the provisions of subsections (a) and (b) of this Section, will cause the Prospectus to be amended or supplemented to reflect the information contained in such announcement. The Issuer also will furnish each Agent with copies of all other press releases or announcements to the general public. The Issuer will immediately notify each Agent of any downgrading in the rating of the Securities or any other debt securities of the Issuer or any proposal to downgrade the rating of the Securities or any other debt securities of the Issuer by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Issuer (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading of such rating), as soon as the Issuer learns of such downgrading, proposal to downgrade or public announcement. (d) As soon as practicable, after the date of each acceptance by the Issuer of an offer to purchase Securities hereunder, but in any event not later than the Applicable Availability Date (as defined below), the Issuer will make generally available to its security-holders an earnings statement covering a period of at least 12 months beginning after the Applicable Effective Date (as defined below) which 8 9 will satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder. For the purpose of the preceding sentence only, "Applicable Effective Date" means the latest of (i) the effective date of the registration statements relating to the Registered Securities, (ii) the effective date of the most recent post-effective amendment to such registration statements to become effective prior to the date of such acceptance, and (iii) the date of filing of the Issuer's most recent Annual Report on Form 10-K filed with the Commission prior to the date of such acceptance, and "Applicable Availability Date" means (A) the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes the Applicable Effective Date or (B) if such fourth fiscal quarter is the last quarter of the Issuer's fiscal year, the 90th day after the end of such fourth fiscal quarter. (e) The Issuer will furnish to each Agent copies of the Registration Statements, including all exhibits, the Prospectus and all amendments and supplements to such documents (including any Pricing Supplement), in each case as soon as available and in such quantities as are reasonably requested. (f) The Issuer will arrange for the qualification of the Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Agents designate and will continue such qualifications in effect so long as required for the distribution; provided, however, that in connection therewith the Issuer shall not be required to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified other than the State of New York or to file a general consent to service of process in any jurisdiction. (g) So long as any Securities are outstanding, the Issuer will furnish to the Agents, (i) as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year, (ii) as soon as available, a copy of each report or definitive proxy statement of the Issuer filed with the Commission under the Exchange Act or mailed to stockholders, and (iii) from time to time, such other information concerning the Issuer as the Agents may reasonably request; provided, however, that the Issuer need furnish exhibits to the reports specified in clause (ii) only to the extent requested by the Agents. (h) The Issuer will pay all expenses incident to the performance of its obligations under this Agreement or any agreement contemplated by Section 11 hereof and will reimburse each Agent for any expenses (including reasonable fees and disbursements of counsel) incurred by it in connection with qualification of the Securities for sale and determination of their eligibility for investment under the laws of such jurisdictions as such Agent may designate and the printing of memoranda relating thereto, for any fees charged by investment rating agencies for the rating of the Securities, for any filing fee of the National Association of Securities Dealers, Inc. relating to the Securities, for expenses incurred by each 9 10 Agent in distributing the Prospectus and all supplements thereto (including any Pricing Supplement), for costs incurred by each Agent in advertising any offering of Securities and for each Agent's reasonable expenses (including the reasonable fees and disbursements of counsel to the Agents) incurred in connection with the establishment or maintenance of the program contemplated by this Agreement or otherwise in connection with the activities of the Agents under this Agreement. 5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, as agent of the Issuer, under this Agreement at any time to solicit offers to purchase the Securities is subject to the accuracy, on the date hereof, on each Representation Date and on the date of each such solicitation, of the representations and warranties of the Issuer herein, to the accuracy, on each such date, of the statements of the Issuer's officers made pursuant to the provisions hereof, to the performance, on or prior to each such date, by the Issuer of its obligations hereunder, and to each of the following additional conditions precedent: (a) The Prospectus, as amended or supplemented as of any Representation Date or date of such solicitation, as the case may be, shall have been filed with the Commission in accordance with the Rules and Regulations and no stop order suspending the effectiveness of the Registration Statements or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Issuer or any Agent, shall be contemplated by the Commission. (b) Neither the Registration Statements nor the Prospectus, as amended or supplemented as of any Representation Date or date of such solicitation, as the case may be, shall contain any untrue statement of fact which, in the opinion of any Agent, is material or omit to state a fact which, in the opinion of any Agent, is material and is required to be stated therein or is necessary to make the statements therein not misleading, other than any statement contained in, or other matter omitted from, the Registration Statements or Prospectus in reliance upon, and in conformity with, information furnished in writing by the Agents to the Issuer expressly for use in the Registration Statements or Prospectus. (c) There shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer and its subsidiaries on a consolidated basis which, in the judgment of such Agent, makes it impracticable or inadvisable to proceed with the soliciting of offers to purchase the Securities as contemplated by the Registration Statement or the Prospectus, (ii) any downgrading in the rating of the Securities or any other debt securities of the Issuer by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Issuer (other than any announcement with positive implications of a possible upgrading, and no 10 11 implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer on any exchange or in the over-the-counter market if, in the judgment of such Agent, any such event or any condition giving rise thereto or existing concurrently therewith makes it impracticable or inadvisable to proceed with the solicitation of offers to purchase, or sales of, Securities on the terms and in the manner contemplated by the applicable Pricing Supplement and the Prospectus; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of hostilities, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of such Agent, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with solicitations of offers to purchase, or sales of, Securities on the terms and in the manner contemplated by the applicable Pricing Supplement and the Prospectus. (d) At the Closing Date, the Agents shall have received an opinion, dated the Closing Date, of Amos & Jeffries, L.L.P., counsel for the Issuer, to the effect that: (i) The Issuer and each of its Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business; and all of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Prospectus, all outstanding shares of capital stock of the Subsidiaries are owned by the Issuer either directly or through wholly owned subsidiaries free and clear of any perfected security interest and, to the best knowledge of such counsel, any other security interest, claim, lien or encumbrance; (ii) The Indenture has been duly authorized, executed and delivered by the Issuer and has been duly qualified under the Trust Indenture Act and constitutes a valid and legally binding obligation of the Issuer enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of 11 12 equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iii) Any series of Securities established on or prior to the date of such opinion has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly completed, executed, authenticated and issued in accordance with the Indenture and delivered against payment as contemplated by this Agreement, such Security will constitute a valid and legally binding obligation of the Issuer enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law), and the Securities, when so issued and delivered and sold, will conform, in all material respects, to the description thereof contained in the Prospectus, it being understood that such counsel may assume that at the time of the issuance, sale and delivery of each Security (a) the authorization of such series will not have been modified or rescinded and there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security, and (b) that neither of the issuance, sale and delivery of any Security, nor any of the terms of such Security, nor compliance by the Issuer with such terms, will violate any then applicable law, any agreement or instrument then binding upon the Issuer or any restriction then imposed by any court or governmental body having jurisdiction over the Issuer; (iv) To the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Issuer or any of its subsidiaries of a character required to be disclosed in the Registration Statements by Item 103 of Regulation S-K which is not disclosed in the Prospectus, there is no statute required to be described in the Prospectus that is not described as required, and there is no franchise, contract or other document of a character required to be described in the Registration Statements or Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the descriptions in the Registration 12 13 Statements and Prospectus of statutes, legal and governmental proceedings, contracts and other documents are accurate and fairly present the information required to be shown; (v) The Registration Statements have become effective under the Act, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Act specified in such opinion on the date specified therein, and, to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statements or of any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and the registration statements relating to the Registered Securities, as of their effective date, the Registration Statements and the Prospectus, as of the Closing Date, and any amendment or supplement thereto, as of its date, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act and the Rules and Regulations; such counsel has no reason to believe that the registration statements relating to the Registered Securities, as of its effective date, or the Registration Statements or the Prospectus, or any amendment or supplement, as of their respective effective or issue dates and at the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial or statistical data contained in the Registration Statements or the Prospectus; (vi) The Issuer's authorized equity capitalization is as set forth in the Prospectus (if contained therein); (vii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance and sale of the Securities by the Issuer, except such as have been obtained and made under the Act and the Trust Indenture Act and as may be required under state securities laws and such other approvals (specified in such opinion) as have been obtained (it being understood that such counsel may assume with respect to each particular Security that the inclusion of any alternative or additional terms in such Security that are not currently specified in the forms of Securities examined by such counsel would not require the Issuer to obtain any regulatory consent, authorization or approval or make any regulatory filing in order for the Issuer to issue, sell and deliver such Security); 13 14 (viii) The execution, delivery and performance of the Indenture or this Agreement, the issue and sale of the Securities, the consummation of the other transactions herein contemplated or the fulfillment of the terms hereof will not conflict with, result in a breach of, or constitute a default under the Articles of Incorporation or By-laws of the Issuer or the terms of any indenture or other agreement or instrument known to such counsel and to which the Issuer or any of its subsidiaries is a party or bound, or any statute, rule, order or regulation known to such counsel to be applicable to the Issuer or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Issuer or any of its subsidiaries; and the Issuer has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement (it being understood that such counsel may assume with respect to each particular Security that the inclusion of any alternative or additional terms in such Security that are not currently specified in the forms of Securities examined by such counsel will not cause the issuance, sale or delivery of such Security, the terms of such Security, or the compliance by the Issuer with such terms, to violate any of the court orders or laws specified in this paragraph or to result in a default under or a breach of any of the agreements specified in this paragraph); (ix) This Agreement has been duly authorized, executed and delivered by the Issuer; (x) The Issuer and its subsidiaries have all necessary franchises or permits for natural gas operations in all communities now served, except as set forth in the Registration Statements and except where the failure to be so authorized by franchise or permit does not, in the opinion of such counsel, materially affect the right of the Issuer or such subsidiary to the use of its properties or the conduct of its business; and the franchises of the Issuer and its subsidiaries referred to in the Registration Statements are good and valid except for and subject only to such defects as may be set forth or referred to in the Registration Statements, and such others as do not, in the opinion of such counsel, materially affect the right of the Issuer or such subsidiary to the use of its properties or the conduct of its business, and said franchises impose no materially burdensome restrictions; and (xi) To the best knowledge of such counsel, the Issuer is not a "holding company" or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 