0000017797-95-000032.txt : 19950811 0000017797-95-000032.hdr.sgml : 19950811 ACCESSION NUMBER: 0000017797-95-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03382 FILM NUMBER: 95560400 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1995 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 1-3382 CAROLINA POWER & LIGHT COMPANY ______________________________ (Exact name of registrant as specified in its charter) North Carolina 56-0165465 ____________________________________________________________________________ (State or other jurisdiction of incorporation (I.R.S. Employer Identifica- or organization tion No.) 411 Fayetteville Street, Raleigh, North Carolina 27601-1748 ___________________________________________________________ (Address of principal executive offices) (Zip Code) 919-546-6111 ____________ (Registrant's telephone number, including area code) ____________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock (Without Par Value) shares outstanding at July 31,1995: 155,431,022 PART I. FINANCIAL INFORMATION Item 1. Financial Statements _______ ____________________ Reference is made to the attached Appendix containing the Consolidated Interim Financial Statements for the periods ended June 30, 1995. The amounts are unaudited but, in the opinion of management, reflect all transactions necessary to fairly present the Company's financial position and results of operations for the interim periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations _______ ___________________________________________________________ Results of Operations For the Three, Six and Twelve Months Ended June 30, 1995, As Compared With the Corresponding Periods One Year Earlier ___________________________________________________________ Operating Revenues: For the three, six and twelve months ended June 30, 1995, operating revenues increased (decreased) due to the following factors (in millions): Three Months Six Months Twelve Months ____________ __________ _____________ Customer Growth/Changes In Usage Patterns $24 $54 $107 Weather (8) (24) (116) Price (21) (49) (79) Sales to North Carolina Eastern Municipal Power Agency (9) (21) (38) Sales to Other Utilities 9 18 36 ___ ___ ___ Total $ (5) $ (22) $ (90) === === === The decrease in the weather component of revenue for the twelve months ended June 30, 1995 is the result of mild weather in the current periods as compared to more extreme weather in the prior periods. The decrease in the price component of revenue for all periods is due primarily to the expiration of a North Carolina rate rider. This reduction in revenue did not significantly impact net income due to a corresponding decrease in amortization expense. In addition, for the twelve-month period, approximately $20 million of the price component decrease is attributable to a decrease in the fuel cost component of revenue. Sales to North Carolina Eastern Municipal Power Agency (Power Agency) decreased for all periods due to the greater availability of the jointly-owned generating units. Sales to other utilities increased for the six-month and twelve-month periods due to the greater availability of the Company's generating units. For the three-month and six-month periods, the Company has become more active in the bulk power market, contributing to the increase in sales to other utilities for these periods. Operating Expenses: Despite an increase in total generation, fuel for generation decreased for the six months and twelve months ended June 30, 1995, due to greater availability of the Company's nuclear generating units. During these periods, lower-cost nuclear generation, as a percentage of total generation, increased and higher-cost fossil generation correspondingly decreased. For the three months ended June 30, 1995, fuel for generation increased due to an increase in total generation. For the six and twelve months ended June 30, 1995, deferred fuel cost increased primarily due to lower fuel costs associated with increased nuclear generation. For the twelve-month period, the increase due to lower fuel costs more than offset a decrease of $33 million related to fuel settlements reached with the Company's regulators. Pursuant to these settlements, the Company agreed to forgo recovery of deferred fuel costs totaling approximately $8 million and $41 million for the twelve-month periods ended June 30, 1995, and June 30, 1994, respectively. Purchased power decreased for the six and twelve months ended June 30, 1995, due to decreased purchases from other utilities, resulting from greater availability of the Company's generating facilities in the current periods, and due to lower purchases from Power Agency in accordance with the Harris Plant buyback agreement. The decrease in maintenance expense for the twelve months ended June 30, 1995, is due to a decrease in expense associated with outages at the Company's nuclear generating facilities. For all periods, the decreases in depreciation and amortization are primarily due to the completion of the amortization of abandoned plant costs for Harris Unit No. 2 and of costs associated with the North Carolina rate rider. The increase in income tax expense for all periods is primarily due to a reduction of expense in the prior periods related to certain Internal Revenue Service (IRS) audit issues. Additionally, for the twelve-month period, an increase in income contributed to the increase in income tax expense. Other Income (Expense): The decrease in Harris Plant carrying costs for the twelve months ended June 30, 1995, is primarily related to the Company's settlement with North Carolina Electric Membership Corporation in 1993. The decrease in interest income for all periods is due to the June 1994 recording of interest income related to certain IRS audit issues. Additionally, for the twelve months ended June 30, 1995, interest income decreased due to a settlement recorded in 1993, which increased interest income in the prior period. Other income, net, decreased for the twelve months ended June 30, 1995, due to a decrease in accretion to present value associated with the Company's abandonment costs and due to various other items, none of which is individually significant. The increase in the income