14 15 In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of the State of South Carolina and Tennessee, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to the Agents and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Issuer and public officials. A copy of any such opinion of other counsel shall be delivered to the Agents. (e) At the Closing Date, the Agents shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of the Issuer in which such officers, shall state that, to the best of their knowledge after reasonable investigation, (i) the representations and warranties of the Issuer in this Agreement are true and correct, (ii) the Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, (iii) no stop order suspending the effectiveness of the Registration Statements or of any part thereof has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and (iv) subsequent to the date of the most recent financial statements included or incorporated by reference in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Issuer and its subsidiaries, except as set forth in or contemplated by the Prospectus. (f) At the Closing Date, the Agents shall have received a letter, dated the Closing Date, of Deloitte & Touche LLP confirming that they are independent public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder and stating in effect that: (i) In their opinion, the financial statements and schedules examined by them and included in the Registration Statements and Prospectus comply in form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; (ii) On the basis of a reading of the latest available interim financial statements of the Issuer; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and the audit committee of the Company and Subsidiaries; and inquiries of officials of the Issuer who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that: 15 16 (A) the unaudited consolidated financial statements, if any, included in the Prospectus do not comply in form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations or any material modification should be made to such unaudited consolidated financial statements for them to be in conformity with generally accepted accounting principles; (B) the unaudited capsule information, if any, included in the Prospectus does not agree with the amounts set forth in the unaudited consolidated financial statements from which such capsule information was derived or was not determined on a basis substantially consistent with that of the audited financial statements included in the Prospectus; (C) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than five days prior to the Closing Date, there was any change in the capital stock (except for the issuance of common stock under the Company's Employee Stock Purchase Plan, Executive Long-Term Incentive Plan and Dividend Reinvestment and Stock Purchase Plan) or any increase in short-term indebtedness or long-term debt of the Issuer and consolidated subsidiaries or, at the date of the latest available balance sheet read by such accountants, there was any increase in consolidated net current liabilities or any decrease in consolidated net assets, as compared with amounts shown on the latest balance sheet included in the Prospectus; or (D) for the period from the date of the latest income statement included in the Prospectus to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year, in consolidated operating revenues, utility operating income, or net income, or in the ratio of earnings to fixed charges; except in all cases set forth in clauses (C) and (D) above for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and 16 17 (iii) They have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Prospectus (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Issuer and its subsidiaries subject to the internal controls of the Issuer's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter. All financial statements and schedules included in material incorporated by reference into the Prospectus shall be deemed included in the Prospectus for purposes of this subsection. (g) The Agents shall have received from Coudert Brothers, counsel for the Agents, such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Issuer, the validity of the Securities, the Registration Statements, the Prospectus, the conclusions of law set forth under the caption "United States Taxation" in the Prospectus and other related matters as they may require, and the Issuer shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, Coudert Brothers may rely as to the matters relating to state regulatory consents and approvals upon the opinion of Amos & Jeffries, L.L.P., counsel for the Issuer. (h) Subsequent to the execution of this Agreement (1) the Issuer shall not have received notice that either Moody's Investors Service Inc. ("Moody's"), Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. ("S&P") or Duff and Phelps ("D&P") intends to reduce, or is considering a reduction in, the ratings of any of the Issuer's debt securities unless Moody's, S&P's or D&P's intention to so reduce or consideration of such a reduction is then publicly known and (2) the Issuer's debt securities shall be rated as investment grade debt by Moody's, S&P and D&P. The Issuer will furnish the Agents with such conformed copies of such opinions, certificates, letters and documents as they may reasonably request. 6. ADDITIONAL COVENANTS OF THE ISSUER. The Issuer agrees that: 17 18 (a) Each acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to be an affirmation that its representations and warranties contained in this Agreement are true and correct at the time of such acceptance and a covenant that such representations and warranties will be true and correct at the time of delivery to the purchaser of the Securities as though made at and as of each such time, it being understood that such representations and warranties shall relate to the Registration Statements and the Prospectus as amended or supplemented at each such time. Each such acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to constitute an additional representation, warranty and agreement by the Issuer that, as of the settlement date for the sale of such Securities, after giving effect to the issuance of such Securities, of any other Securities to be issued on or prior to such settlement date and of any other Registered Securities to be issued and sold by the Issuer on or prior to such settlement date, the aggregate amount of Registered Securities (including any Securities) which have been issued and sold by the Issuer will not exceed the amount of Registered Securities registered pursuant to the Registration Statements. (b) Each time that the Registration Statements or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement), the Issuer shall, (A) concurrently with such amendment or supplement, if such amendment or supplement shall occur during a Marketing Time, or (B) at or immediately prior to commencement of the next Marketing Time if such amendment or supplement shall not occur during a Marketing Time, furnish the Agents with a certificate, dated the date of delivery thereof, of the President or any Vice President and a principal financial or accounting officer of the Issuer, in form satisfactory to the Agents, to the effect that the statements contained in the certificate covering the matters set forth in Section 5(e) hereof which was last furnished to the Agents are true and correct at the time of such amendment or supplement, as though made at and as of such time or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 5(e); provided, however, that any certificate furnished under this Section 6(b) shall relate to the Registration Statements and the Prospectus as amended or supplemented at the time of delivery of such certificate and, in the case of the matters set forth in clause (ii) of Section 5(e), to the time of delivery of such certificate. (c) At each Representation Date referred to in Section 6(b), the Issuer shall (A) concurrently if such Representation Date shall occur during a Marketing Time, or (B) at or immediately prior to commencement of the next Marketing Time if such Representation Date shall not occur during a Marketing Time, furnish the Agents with a written opinion or opinions, dated the date of such Representation Date, of counsel for the Issuer, in form satisfactory to the Agents, to the effect set forth in Section 5(d) hereof; provided, however, that to the extent appropriate such opinion or opinions may reconfirm matters set forth in a prior 18 19 opinion delivered under Section 5(d) or this Section 6(c); provided further, however, that any opinion or opinions furnished under this Section 6(c) shall relate to the Registration Statements and the Prospectus as amended or supplemented at the time of delivery of such opinion or opinions and shall state that the Securities sold in the relevant Applicable Period have been duly executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law), and conform to the description thereof contained in the Prospectus as amended or supplemented at the relevant settlement date or dates for the sale of such Securities. For the purpose of this Section 6(c), "Applicable Period" shall mean with respect to any opinion delivered pursuant to this Section 6(c) the period commencing on the date of the most recent prior opinion delivered under Section 5(d) or this Section 6(c) and ending on the date of delivery of the opinion to be delivered pursuant to this Section 6(c). (d) At each Representation Date referred to in Section 6(b) on which the Registration Statements or the Prospectus shall be amended or supplemented to include additional financial information, the Issuer shall cause Deloitte & Touche LLP (A) concurrently if such Representation Date shall occur during a Marketing time, or (B) at or immediately prior to commencement of the next Marketing Time if such Representation Date shall not occur during a Marketing Time, to furnish the Agents with a letter, addressed jointly to the Issuer and the Agents and dated the date of delivery of such letter, in form and substance satisfactory to the Agents, to the effect set forth in Section 5(f) hereof; provided, however, that to the extent appropriate such letter may reconfirm matters set forth in a prior letter delivered by Deloitte & Touche LLP pursuant to Section 5(f) or this Section 6(d); provided further, however, that any letter furnished under this Section 6(d) shall relate to the Registration Statements and the Prospectus as amended or supplemented at the time of deliver of such letter, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Issuer. (e) On each settlement date for the sale of Securities, the Issuer shall, if requested by the Agent that solicited or received the offer to purchase any Securities being delivered on such settlement date, furnish such Agent with a written opinion or opinions, dated the date of delivery thereof, of counsel for the Issuer, in form satisfactory to such Agent, to the effect set forth in clauses (i), (ii) and (iii) of Section 5(d) hereof; provided, however, that any opinion furnished 19 20 under this Section 6(e) shall relate to the Prospectus as amended or supplemented at such settlement date and shall state that the Securities being sold by the Issuer on such settlement date, when delivered against payment therefor as contemplated by this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization, arrangement or other similar laws now or hereafter in effect affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law) and will conform to the description thereof contained in the Prospectus as amended or supplemented at such settlement date. (f) The Issuer agrees that any obligation of a person who has agreed to purchase Securities to make payment for and take delivery of such Securities shall be subject to (i) the accuracy, on the related settlement date fixed pursuant to the Procedures, of the Issuer's representation and warranty deemed to be made to the Agents pursuant to the last sentence of subsection (a) of this Section 6, and (ii) the satisfaction, on such settlement date, of each of the conditions set forth in Sections 5(a), (b) and (c), it being understood that under no circumstance shall any Agent have any duty or obligation to exercise the judgment permitted under Section 5(b) or (c) on behalf of any such person. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer will indemnify and hold harmless each Agent against any losses, claims, damages or liabilities, joint or several, to which such Agent may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statements, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus or preliminary prospectus supplement, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Issuer will not be liable to such Agent in any case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Issuer by such Agent specifically for use therein, unless such loss, claim, damage or liability arises out of the offer or sale 20 21 of Securities occurring after such Agent has notified the Issuer in writing that such information should no longer be used therein. (b) Each Agent will indemnify and hold harmless the Issuer against any losses, claims, damages or liabilities to which the Issuer may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statements, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus or preliminary prospectus supplement, or arise out of or based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuer by such Agent specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Issuer in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, unless such loss, claim, damage or liability arises out of the offer or sale of Securities occurring after the Agent has notified the Issuer in writing that such information should no longer be used therein. The Issuer acknowledges that the statements set forth in the last paragraph of the cover page and under the heading "Plan of Distribution" in any preliminary Prospectus and the Prospectus constitute the only information furnished in writing by or on behalf of such Agent for inclusion in the documents referred to in the forgoing indemnity, and you confirm that such statements are correct. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party (i) will not relieve it from any liability which it may have to any indemnified party under subsection (a) or (b) above unless and to the extent such failure prejudices the indemnifying party of substantial rights or defenses and (ii) will not, in any event, relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to appoint counsel satisfactory to such indemnified party to represent the indemnified party in such action; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified 21 22 party of its election so to appoint counsel to defend such action and approval by the indemnified party of such counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (plus any local counsel), approved by the Agents in the case of paragraph (a) of this Section 7, representing the indemnified parties under such paragraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuer on the one hand and any Agent on the other from the offering pursuant to this Agreement of the Securities which are the subject of the action or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuer on the one hand and any Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Issuer on the one hand and any Agent on the other shall be deemed to be in the same proportions as the total net proceeds from the offering pursuant to this Agreement of the Securities which are the subject of the action (before deducting expenses) received by the Issuer bear to the total discounts and commissions received by such Agent from the offering of such Securities pursuant to this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer or such Agent and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Issuer and each Agent agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Agents were 22 23 treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities which are the subject of the action and which were distributed to the public through it pursuant to this Agreement or upon resale of Securities purchased by it from the Issuer exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of each Agent in this subsection (d) to contribute are several, in the same proportion which the amount of the Securities which are the subject of the action and which were distributed to the public through such Agent pursuant to this Agreement bears to the total amount of such Securities distributed to the public through all of the Agents pursuant to this Agreement, and not joint. (e) The obligations of the Issuer under this Section 7 shall be in addition to any liability which the Issuer may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls each Agent within the meaning of the Act; and the obligations of each Agent under this Section 7 shall be in addition to any liability which each Agent may otherwise have and shall extend, upon the same terms and conditions, to each director of the Issuer (including any person who, with his consent, is named in the Registration Statements as about to become a director of the Issuer), to each officer of the Issuer who has signed the Registration Statements and to each person, if any, who controls the Issuer within the meaning of the Act. 8. STATUS OF EACH AGENT. In soliciting offers to purchase the Securities from the Issuer pursuant to this Agreement and in assuming its other obligations hereunder (other than offers to purchase pursuant to Section 11), each Agent is acting individually and not jointly and is acting solely as agent for the Issuer and not as principal. Each Agent will use its reasonable best efforts to assist the Issuer in obtaining performance by each purchaser whose offer to purchase Securities from the Issuer has been solicited by such Agent and accepted by the Issuer, but such Agent shall have no liability to the Issuer in the event any such purchase is not consummated for any reason. If the Issuer shall default on its obligations to deliver Securities to a purchaser whose offer it has accepted, the Issuer (i) shall hold the Agents harmless against any loss, claim or damage arising from or as a result of such default by the Issuer, and (ii) in 23 24 particular, shall pay to the Agents any commission to which they would be entitled in connection with such sale. 9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Issuer or its officers and of the Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Agent, the Issuer or any of their respective representatives, officers or directors or any controlling person and will survive delivery of and payment for the Securities. If this Agreement is terminated pursuant to Section 10 or for any other reason, the Issuer shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4(h) and the obligations of the Issuer under Sections 4(d) and 4(g) and the respective obligations of the Issuer and the Agents pursuant to Section 7 shall remain in effect. In addition, if any such termination shall occur either (i) at a time when any Agent shall own any of the Securities acquired pursuant to Section 11 hereof and shall have informed the Issuer of its intention of reselling them or (ii) after the Issuer has accepted an offer to purchase Securities and prior to the related settlement, the obligations of the Issuer under the last sentence of Section 4(b), under Sections 4(a), 4(c), 4(e) and 4(f) and, in the case of a termination occurring as described in (ii) above, under Sections 3(c), 6(a), 6(e) and 6(f) and under the last sentence of Section 8, shall also remain in effect. 10. TERMINATION. This Agreement may be terminated for any reason at any time by the Issuer as to any Agent or by such Agent insofar as this Agreement relates to such Agent, upon the giving of one day's written notice of such termination to the other parties hereto. Any settlement with respect to Securities placed by an Agent occurring after termination of this Agreement shall be made in accordance with the Procedures and each Agent agrees, if requested by the Issuer, to take the steps therein provided to be taken by such Agent in connection with such settlement. 11. PURCHASES AS PRINCIPAL. From time to time, any Agent may agree with the Issuer to purchase Securities from the Issuer as principal and (unless the Issuer and such Agent may otherwise agree) such purchase shall be made in accordance with the terms of a separate agreement (a "Purchase Agreement") in the form attached hereto as Exhibit C (or any such other form as may be agreed to between the Issuer and such Agent) with such additional provisions relating to the terms of the Securities and of the purchase and sale (and, if applicable, resale) thereof as shall be set forth in the Purchase Information delivered pursuant to the Procedures, and such Agent's compensation shall, unless otherwise agreed between the Issuer and such Agent, be the amount thereof set forth in the Pricing Supplement. For the purposes of Section 12 of this Agreement the term "Purchaser" shall refer to each of you acting solely as principal hereunder and not as agent. 24 25 12. CONDITIONS TO THE OBLIGATIONS OF A PURCHASER. The obligations of a Purchaser to purchase Securities pursuant to any Purchase Agreement will be subject to the accuracy of the representations and warranties on the part of the Issuer herein as of the date of the respective Purchase Agreement and as of the settlement date for the sale of such Securities, to the performance and observance by the Issuer of all covenants and agreements herein and therein contained on its part to be performed and observed and to the following additional conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statements, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) Except to the extent modified by the respective Purchase Agreement, the Purchaser shall have received, appropriately updated in a manner consistent with Section 5 hereof, (i) a certificate of the Issuer, dated as of the settlement date, to the effect set forth in Section 5(e), (ii) the opinion or opinions of Amos & Jeffries, L.L.P., counsel to the Issuer, dated as of the settlement date, to the effect set forth in Section 5(d),(iii) the opinion of Coudert Brothers, counsel for the Purchaser, dated as of the settlement date, to the effect set forth in Section 5(g) and (iv) letter of Deloitte & Touche, dated as of the settlement date, to the effect set forth in Section 5(f). (c) The conditions set forth in Section 5(c) shall have been satisfied. (d) Prior to the settlement date, the Issuer shall have furnished to the Purchaser such further information, certificates and documents as the Purchaser may reasonably request. (e) Subsequent to the execution of any Purchase Agreement, there shall not have been any decrease in the ratings of any of the Issuer's debt securities by Moody's, S&P or D&P. If any of the conditions specified in this Section 12 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in the Purchase Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Purchaser and its counsel, the Purchase Agreement and all obligations of the Purchaser thereunder may be canceled at, or at any time prior to, the respective settlement date by the Purchaser. Notice of such cancellation shall be given to the Issuer in writing or by telephone or transmitted by any standard form of telecommunication confirmed in writing. 25 26 13. NOTICES. Except as otherwise provided herein, all notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to ________________ shall be directed to it at _____________________________________, Attention: ____________________________; notices to ______________________________ shall be directed to it at _____________________________________________, Attention: _____________________ _____________________; notices to _____________________________________ shall be directed to it at ________________________________________________, Attention: __________________________________________; and notices to the Issuer shall be directed to it at 1915 Rexford Road, Charlotte, North Carolina 28211, Attention: Ted C. Coble, Vice President and Treasurer; or in the case of any party hereto, to such other address or person as such party shall specify to each other party by a notice given in accordance with the provisions of this Section 13. Any such notice shall take effect at the time of receipt. 14. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto, their respective successors and assigns, the officers and directors and controlling persons referred to in Section 7 and, to the extent provided in Section 6(f), any person who has agreed to purchase Securities from the Issuer, and no other person will have any right or obligation hereunder. 15. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such executed counterparts shall together constitute one and the same Agreement. 26 27 If the foregoing correctly sets forth our agreement, please indicate your acceptance hereof in the space provided for that purpose below. Very truly yours, PIEDMONT NATURAL GAS COMPANY, INC. By:_________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: [ ] By: _____________________________ Name: Title: [ ] By: _____________________________ Name: Title: [ ] By: _____________________________ Name: Title: 27 28 EXHIBIT A The Issuer agrees to pay each Agent a commission equal to the following percentage of the principal amount of Securities sold to purchasers solicited by such Agent:
Commission Rate (as a percentage of Term principal amount) ---- ----------------- From 9 months to less than 1 year .125% From 1 year to less than 18 months .150 From 18 months to less than 2 years .200 From 2 years to less than 3 years .250 From 3 years to less than 4 years .350 From 4 years to less than 5 years .450 From 5 years to less than 6 years .500 From 6 years to less than 7 years .550 From 7 years to less than 10 years .600 From 10 years to less than 15 years .625 From 15 years to less than 20 years .700 From 20 years to 30 years .750 Greater than 30 years To be determined at the time of sale
29 EXHIBIT B ADMINISTRATIVE PROCEDURES The Medium-Term Notes, Series C due nine months or more from their issue date (the "Notes") are to be offered on a continuing basis by Piedmont Natural Gas Company, Inc., a North Carolina corporation (the "Issuer"). _________________________, ___________________________ and __________________________________, as agents (individually, an "Agent" and collectively, the "Agents"), have each agreed to use reasonable best efforts to solicit offers to purchase the Notes. No Agent will be obligated to purchase Notes for its own account. The Notes are being sold pursuant to an Agency Agreement, dated ___________, 1997 (the "Agency Agreement"), among the Issuer and the Agents, and will be issued pursuant to an Indenture, dated as of April 1, 1993, between Piedmont Natural Gas Company, Inc., a New York corporation (the "Predecessor Company") and Citibank, N.A., as trustee (the "Trustee"), as amended by the First Supplemental Indenture, dated as of February 25, 1994, among the Issuer, the Predecessor Company and the Trustee (collectively, the "Indenture"). The Notes will rank equally and ratably with all other unsecured and unsubordinated indebtedness of the Issuer and will have been registered with the Securities and Exchange Commission (the "Commission"). For a description of the terms of the Notes and the offering and sale thereof, see the sections entitled "Description of Notes" and "Plan of Distribution of Notes" in the Prospectus Supplement relating to the Notes, dated ______________, 1997, attached hereto and hereinafter referred to as the "Prospectus Supplement", and the sections entitled "Description of Debt Securities", "United States Taxation" and "Plan of Distribution" in the Prospectus relating to the Notes, dated _____________, 1997, attached hereto and hereinafter referred to as the "Prospectus". Unless otherwise specified in the applicable Pricing Supplement, the Notes will be issued in book-entry form (each, a "Book-Entry Note") and will be represented by a fully registered master global note certificate (the "Master Global Note"). The Master Global Note shall be in a form approved by the Issuer, the Agents, The Depository Trust Company ("DTC") and the Trustee. Prior to the issuance of any Notes, the Trustee shall authenticate the Master Global Note and hold it as custodian for DTC. Except under the limited circumstances described in the Indenture, beneficial owners of Book-Entry Notes will not be entitled to receive a certificate representing such Notes. At the option of the Issuer, Notes may also be issued in certificated form. Prior to accepting any offer to purchase Notes in certificated form, the Issuer shall deliver to the Trustee an adequate supply of duly executed certificated Notes. B-1 30 Administrative procedures and specific terms of the offering are explained below -- Part I indicating procedures applicable to all Notes, Part II indicating specific procedures for Book-Entry Notes, and Part III indicating specific procedures for Notes issued in certificated form. Administrative and record keeping responsibilities will be handled for the Issuer by its Treasury Department. The Issuer will advise the Agents in writing of those persons handling administrative responsibilities with whom the Agents are to communicate regarding offers to purchase Notes and the details of their delivery. Unless otherwise defined herein, terms defined in the Indenture (or any applicable Board Resolution referred to therein related to the Notes) shall be used herein as therein defined. PART I: ADMINISTRATIVE PROCEDURES APPLICABLE TO ALL NOTES ISSUE DATE Each Note will be dated the date of its authentication. Each Note will also bear an original issue date (the "Issue Date") which, with respect to any such Note (or portion thereof), shall mean the date of its original issuance and shall be specified therein. The Issue Date will remain the same for all Notes subsequently issued upon transfer, exchange or substitution of a Note, regardless of their dates of authentication. PRICE TO PUBLIC; DENOMINATIONS; REGISTRATION Except as otherwise specified in a Pricing Supplement, each Note will be issued at 100% of principal amount. The minimum denominations of the Notes will be $100,000 and integral multiples of $1,000 in excess thereof. Notes will be issued only in fully registered form. MATURITIES; MINIMUM PURCHASE; CALCULATION OF INTEREST Each Note will mature on a date, selected by the purchaser and agreed to by the Issuer, which will be nine months or more from its Issue Date. The minimum aggregate amount of Notes which may be offered to any purchaser will be $100,000. Interest on each interest-bearing Note will be calculated and paid in the manner described in such Note and in the Prospectus Supplement and the applicable Pricing Supplement. Unless otherwise set forth therein, interest on Fixed Rate Notes (including interest for partial periods) will be calculated on the basis of a 360-day year of twelve 30-day months and will not accrue on the 31st day of any month. Interest on Floating Rate Notes, except as otherwise set forth therein, will be calculated on the basis of actual days elapsed and a year of 360 days, except that in the case of a Floating Rate Note for which the Base Rate is the Treasury Rate, interest will be calculated on the basis of the actual number of days in the year. B-2 31 REDEMPTION/REPAYMENT If indicated in the applicable Pricing Supplement, the Notes of a particular tenor will be subject to redemption in whole or in part (subject to applicable minimum denominations), at the option of the Issuer on and after an initial redemption date as set forth in the applicable Pricing Supplement and in the applicable Note. The redemption price will be set forth in the applicable Pricing Supplement and in the applicable Note. If indicated in the applicable Pricing Supplement, the Notes of a particular tenor will be subject to repayment at the option of the holders therefore in accordance with the terms of the Notes on a repayment date as set forth in the applicable Pricing Supplement and in the applicable Note. The repayment date or dates and repayment price will be set forth in the applicable Pricing Supplement and in the applicable Note. PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES The Issuer and the Agents will discuss from time to time the rates to be borne by the Notes that may be sold as a result of the solicitation of offers by the Agents. Once any Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement to the Prospectus, as then amended or supplemented, reflecting the terms of such Notes and, after approval from the Agents, will arrange to have the Pricing Supplement filed via EDGAR with the Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933, as amended, no later than the fifth Business Day following the earlier of the date of determination of the settlement information described below or the date such Pricing Supplement is first used. The Issuer will supply at least 10 copies of the Prospectus, as then amended or supplemented, and bearing such Pricing Supplement, to the Agent who presented the offer (the "Presenting Agent"). No settlements with respect to Notes upon such terms may occur prior to such filing and the Agents will not, prior to such filing, mail confirmations to customers who have offered to purchase Notes upon such terms. After such filing, sales, mailing or confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of "Delivery of Prospectus" below. If the Issuer decides to post rates and a decision has been reached to change interest rates, the Issuer will promptly notify each Agent. Each Agent will forthwith suspend solicitation of purchases. At that time, the Agents will recommend and the Issuer will establish rates to be so "posted". Following establishment of posted rates and prior to the transmitting or filing described in the preceding paragraph, the Agents may only record indications of interest in purchasing Notes at the posted rates. Once any Agent has recorded any indication of interest in Notes at the posted rates and communicated with the Issuer, if the Issuer plans to accept an offer at the posted rate, it will prepare a Pricing Supplement reflecting such posted rates and, after approval from the Agents, will arrange to have the Pricing Supplement filed via EDGAR with the Commission and will supply at least 10 copies of the Prospectus, as then amended or supplemented, and bearing such Pricing Supplement, to the Presenting Agent at the address B-3 32 listed on Annex A attached hereto. No settlements at the posted rates may occur prior to such filing and the Agents will not, prior to such filing, mail confirmations to customers who have offered to purchase Notes at the posted rates. After such filing, sales, mailing of confirmations and settlements may resume, subject to the provisions of "Delivery of Prospectus" below. Outdated Pricing Supplements, and copies of the Prospectus to which they are attached (other than those retained for files), will be destroyed. SUSPENSION OF SOLICITATION; AMENDMENT OR SUPPLEMENT As provided in the Agency Agreement, the Issuer may instruct the Agents to suspend solicitation of offers to purchase at any time. As soon as reasonably practicable, but in no event later than one Business Day after notice from the Issuer, the Agents will each forthwith suspend solicitation until such time as the Issuer has advised them that solicitation of offers to purchase may be resumed. If the Agents receive the notice from the Issuer contemplated by Section 3(b) or 4(b) of the Agency Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer is required, pursuant to the second sentence of Section 4(b) of the Agency Agreement, to prepare an amendment or supplement, it will promptly furnish each Agent with the proposed amendment or supplement; if the Issuer decides to amend or supplement the Registration Statements or the Prospectus relating to the Notes, it will promptly advise each Agent and will furnish each Agent with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Issuer will file such amendment or supplement with the Commission, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuer's obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of offers to purchase there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations. The Issuer will in addition promptly advise the Agents and the Trustee if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. ACCEPTANCE OF OFFERS Each Agent will promptly advise the Issuer, at its option orally or in writing, of each reasonable offer to purchase Notes received by it, other than those rejected by such Agent. Each Agent may, in its discretion reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the sole right to accept offers to purchase Notes and may reject any such offer, in whole or in part. Prior to accepting any offer B-4 33 the Issuer will have the specific terms of the Notes approved by the Finance Committee of the Board of Directors. If the Issuer accepts or rejects an offer, in whole or in part, the Issuer will promptly notify the Presenting Agent. CONFIRMATION For each accepted offer, the Presenting Agent will issue a confirmation to the purchaser, with a separate confirmation to the Issuer's Treasury Department, setting forth the Purchase Information (as defined under "Details for Settlement" in Part II for Book-Entry Notes and in Part III for certificated Notes) and delivery and payment instructions; provided, however, that, in the case of the confirmation issued to the purchaser, no confirmation shall be delivered to the purchaser prior to the delivery of the Prospectus referred to below. DELIVERY OF PROSPECTUS A copy of the Prospectus as most recently amended or supplemented on the date of delivery thereof (except as provided below) must be delivered to a purchaser prior to or simultaneously with the earlier of delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser. (For this purpose, entry of a Same Day Funds Settlement System ("SDFS") delivery order through DTC's Participant Terminal System to credit a Book-Entry Note to the account of a Participant purchasing, or acting for the purchaser of a Book-Entry Note, shall be deemed to constitute delivery of such Book-Entry Note). Subject to the foregoing, it is anticipated that delivery of the Prospectus, confirmation and Notes to the purchaser will be made simultaneously at settlement. The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the first sentence of this paragraph. If, since the date of acceptance of a purchaser's offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. AUTHENTICITY OF SIGNATURES The Issuer will cause the Trustee to furnish the Agents from time to time with the specimen signatures of each of the Trustee's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but no Agent will have any obligation or liability to the Issuer or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Issuer or the Trustee on any Note or Master Global Note. B-5 34 ADVERTISING EXPENSES The Issuer will determine with the Agents the amount of advertising that may be appropriate in offering the Notes. Advertising expenses will be paid by the Issuer. BUSINESS DAY "Business Day" means any day which is not a Saturday or Sunday and is not a day on which banking institutions are generally authorized or obligated by law or executive order to close in The City of New York and, with respect to LIBOR notes, any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market. TRUSTEE NOT TO RISK FUNDS Nothing herein shall be deemed to require the Trustee to risk or expend its own funds in connection with any payment made to the Issuer, the Agents, DTC, or to the holder of any Note, it being understood by all parties that payments made by the Trustee to the Issuer, the Agents, DTC, or to the holder of any Note shall be made only to the extent that funds are provided to the Trustee for such purpose. PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations (the "Letter") from the Issuer and the Trustee to DTC dated as of ____________, 1995 and a Medium-Term Note Certificate Agreement (the "MTN Certificate Agreement") between the Trustee and DTC dated as of _____________ and its obligations as a participant in DTC, including DTC's SDFS. ISSUANCE All Book-Entry Notes will be represented initially by a single Master Global Note in fully registered form without coupons. The Master Global Note will be dated and issued as of the date of its authentication by the Trustee. The Master Global Note will not represent any Note in certificated form. IDENTIFICATION NUMBERS The Issuer has arranged with the CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers), such series consisting of approximately 900 CUSIP numbers and relating to Book-Entry Notes. The Issuer has obtained from the CUSIP Service Bureau a written list of such reserved CUSIP numbers and has delivered such list to the Trustee and DTC. The B-6 35 Trustee will assign CUSIP numbers serially to Book-Entry Notes as described below under Settlement Procedure "C". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Book-Entry Notes. The Trustee will notify the Issuer at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Book-Entry Notes; and the Issuer will reserve 900 additional CUSIP numbers for assignment to Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to the Trustee and DTC. REGISTRATION The Master Global Note will be registered in the name of Cede & Co., as nominee for DTC, on the Debt Security Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (the "Participants") to act as agent or agents for such owner with respect to such Book-Entry Note in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Book-Entry Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. So long as Cede & Co. is the registered owner of the Master Global Note, DTC will be considered the sole owner and holder of the Book-Entry Notes represented by the Master Global Note for all purposes under the Indenture. TRANSFERS Transfers of beneficial interest in a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. EXCHANGES The Trustee may upon notice to the Issuer deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation specifying (i) the CUSIP numbers of two or more outstanding Book-Entry Notes having the same interest rate, Stated Maturity and other terms, and for which interest (if any) has been paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date (if any) for such Notes, on which such Book-Entry Notes shall be exchanged for a single replacement Book-Entry Note, and (iii) a new CUSIP number to be assigned to such replacement Book-Entry Note. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new B-7 36 CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Book-Entry Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Book-Entry Notes for a single Book-Entry Note bearing the new CUSIP number and a new Original Issue Date, which shall be the most recent Interest Payment Date to which interest has been paid or duly provided for on the predecessor Book-Entry Notes, and the CUSIP numbers of the exchanged Book-Entry Notes will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. REDEMPTION The Trustee will comply with the terms of the Letter with regard to redemptions of the Book-Entry Notes. In the case of Book-Entry Notes stated by their terms to be redeemable prior to Stated Maturity, at least 60 calendar days before the date fixed for redemption (the "Redemption Date"), the Issuer shall notify the Trustee of the Issuer's election to redeem such Book-Entry Notes in whole or in part and the principal amount of such Book-Entry Notes to be so redeemed. At least 30 calendar days but not more than 60 days prior to the Redemption Date, the Trustee shall notify DTC of the Issuer's election to redeem such Book-Entry Notes. The Trustee shall notify the Issuer and DTC of the CUSIP numbers of the particular Book-Entry Notes to be redeemed either in whole or in part. The Issuer, the Trustee and DTC will confirm the amounts of such principal and any premium and interest payable with respect to each such Book-Entry Note on or about the fifth Business Day preceding the Redemption Date of such Book-Entry Note. The Issuer will pay the Trustee, in accordance with the terms of the Indenture, the amount necessary to redeem each such Book-Entry Note or the applicable portion of each such Book-Entry Note. The Trustee will pay such amount to DTC at the times and in the manner set forth herein. Promptly after payment to DTC of the amount due on the Redemption Date for such Book-Entry Note, the Trustee shall make the appropriate entry on its records to cancel any such Book-Entry Note redeemed in whole and shall deliver an appropriate debit advice to the Issuer. If a Book-Entry Note is to be redeemed in part, the Trustee will make the appropriate entry on its records to cancel the portion of such Book-Entry Note to be redeemed and the remaining portion of such Book-Entry Note shall bear the same CUSIP number. DENOMINATIONS Book-Entry Notes will be issued in principal amounts of $100,000 or any amount in excess thereof that is an integral multiple of $1,000. INTEREST Standard & Poor's Corporation will use the information received in the pending deposit message described under Settlement Procedure "C" to include the amount of any interest payable and certain other information regarding the related Book-Entry Note in the appropriate daily or weekly bond report published by Standard & Poor's Corporation. B-8 37 PAYMENTS OF PRINCIPAL AND INTEREST (a) Payments of Interest Only. Promptly after each Record Date, the Trustee will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Book-Entry Note on the following Interest Payment Date (other than an Interest Payment Date coinciding with Maturity) and the total of such amounts. DTC will confirm the amount payable on each Book-Entry Note on such Interest Payment Date by reference to the daily or weekly bond reports published by Standard & Poor's Corporation. The Issuer will pay to the Trustee the total amount of interest due on such Interest Payment Date (other than at Maturity), and the Trustee will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". (b) Payments at Maturity. On or about the first Business Day of each month, the Trustee will deliver to the Issuer and DTC a written list of principal, premium, if any, and interest to be paid on each Book-Entry Note maturing in the following month. The Issuer, the Trustee and DTC will confirm the amounts of such principal, premium, if any, and interest payments with respect to each such Book-Entry Note on or about the fifth Business Day preceding the Maturity of such Book-Entry Note. The Issuer will pay to the Trustee, as the paying agent, and the Trustee in turn will pay to DTC, the principal amount of and premium, if any, on such Book-Entry Note, together with interest due at such Maturity at the times and in the manner set forth below under "Manner of Payment". Promptly after payment to DTC of the principal and interest and premium due at the Maturity of such Book-Entry Note, the Trustee will make the appropriate entry on its records to cancel such Book-Entry Note and shall deliver an appropriate debit advice to the Issuer. (c) Manner of Payment. The total amount of any principal, premium, if any, and interest due on Book-Entry Notes on any Interest Payment Date or at Maturity shall be paid by the Issuer to the Trustee in funds available for use by the Trustee as of 9:30 a.m., New York City time, on such date. The Issuer will make such payment on such Book-Entry Notes by wire transfer to the Trustee. The Issuer will confirm instructions regarding payment in writing to the Trustee. Prior to 10:00 a.m., New York City time, on each maturity date or as soon as possible thereafter, following receipt of such funds from the Issuer, the Trustee will pay by wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal, premium, if any, and interest due on Book-Entry Notes on any maturity date. On each Interest Payment Date, interest payment shall be made to DTC in same day funds in accordance with existing arrangements between the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry Notes are recorded in the book-entry system maintained by DTC. NEITHER THE ISSUER NOR THE TRUSTEE SHALL HAVE ANY DIRECT RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BOOK-ENTRY NOTES. B-9 38 (d) Withholding Taxes. The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. SETTLEMENT The receipt by the Issuer of immediately available funds in payment for a Book-Entry Note and entry by the Presenting Agent of an SDFS deliver order through DTC's Participant Terminal System to credit such Note to the account of a Participant purchasing, or acting for the purchase of, such Note, shall constitute "settlement" with respect to such Note. All orders accepted by the Issuer will be settled from one to five Business Days from the date of the sale pursuant to the timetable for settlement set forth below unless the Issuer and the purchaser agree to settlement on a later date. DETAILS FOR SETTLEMENT For each offer accepted by the Issuer, the Presenting Agent will communicate to the Issuer's Treasury Department by telephone, electronic or facsimile transmission or other acceptable means, the following information (the "Purchase Information"): 1. Principal amount of each Note (in authorized denominations) to be purchased. 2. Issue price, interest rate if fixed or Initial Interest Rate and interest rate basis if floating, Spread or Spread Multiplier, maximum or minimum interest rates, interest calculation dates, Index Maturity, Interest Determination Date, Interest Reset Date, interest rate reset period, interest payment period, Record Dates and Interest Payment Dates (as such capitalized terms are defined in either the Indenture or the Prospectus Supplement), in each case, to the extent applicable. 3. Any index to determine the amounts of payments of principal and any premium and interest. 4. Maturity of each Note. 5. Redemption, repayment or sinking fund provisions, if any, of each Note. 6. If an Original Issue Discount Note, the Yield to Maturity and the initial accrual period of original issue discount. B-10 39 7. Issue Date of each Note. 8. Settlement date for each Note. 9. Presenting Agent's commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). The Issue Date of, and the settlement date for, Notes will be the same. SETTLEMENT PROCEDURES Settlement Procedures with regard to each Book-Entry Note sold by the Issuer through an Agent shall be as follows: A. The Presenting Agent will advise the Issuer by telephone of the Purchase Information with respect to each Book-Entry Note to be issued. B. The Issuer will advise the Trustee by electronic or facsimile transmission or by another mutually acceptable method of the information set forth in Settlement Procedure "A" above and the name of the Presenting Agent. C. The Trustee will assign a CUSIP number to such Book-Entry Note and advise the Issuer by telephone of such CUSIP number. The Trustee will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poor's Corporation and Interactive Data Corporation) and the Presenting Agent. 1. The applicable information set forth in Settlement Procedure "A". 2. Initial Interest Payment Date for such Book-Entry Note, number of days by which such date succeeds the Record Date and the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Book-Entry Notes. 3. CUSIP number of such Book-Entry Note. 4. Whether such CUSIP number will be assigned to any other Book-Entry Note (to the extent known at such time). 5. Interest payment periods. 6. Numbers of the participant accounts maintained by DTC on behalf of the Trustee and the Presenting Agent. B-11 40 D. DTC will credit such Book-Entry Note to the Trustee's participant account at DTC. E. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System, with respect to each Book-Entry Note to be issued, instructing DTC to (i) debit such Book-Entry Note to the Trustee's participant account and credit such Book-Entry Note to the Presenting Agent's participant account and (ii) debit the Presenting Agent's settlement account and credit the Trustee's settlement account for an amount equal to the price of such Book-Entry Note less such Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by the Trustee to DTC that (i) the Master Global Note has been delivered and authenticated and (ii) the Trustee is holding such Master Global Note pursuant to the MTN Certificate Agreement. F. The Presenting Agent will enter an SDFS deliver order through DTC's Participant Terminal System, with respect to each Book-Entry Note to be issued, instructing DTC (i) to debit such Book-Entry Note to the Presenting Agent's participant account and credit such Book-Entry Note to the participant accounts of the Participant with respect to such Book-Entry Note and (ii) to debit the settlement accounts of such Participant and credit the settlement account of the Presenting Agent for an amount equal to the price of such Book-Entry Note. G. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures "E" and "F" will be settled in accordance with SDFS operating procedures in effect on the settlement date. H. The Trustee, upon confirming receipt of such funds, will credit the amount transferred to the Trustee in accordance with Settlement Procedure "E", in funds available for immediate use, to a bank account of the Issuer at the Trustee. I. The Presenting Agent will confirm the purchase of each Book-Entry Note to the purchaser either by transmitting to the Participant with respect to such Book-Entry Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. SETTLEMENT PROCEDURES TIMETABLE For orders of Book-Entry Notes solicited by an Agent, and accepted by the Issuer for settlement on the first Business Day after the sale date, Settlement Procedures "A" through "I" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: B-12 41
Settlement Procedure Time --------- ---- A-B 11:00 a.m. on the sale date C 2:00 p.m. on the sale date D 10:00 a.m. on settlement date E-F 2:00 p.m. on settlement date G 4:45 p.m. on settlement date H-I 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but not later than the times specified above on the first Business Day after the sale date. In connection with a sale which is to be settled more than one Business Day after the sale date, if the initial interest rate for a Floating Rate Note is not known at the time that Settlement Procedure "A" is completed, Settlement Procedures "B" and "C" shall be completed as soon as such rates have been determined, but no later than 11:00 a.m. and 2:00 p.m., respectively, on the second Business Day before the settlement date. Settlement Procedures "G" and "H" are subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. If settlement of a Book-Entry Note is rescheduled or cancelled, the Issuer shall notify the Trustee, and upon receipt of such notice, the Trustee will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled settlement date. FAILURE TO SETTLE If the Trustee has not entered an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure "E", then upon written request (which may be evidenced by facsimile transmission) of the Issuer, the Trustee shall deliver to DTC, through DTC's Participation Terminal System, as soon as practicable, but no later than 2:00 p.m. on any Business Day, a withdrawal message instructing DTC to debit such Book-Entry Note to the Trustee's participant account. DTC will process the withdrawal message, provided that the Trustee's participant account contains a principal amount of such Book-Entry Notes that is at least equal to the principal amount to be debited. The Trustee will make appropriate entries in the Trustee's records and so advise the Issuer. If withdrawal messages are processed with respect to all the Book-Entry Notes identified by a single CUSIP number, the CUSIP number assigned to such Book-Entry Notes shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If the purchase price for any Book-Entry Note is not timely paid to the B-13 42 Participants with respect to such Book-Entry Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participant and, in turn the Presenting Agent for such Book-Entry Note may enter an SDFS deliver order through DTC's Participant Terminal System debiting such Book-Entry Note to such Agent's participant account and crediting such Book-Entry Note free to the participant account of the Trustee and shall notify the Trustee and the Issuer thereof. Thereafter, the Trustee, (i) will immediately notify the Issuer, once the Trustee has confirmed that such Book-Entry Note has been credited to its participant account, and the Issuer shall immediately transfer by Fedwire (in immediately available funds) to the Presenting Agent an amount equal to the price of such Book-Entry Note which was previously sent by wire transfer to the account of the Issuer maintained at the Trustee in accordance with Settlement Procedure "H", and (ii) the Trustee will deliver the withdrawal message and take the related actions described in the preceding paragraph. The Presenting Agent will not be entitled to any commission with respect to any Book-Entry Note which the purchaser does not accept and make payment for. Such debits and credits will be made on the settlement date, if possible, and in any event not later than 5:00 p.m. on the following Business Day. If such failure shall have occurred for any reason other than failure by the Presenting Agent to perform its obligations hereunder or under the Agency Agreement, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when the funds were credited to the account of the Issuer. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. PART III: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES INTEREST PAYMENTS On the fifth Business Day immediately preceding each Interest Payment Date, the Trustee will furnish the Issuer with the total amount of the interest payments to be paid on such Interest Payment Date. The Trustee will provide monthly to the Issuer's Treasury Department a list of the principal and interest to be paid on Notes maturing in the next succeeding month. The Trustee will assume responsibility for withholding taxes on interest paid as required by law to the extent holders have not produced a taxpayer identification number (TIN). PAYMENT AT MATURITY Upon presentation of each Note at Maturity, the Trustee (or a duly authorized Paying Agent) will pay the principal amount thereof, together with any premium and accrued interest due at maturity. Such payment will be made in immediately available funds, provided that the Note is presented in time for the Trustee (or any such Paying Agent) to make payment in such funds in accordance with its normal procedures. The Issuer will provide the Trustee (and any such Paying Agent) with funds available for immediate use for such purpose. Notes presented at Maturity will be cancelled by the Trustee as provided in the Indenture. B-14 43 DETERMINATION OF SETTLEMENT DATE The receipt of immediately available funds by the Issuer from the Presenting Agent in payment for a Note and the authentication and issuance of such Note shall, with respect to such Note, constitute "settlement". All offers accepted by the Issuer will be settled on the fifth Business Day next succeeding the date of receipt unless otherwise agreed by any purchaser, the Issuer and the Trustee. The settlement date shall be specified upon receipt of an offer. Prior to 3:00 p.m., New York City time, on the Business Day prior to the settlement date, the Issuer will instruct the Trustee to authenticate and deliver the Notes no later than 2:15 p.m., New York City time, on the settlement day. DETAILS FOR SETTLEMENT For each offer accepted by the Issuer, the Presenting Agent will communicate to the Issuer's Treasury Department by telephone, electronic or facsimile transmission or other acceptable means, the Purchase Information prior to 3:00 p.m., New York City time, on the Business Day prior to the applicable settlement date. For certificated Notes "Purchase Information" shall refer to the terms of the Notes described under "Details of Settlement" in Part II and the following additional information: 1. Exact name in which the Note or Notes are to be registered (the "registered owner"). 2. Exact address of the registered owner and, if different, the address for delivery, notices and payment of principal and premium and interest. 3. Taxpayer Identification Number (TIN) of the registered owner. 4. Delivery address for each Note. The Issue Date of, and the settlement date for, Notes will be the same. Before accepting any offer to purchase Notes to be settled in less than three Business Days, the Issuer will verify that the Trustee will have adequate time to prepare and authenticate the Notes. Immediately after receiving the details for each offer from the Presenting Agent (but in no event later than 3:00 p.m. on the Business Day prior to the settlement date for such Notes), the Issuer will, after recording the details and any necessary calculations, communicate the Purchase Information by electronic or facsimile transmission or other acceptable means, to the Trustee. The Trustee will assign to and enter on each Note a transaction number. B-15 44 SETTLEMENT; NOTE DELIVERIES AND CASH PAYMENT Upon the receipt of appropriate documentation and instructions from the Issuer the Trustee will cause the Notes to be completed and authenticated and hold the Notes for delivery against confirmation from the Issuer of receipt of payment. The Trustee will deliver the Notes in accordance with instructions from the Issuer, to the Presenting Agent, as the Issuer's agent, for the benefit of the purchaser against receipt therefor by stamping the delivery receipt with the date and time received and returned. If the Presenting Agent in any instance advances its own funds, the Issuer shall not use any of the proceeds of such sale to acquire securities. The Presenting Agent, as the Issuer's agent, will deliver the Notes (with the written confirmation provided for in Part I above) to the purchaser thereof against payment therefor by such purchaser. Delivery of any confirmation or Note will be made in compliance with "Delivery of Prospectus" in Part I. FAILS In the event that a purchaser shall fail to accept delivery of and make payment for a Note on the settlement date, the Presenting Agent will notify the Trustee and the Issuer by telephone, confirmed in writing. If such Note has been delivered to the Presenting Agent, as the Issuer's agent, the Presenting Agent shall return such Note to the Trustee. If funds have been advanced by the Presenting Agent for the purchase of such Note, the Issuer will, immediately upon receipt of confirmation from the Trustee of receipt of such Note, debit its account for the amount so advanced and shall refund the payment previously made by the Presenting Agent in immediately available funds. Such payments will be made on the settlement date for such Note, if possible, and in any event not later than the Business Day following such settlement date. If any failure described in this paragraph shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Issuer. Immediately upon receipt of the Note in respect of which the fail occurred, the Trustee will cause the Debt Security Registrar to make appropriate entries to reflect the fact that the Note was never issued and the Note will be cancelled and disposed of as provided in the Indenture. B-16 45 ANNEX A Agents' Addresses for Delivery of the Prospectus with the Pricing Supplement Name and Address of Agents B-17 46 EXHIBIT C PURCHASE AGREEMENT __________, 199_ Piedmont Natural Gas Company, Inc. 1915 Rexford Road Charlotte, North Carolina 28211 Attention: Ted C. Coble, Vice President and Treasurer The undersigned agrees to purchase the following principal amount of the Securities described in the Agency Agreement dated ____________, 1997 (the "Agency Agreement"): Principal Amount $ -------------------- Interest Rate % ---- Maturity Date -------------------- Discount % of Principal Amount ----- Price to be paid to Issuer (in immediately available funds) $ -------------------- Commission to Agent $ -------------------- Settlement Date , 199_ --------------------
Except as otherwise expressly provided herein, all terms used herein which are defined in the Agency Agreement shall have the same meanings as in the Agency Agreement. The terms Agent and Agents, as used in the Agency Agreement, shall be deemed to refer only to the undersigned for purposes of this Agreement. This Agreement incorporates by reference all of the provisions of the Agency Agreement, (including any amendment entered into pursuant thereto by the Issuer and the undersigned Agent, to the extent applicable), except provisions of the Agency Agreement relating specifically to solicitation by the Agents, as Agents, and except that (i) the last sentence of Section 7(d) shall not be applicable; and (ii) the term "this Agreement", as used in Section 7(d) of the Agency Agreement, shall be deemed to refer to this Agreement (and not the Agency Agreement) except that in the fifth sentence such term shall be deemed to refer to the Agency Agreement. [Insert other appropriate changes.] You and we agree to perform, to the extent C-1 47 applicable, our respective duties and obligations specifically provided to be performed by each of us in the Procedures. Our obligation to purchase Securities hereunder is subject to the accuracy on the above Settlement Date of your representations and warranties contained in Section 2 of the Agency Agreement (it being understood that such representations and warranties shall be deemed to be made as of the date of this Purchase Agreement and references to the Registration Statement and Prospectus shall be deemed to relate to the Registration Statement and the Prospectus as amended at such Settlement Date specified above) and to your performance and observance of all covenants and agreements contained in Sections 4 and 6 thereof. Our obligation hereunder is also subject to the following conditions: (a) the satisfaction, at such Settlement Date, of each of the conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5 of the Agency Agreement (it being understood that each document so required to be delivered shall be dated such Settlement Date and that each such condition and the statements contained in each such document that relate to the Registration Statement or the Prospectus shall be deemed to relate to the Registration Statement or the Prospectus, as the case may be, as amended or supplemented as of the date hereof and at the time of settlement on such Settlement Date and except that the opinion described in Section 5(d) shall be modified so as to state that the Securities being sold on such Settlement Date, when delivered against payment therefor as provided in the Indenture and this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject only to the exceptions as to enforcement set forth in clause (iii) of Section 5(d) of the Agency Agreement, and will conform to the description thereof contained in the Prospectus as amended or supplemented at such Settlement Date; and (b) there shall not have occurred between the date hereof and the above Settlement Date (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer or its subsidiaries which, in our judgment, materially impairs the investment quality of the Securities; (ii) any downgrading in the rating of the Securities of any other debt securities of the Issuer by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of the Securities or any other debt securities of the Issuer (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer on any exchange or in the over-the-counter market if, in our judgment, any such event or any condition giving rise thereto or existing concurrently therewith makes it impracticable or inadvisable to proceed with the solicitation of offers to purchase, or sales of, Securities on the terms and in the manner contemplated by the C-2 48 applicable Pricing Supplement and the Prospectus; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of hostilities, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in our judgment, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Securities on the terms and in the manner contemplated applicable Pricing Supplement and the Prospectus. In further consideration of our agreement hereunder, you agree that between the date hereof and the above Settlement Date, you will not offer or sell, or enter into any agreement to sell, any debt securities of the Issuer in the United States, other than sales of Securities, borrowings under your revolving credit agreements and lines of credit, the private placement of securities and issuances of your commercial paper. [Insert appropriate provisions as agreed to between the parties hereto regarding responsibility for expenses.] If for any reason our purchase of the above Securities is not consummated, the respective obligations of you and the undersigned pursuant to Section 7 shall remain in effect. C-3 49 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such executed counterparts shall together constitute one and the same Agreement. [INSERT NAME OF PURCHASER] By:___________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: PIEDMONT NATURAL GAS COMPANY, INC. By:_______________________________ Name: Title: C-4 EX-4.3 4 FORM OF DEBT SECURITY 1 EXHIBIT 4.3 2 Draft of 5/5/95 [FORM OF FACE OF DEBT SECURITY] [If the Security is to be a Book-Entry Debt Security, insert -- This Security is a Book-Entry Debt Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository. This Security is exchangeable for Securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances. Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] [IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND THE REGULATIONS THEREUNDER.] PIEDMONT NATURAL GAS COMPANY, INC. [Insert Designation of Securities and Series] No. $ ---------- ------------ CUSIP No. ------ PIEDMONT NATURAL GAS COMPANY, INC., a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to [If the Security is to be a Book-Entry Debt Security, insert -- Cede & Co., as nominee for The Depository Trust Company] [_______________________________________________________________________________ __], or registered assigns, the principal sum of ______________________________ ___________________ on _________________________________________________ [If the Security is to bear interest prior to maturity, insert -- , and to pay interest thereon from __________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on ________ and ________ in each year (each an "Interest Payment Date"), commencing ______, at the rate of __% per annum, until the principal hereof is paid or made available for payment [If applicable insert -- , and (to the extent that the payment of such interest shall be legally enforceable) at the rate of ___% per annum on any overdue principal and premium and on any overdue installment of interest]. [The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months.] The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the person in whose name this Security is registered at the close of business on the Record Date for such interest, which shall be the ________ or _________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the holder on such Record Date and may either be paid to the person in whose name this Security is registered at the close of business on a subsequent record date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to holders of Securities of this series not less than 15 days 3 prior to such subsequent record date, such subsequent record date to be not less than five days preceding the date of payment of such default interest or in any other lawful manner acceptable to the Trustee. Except as otherwise stated above with respect to default interest, the person in whose name this Security is registered at the close of business on the Record Date with respect to an Interest Payment Date shall be entitled to receive the interest payable on such date notwithstanding the cancellation of this Security upon any registration of transfer or exchange hereof subsequent to such Record Date and prior to such Interest Payment Date]. [If the Security is not to bear interest prior to Maturity, insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at stated maturity and in such case the overdue principal of this Security shall bear interest at the rate of ____% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of _____% per annum (to the extent that payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.] Payment of the principal of and premium, (if any) and [if applicable, insert -- any such] interest on this Security will be made at the corporate trust office of the Trustee in the Borough of Manhattan, The City of New York, or such other office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert -- ; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Debt Security Register]. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 2 4 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by manual or facsimile signature under its corporate seal. Dated: , 199 -------------- - PIEDMONT NATURAL GAS COMPANY, INC. [CORPORATE SEAL] By: ------------------------------ Name: Title: Attest: By: ----------------------------------- [Assistant] Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. CITIBANK, N.A., As Trustee By: ----------------------------- Authorized Signatory 3 5 [FORM OF REVERSE OF DEBT SECURITY] This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of April 1, 1993, between Piedmont Natural Gas Company, Inc., a New York corporation (the "Predecessor Company"), and Citibank, N.A., as trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), as supplemented by the First Supplemental Indenture, dated as of February 25, 1994, between the Company, the Predecessor Company and the Trustee (herein collectively called the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $_________]. [If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert - -- (1) on _________ in any year commencing with the year _________ and ending with the year _________ through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [on or after ______________], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before ________, ___%, and if redeemed] during the 12-month period beginning ___________________ of the years indicated, REDEMPTION REDEMPTION YEAR PRICE YEAR PRICE ---- ----- ---- ----- and thereafter at a Redemption Price equal to ___% of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments the payment dates for which are on or prior to such Redemption Date will be payable to the holders of such Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert -- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, (1) on _____________ in any year commencing with the year ________ and ending with the year _________ through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after ________], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ___________ of the years indicated, 4 6 Redemption Price Redemption Price For For Redemption Redemption Otherwise Through Operation Than Through Operation Year of the Sinking Fund of the Sinking Fund ---- ------------------- ------------------- and thereafter at a Redemption Price equal to ____% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments the payment dates for which are on or prior to such Redemption Date will be payable to the holders of such Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [Notwithstanding the foregoing, the Company may not, prior to ________, redeem any Securities of this series as contemplated by [Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than ____% per annum.] [The sinking fund for this series provides for the redemption on ________ in each year beginning with the year ________ and ending with the year _________ of [not less than] $__________ [("mandatory sinking fund") and not more than $________] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made [in the [inverse] order in which they become due].] [If the Security is subject to redemption, insert -- In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the holder hereof upon the cancellation hereof.] [If the Security is not subject to redemption, insert -- The Securities of this series are not redeemable in whole or in part at any time prior to maturity.] [If the Security is not an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] [If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment 5 7 of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.] The Indenture contains provisions for defeasance at any time of the entire indebtedness of Securities of this series upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the holders of 66 2/3% in principal amount of the Securities at the time outstanding of all series to be affected. The Indenture also contains provisions permitting the holders of a majority in principal amount of the Securities of each series at the time outstanding, on behalf of the holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the holder of this Security shall be conclusive and binding upon such holder and upon all future holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the holders of not less than 25% in principal amount of the outstanding Securities of this series shall have made written request, and offered reasonable indemnity to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the holders of a majority in principal amount of the outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the holder hereof for the enforcement of payment of the principal of and premium (if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium and interest, if any, on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Debt Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and premium and interest, if any, on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Debt Security Registrar duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $__________ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series of a different authorized denomination, as requested by the holder surrendering the same. [If the Security is subject to redemption, insert -- In the event of any redemption at the option of the Company, the Trustee shall not be required to (i) register the transfer of or exchange Securities of this series during a period of 15 days next preceding the mailing of the notice of any redemption, or (ii) register the transfer of or exchange any Security so selected for redemption, except, in the case of any redemption in part, the portion of any Security not to be redeemed.] No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 6 8 Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ___________________________________ 7 9 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - ______________________ Custodian ____________________ (Custodian) (Minor) Under Uniform Gifts to Minor Act (___________________________) (State)
Additional abbreviations may also be used though not in the above list. _______________________________ FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ________________________________________________________________________________ (Please insert Social Security or other identifying number of assignee) ________________________________________________________________________________ (Please print or typewrite name and address including postal zip code of assignee) ________________________________________________________________________________ ________________________________________________________________________________ the within Security and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________________________________________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises.
Dated:__________________ X__________________________________________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.
8 EX-4.4 5 FORM OF MASTER GLOBAL NOTE 1 EXHIBIT 4.4 FORM OF MASTER GLOBAL NOTE - -------------------------------- (Date of Issuance) This Master Note represents Book-Entry Debt Securities within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository. This Master Note is exchangeable for Debt Securities registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Master Note (other than a transfer of this Master Note as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances. Piedmont Natural Gas Company, Inc. (the "Issuer"), a corporation organized and existing under the laws of the State of North Carolina, for value received, hereby promises to pay to Cede & Co. or its registered assigns: (i) on each principal payment date, including each amortization date, redemption date, repayment date, maturity date, and extended maturity date, as applicable, of each obligation identified on the records of the Issuer (which records are maintained by Citibank, N.A. (the "Paying Agent")), the principal amount and premium, if any, then due and payable for each such obligation, and (ii) on each interest payment date, if any, the interest then due and payable on the principal amount for each such obligation. Payment shall be made by wire transfer of United States dollars to the registered owner, or in immediately available funds or the equivalent to a party as authorized by the registered owner and in the currency other than United States dollars as provided for in each such obligation, by the Paying Agent without the necessity or presentation and surrender of this Master Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF, WHICH ARE INCORPORATED HEREIN BY REFERENCE. Further information with respect to the obligations of the Issuer evidenced by this Master Note is contained in the prospectus, prospectus supplement(s), and pricing supplement(s) prepared by the Issuer and on file with the Securities and Exchange Commission. This Master Note is a valid and binding obligation of the Issuer. IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed under its corporate seal. [Seal] PIEDMONT NATURAL GAS COMPANY, INC. ATTEST: By: ---------------------------------- Name: Title: - -------------------------------------- Name: Title: This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture. CITIBANK, N.A., as Trustee By: ---------------------------------- Name: Title: 2 This Master Note evidences indebtedness of the Issuer of a single Series of Medium-Term Notes Series C (the "Debt Obligations"), all issued or to be issued under and pursuant to an Indenture dated as of April 1, 1993, amended (the "Indenture"), duly executed and delivered by Piedmont Natural Gas Company, Inc., a New York corporation and the corporate predecessor to the Issuer, to Citibank, N.A., as trustee (the "Trustee"), as to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, duties, and immunities thereunder of the Trustee and the rights thereunder of the holders of the Debt Obligations. As provided in the Indenture, the Debt Obligations may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase, or analogous funds, if any, may be subject to different covenants and events of default, and may otherwise vary as in the Indenture provided or permitted. The Debt Obligations aggregated with any other indebtedness of the Issuer of this Series are limited (except as provided in the Indenture) to the principal amount of $150,000,000 designated as the Medium-Term Notes Series C of the Issuer due 9 months or more from the date of issue. No reference herein to the Indenture and no provision of this Master Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of, premium, if any, and interest, if any, on each obligation at the times, places and rates, and in the coin or currency, identified on the records of the Issuer. At the request of the registered owner, the Issuer shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Master Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Master Note. =============================================================================== FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto -------------------------------------------------------------------------- (Name, Address, and Taxpayer Identification Number of Assignee) the Master Note and all rights thereunder, hereby irrevocably constituting and appointing ------------------------------------------------------------------- attorney to transfer said Master Note on the books of the Issuer with full power of substitution in the premises. Dated: ------------------------------------- (Signature) Signature(s) Guaranteed: NOTICE: The signature on this assignment must correspond with the name as written upon the face of this Master Note, in every particular, without alteration or enlargement or any change whatsoever. =============================================================================== Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its Agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. EX-5.1 6 OPINION OF AMOS & JEFFRIES, L.L.P. 1 EXHIBIT 5.1 AMOS & JEFFRIES, L.L.P. ATTORNEYS AND COUNSELLORS AT LAW TELEPHONE: (910) 273-5569 1230 RENAISSANCE PLAZA FACSIMILE: (910) 273-2435 230 NORTH ELM STREET POST OFFICE BOX 787 GREENSBORO, NORTH CAROLINA 27402
April 30, 1997 Piedmont Natural Gas Company, Inc. 1915 Rexford Road Charlotte, North Carolina 28211 Re: Registration Statement on Form S-3 filed on April 30, 1997, with respect to $95,000,000 Aggregate Principal Amount of Debt Securities Gentlemen: We have acted as counsel to Piedmont Natural Gas Company, Inc. (the "Corporation") in connection with the registration by the Corporation of $95,000,000 aggregate principal amount of additional unsecured notes, debentures and other evidences of indebtedness (the "Debt Securities") as set forth in the Registration Statement on Form S-3 (the "Registration Statement") which is being filed on the date hereof with the Securities and Exchange Commission ("SEC") by the Corporation pursuant to the Securities Act of 1933, as amended. The Debt Securities are to be issued in one or more series in amounts, at prices and on terms to be determined when an agreement to sell is made or at the time of sale, as the case may be, and are to be sold from time to time as set forth in the Registration Statement, the prospectus contained therein (the "Prospectus") and any amendments or supplements thereto. We are generally familiar with the corporate proceedings and actions undertaken by the Corporation in connection with the proposed offering of the Debt Securities, and we have examined such agreements and certificates of public officials and of officers of the Corporation and such instruments and documents as we have deemed necessary to form a basis for the opinion hereinafter expressed. Based on the foregoing, we are of the opinion that: when (1) the Registration Statement shall have been declared effective by order of the SEC, (2) the terms of any series of the Debt Securities have been authorized by appropriate corporate action of the Corporation, and (3) the 2 Piedmont Natural Gas Company, Inc. April 30, 1997 Page 2 Debt Securities have been issued and sold upon the terms and conditions set forth in the Registration Statement, the Prospectus and the applicable supplement to the Prospectus, the Debt Securities will be validly authorized, legally issued and binding obligations of the Corporation, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization, arrangement or similar laws, now or hereafter in effect, affecting the rights of creditors generally and general principles of equity and rules of law governing and limiting the availability of specific performance, injunctive relief and other equitable remedies (regardless of whether such enforceability is considered in a proceeding in equity or at law). We hereby consent to be named in the Registration Statement and in the Prospectus as the attorneys who passed upon the legality of the Debt Securities and to the filing of a copy of this opinion as Exhibit 5.1 to the Registration Statement. By giving the foregoing consent, we do not admit that we are within the category of persons required to give consents pursuant to Section 7 of the Securities Act of 1933, as amended. Very truly yours, Amos & Jeffries, L.L.P. /s/ Jerry W. Amos ----------------- Jerry W. Amos EX-23.2 7 INDEPENDENT AUDITOR'S CONSENT 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Piedmont Natural Gas Company, Inc., on Form S-3 of our report dated December 20, 1996, appearing in the Annual Report on Form 10-K of Piedmont Natural Gas Company, Inc., for the year ended October 31, 1996, and to the reference to us under the heading "Experts" in the Prospectus, which is part of the Registration Statement. DELOITTE & TOUCHE LLP Charlotte, North Carolina April 30, 1997 EX-24.1 8 POWERS OF ATTORNEY 1 EXHIBIT 24.1a PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 14th day of April, 1997. /s/ DONALD S. RUSSELL ------------------------------------ Director STATE OF SOUTH CAROLINA -------------- COUNTY OF RICHLAND -------- This is to certify that before me personally came DONALD S. RUSSELL known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 14th day of April, 1997. /s/ JACK W. CLOER ------------------------------------ Notary Public My commission expires: April 28, 2003 - ------------------------------------ 2 EXHIBIT 24.1b PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 10th day of April, 1997. /s/ JOHN F. MCNAIR III ------------------------------------ Director STATE OF NORTH CAROLINA -------------- COUNTY OF FORSYTH ------- This is to certify that before me personally came JOHN F. MCNAIR III known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 10th day of April, 1997. /s/ KAREN A. BASS ------------------------------------ Notary Public My commission expires: August 13, 2001 - ------------------------------------ 3 EXHIBIT 24.1c PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 11 day of April, 1997. /s/ MURIEL W. HELMS ------------------------------------ Director STATE OF NORTH CAROLINA -------------- COUNTY OF MECKLENBURG ----------- This is to certify that before me personally came MURIEL W. HELMS known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 11 day of April, 1997. /s/ PATRICIA COX VISER ------------------------------------ Notary Public My commission expires: September 1, 1998 - ------------------------------------ 4 EXHIBIT 24.1d PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 17th day of April, 1997. /s/ JOHN E. SIMKINS, JR. ------------------------------------ Director STATE OF MARYLAND -------- COUNTY OF BALTIMORE --------- This is to certify that before me personally came JOHN E. SIMKINS, JR. known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 17th day of April, 1997. /s/ DOUGLAS R. BROWN ------------------------------------ Notary Public My commission expires: December 1, 2000 - ------------------------------------ 5 EXHIBIT 24.1e PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 29th day of April, 1997. /s/ JERRY W. AMOS ------------------------------------ Director STATE OF NORTH CAROLINA -------------- COUNTY OF MECKLENBURG ----------- This is to certify that before me personally came JERRY W. AMOS known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 29th day of April, 1997. /s/ Debra L. Brucki ------------------------------------ Notary Public My commission expires: December 18, 2000 - ------------------------------------ 6 EXHIBIT 24.1f PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 11 day of April, 1997. /s/ SAM J. DIGIOVANNI ------------------------------------ Director STATE OF FLORIDA ------- COUNTY OF ORANGE ------ This is to certify that before me personally came SAM J. DIGIOVANNI known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 11th day of April, 1997. /s/ JUDITH T. FURMAN ------------------------------------ Notary Public My commission expires: May 21, 2000 - ------------------------------------ 7 EXHIBIT 24.1g PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 10th day of April, 1997. /s/ W.S. MONTGOMERY, JR. ------------------------------------ Director STATE OF SOUTH CAROLINA -------------- COUNTY OF SPARTANBURG ----------- This is to certify that before me personally came W.S. MONTGOMERY, JR. known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 10th day of April, 1997. /s/ PATRICIA J. TATE ------------------------------------ Notary Public My commission expires: March 31, 2002 - ------------------------------------ 8 EXHIBIT 24.1h PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 10th day of April, 1997. /s/ NED R. McWHERTER ------------------------------------ Director STATE OF TENNESSEE --------- COUNTY OF WEAKLEY ------- This is to certify that before me personally came NED R. McWHERTER known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 10 day of April, 1997. /s/ MADELYN PRITCHETT ------------------------------------ Notary Public My commission expires: March 19, 2001 - ------------------------------------ 9 EXHIBIT 24.1i PIEDMONT NATURAL GAS COMPANY, INC. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or executive officer of PIEDMONT NATURAL GAS COMPANY, INC., a corporation organized under the laws of the State of North Carolina, does hereby make, constitute and appoint David J. Dzuricky, their true and lawful attorney-in-fact, with full power of substitution, to (i) execute, deliver and file, on their behalf and in their name and in their capacity as set forth below, a Registration Statement on Form S-3 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, together with any and all exhibits thereto and any and all other documents in support thereof or supplemental thereto, with respect to the registration of and continuous offering of unsecured notes, debentures and other evidences of indebtedness of the Corporation under the Registration Statement on Form S-3, and any and all further amendments to such Registration Statement, and (ii) execute any and all applications, registration statements, notices and other documents necessary or advisable to comply with applicable state securities and blue sky laws and regulations, and to file the same together with all other exhibits and documents in connection therewith, with the appropriate state securities and blue sky authorities; and does hereby grant to said attorney-in-fact power and authority to do and perform each and every act and thing whatsoever as said attorney-in-fact may deem necessary or advisable to carry out fully the intent of this instrument, to the same extent and with the same effect as the undersigned might or could do personally, or in their capacity as set forth below; and the undersigned does hereby ratify and confirm all acts and things which said attorney-in-fact may do or cause to be done by virtue of this instrument. IN WITNESS WHEREOF, the undersigned has hereunto set their hand this 14th day of April, 1997. /s/ JOHN W. HARRIS ------------------------------------ Director STATE OF NORTH CAROLINA -------------- COUNTY OF MECKLENBURG ----------- This is to certify that before me personally came JOHN W. HARRIS known to me to be the individual described in and who executed the foregoing Power of Attorney, and the undersigned Notary Public duly acknowledged that this person executed this document, this 14th day of April, 1997. /s/ THERESA M. DICK ------------------------------------ Notary Public My commission expires: April 29, 2001 - ------------------------------------ EX-25.1 9 STATEMENT OF ELIGIBILITY ON FORM T-1 1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an application to determine eligibility of a Trustee pursuant to Section 305(b)(2) ____ ---------------------- CITIBANK, N.A. (Exact name of trustee as specified in its charter) 13-5266470 (I.R.S. employer identification no.) 399 Park Avenue, New York, New York 10043 (Address of principal executive office) (Zip Code) ---------------------- PIEDMONT NATURAL GAS COMPANY, INC. (Exact name of obligor as specified in its charter) North Carolina 56-0556998 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1915 Rexford Road Post Office Box 33068 Charlotte, NC 28233 (Address of principal executive offices) (Zip Code) ---------------------- Debt Securities (Title of the indenture securities) 2 Item 1. General Information Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject:
Name Address ---- ------- Comptroller of the Currency Washington, D.C. Federal Reserve Bank of New York New York, NY 33 Liberty Street New York, NY Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as exhibits hereto. Exhibit 1 - Copy of Articles of Association of the Trustee, as now in effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983) Exhibit 2 - Copy of certificate of authority of the Trustee to commence business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577). Exhibit 3 - Copy of authorization of the Trustee to exercise corporate trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519) Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 to Registration Statement No. 33-34988) Exhibit 5 - Not applicable. 3 Exhibit 6 - The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration Statement No. 33-19227.) Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A. (as of December 31, 1996 - attached) Exhibit 8 - Not applicable. Exhibit 9 - Not applicable. ------------------- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Citibank, N.A., a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York and State of New York, on the ____ day of ______________, 1997. CITIBANK, N.A. By /s/ Carol Ng ------------------------- Carol Ng Vice President 4 Citibank, N.A. of New York in the State of New York, at the close of business on December 31, 1996, published in response to call made by Comptroller of the Currency, under Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of the Currency Northeastern District.
ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ........................................................ $ 7,362,000 Interest-bearing balances ..................................................................................... 12,822,000 Held-to-maturity securities ................................................................................... 0 Available-for-sale securities ................................................................................. 23,558,000 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold ........................................................................................ 2,939,000 Securities purchased under agreements to resell ........................................................... 677,000 Loans and lease financing receivables: Loans and Leases, net of unearned income ........................................... $154,979,000 LESS: Allowance for loan and lease losses .......................................... 4,382,000 ------------ Loans and leases, net of unearned income, allowance, and reserve .............................................. 150,597,000 Trading assets ................................................................................................ 27,259,000 Premises and fixed assets (including capitalized leases) ...................................................... 3,606,000 Other real estate owned ....................................................................................... 824,000 Investments in unconsolidated subsidiaries and associated companies ........................................... 1,253,000 Customers' liability to this bank on acceptances outstanding .................................................. 2,077,000 Intangible assets ............................................................................................. 106,000 Other assets .................................................................................................. 7,926,000 ------------ TOTAL ASSETS .................................................................................................. $241,006,000 ============ LIABILITIES Deposits: In domestic offices ....................................................................................... $ 37,389,000 Noninterest-bearing ................................................................ $ 14,046,000 Interest-bearing ................................................................... 23,343,000 ------------ In foreign offices, Edge and Agreement subsidiaries, and IBFs ................................................. 134,287,000 Noninterest-bearing ................................................................ 9,660,000 Interest-bearing ................................................................... 124,627,000 ------------ Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased ................................................................................... 3,907,000 Securities sold under agreements to repurchase ............................................................ 363,000 Trading liabilities ........................................................................................... 20,795,000 Other borrowed money: With a remaining maturity of one year or less ............................................................. 8,955,000 With a remaining maturity of more than one year ........................................................... 4,471,000 Mortgage indebtedness and obligations under capitalized leases ................................................ 136,000 Bank's liability on acceptances executed and outstanding ...................................................... 2,104,000 Subordinated notes and debentures ............................................................................. 4,700,000 Other liabilities ............................................................................................. 7,665,000 ------------ TOTAL LIABILITIES ............................................................................................. $224,772,000 ============ EQUITY CAPITAL Perpetual preferred stock and related surplus ................................................................ 0 Common stock ................................................................................................. $ 751,000 Surplus ...................................................................................................... 7,120,000 Undivided profits and capital reserves ....................................................................... 8,277,000 Net unrealized holding gains (losses) on available-for-sale securities ....................................... 673,000 Cumulative foreign currency translation adjustments .......................................................... (587,000) ------------ TOTAL EQUITY CAPITAL ......................................................................................... $ 16,234,000 ------------ TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND EQUITY CAPITAL .......................................... $241,006,000 ============
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. ROGER W. TRUPIN CONTROLLER We, the undersigned directors, attest to the correctness of this Report of Condition. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. PAUL J. COLLINS JOHN S. REED WILLIAM R. RHODES DIRECTORS -----END PRIVACY-ENHANCED MESSAGE-----