tax credit for the twelve months ended June 30, 1995 is primarily attributable to lower income in the current period. Material Changes in Capital Resources and Liquidity From December 31, 1994, to June 30, 1995 and From June 30, 1994, to June 30, 1995 ___________________________________________________ During the six and twelve months ended June 30, 1995, the Company issued long-term debt of $185 million and $235 million, respectively. The proceeds of these issuances, along with the issuance of short-term debt and internally generated funds, financed the redemption or retirement of long-term debt totaling $227.1 million during both the six and twelve months ended June 30, 1995. In order to provide flexibility in the timing and amounts of long-term financing, the Company uses short-term financing in the form of commercial paper backed by revolving credit agreements. These revolving credit agreements currently amount to $285 million. The Company had $82.7 million of commercial paper outstanding at June 30, 1995. The Company's capital structure at June 30, 1995, was 47.98% common stock equity, 49.37% long-term debt and 2.65% preferred stock. At June 30, 1994, the Company's capital structure was 49.9% common stock equity, 47.4% long-term debt and 2.7% preferred stock. The Company's First Mortgage Bonds are currently rated "A2" by Moody's Investors Service, "A" by Standard & Poors and "A+" by Duff & Phelps. Moody's Investors Service, Standard & Poors and Duff & Phelps have rated the Company's commercial paper "P-1", "A-1" and "D-1" respectively. In 1994, the Board of Directors of the Company authorized the Executive Committee of the Board to repurchase up to 10 million shares of the Company's common stock on the open market. Under this stock repurchase program, the Company has purchased approximately 4.6 million shares from July 1994 through June 1995. The decrease in average common shares outstanding resulted in an increase in earnings per common share of approximately $.01, $.03 and $.05 for the three, six and twelve months ended June 30, 1995, respectively. Other Matters _____________ In 1994, the Company established a wholly-owned subsidiary, CaroNet, Inc., which owns a ten percent interest in BellSouth Carolinas PCS, L.P., a limited partnership led by BellSouth Personal Communications, Inc. (BellSouth). In March 1995, BellSouth won its bid for a Federal Communications Commission license to operate a personal communications services (PCS) system covering most of North Carolina and South Carolina and a small portion of Georgia. PCS, a wireless communications technology, is expected to provide high-quality mobile communications. BellSouth will transfer the PCS license to the limited partnership. BellSouth is the general partner and handles day-to-day management of the business. In April 1995, the Company invested $50 million in CaroNet, Inc. in anticipation of infrastructure construction. Construction of the system infrastructure began in the spring of 1995 and service start-up is expected to begin in mid-1996. PART II. OTHER INFORMATION Item 1. Legal Proceedings _______ _________________ Legal aspects of certain matters are set forth in Item 5 below. Item 2. Changes in Securities ) _______ _____________________ ) ) Item 3. Defaults upon Senior Securities ) Not _______ _______________________________ ) applicable for ) the quarter ended ) June 30, 1995. ) ) Item 4. Submission of Matters to a Vote of Security Holders _______ _________________________________ (a) The Annual Meeting of the Shareholders was held on May 10, 1995. (b) The meeting involved the election of directors. Proxies for the meeting were solicited pursuant to Regulation 14, there was no solicitation in opposition to the management's nominees as listed below, and all such nominees were elected. (c) The Board of Directors' proposal to amend the Company's Restated Charter and By-Laws to establish a variable range for the size of the Company's Board of Directors was approved by the shareholders. The number of shares voted for the amendment was 123,301,566, the number of shares voted against the amendment was 13,424,654 and the number of shares that abstained from voting was 3,132,155. The Board of Directors' proposal to amend the Company's By-Laws to provide for Classification of the Board of Directors was approved by the shareholders. The number of shares voted for the amendment was 96,591,670, the number of shares voted against the amendment was 20,511,125, the number of shares that abstained from voting was 2,068,442, and the number of shares represented by broker non-votes was 20,687,138. The total votes for the election of directors were as follows: Votes For Votes Withheld _________ ______________ Class I (Term Expiring in 1996) _______________________ Leslie M. Baker, Jr. 136,916,998 2,941,377 George H. V. Cecil 136,903,383 2,954,922 Sherwood H. Smith, Jr. 136,974,655 2,883,720 J. Tylee Wilson 136,980,130 2,878,245 Class II (Term Expiring in 1997) _______________________ Edwin B. Borden 137,080,180 2,778,195 Richard L. Daugherty 136,954,985 2,903,390 J. R. Bryan Jackson 137,108,169 2,750,206 Robert L. Jones 137,034,539 2,823,836 Class III (Term Expiring in 1998) _______________________ Felton J. Capel 136,941,665 2,916,710 William Cavanaugh III 136,921,201 2,937,174 Charles W. Coker 137,064,173 2,794,202 Estell C. Lee 137,085,472 2,772,903 (d) Not applicable. Item 5. Other Information _______ _________________ 1. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8, paragraph 1b.) With regard to the petition filed with the North Carolina Utilities Commission (NCUC) by the Carolina Utility Customers Association, Inc. requesting that the NCUC hold a generic hearing to address various retail wheeling issues (Docket No. E-100, Sub 77), on July 21, 1995, the NCUC issued an order indicating that it will not convene a formal hearing to investigate these issues at this time. The NCUC's order noted that North Carolina's territorial assignment statute appears to prohibit retail wheeling, and the issue represents a number of jurisdictional uncertainties. The NCUC concluded that for the time being, it should monitor developments in other states and at the Federal Energy Regulatory Commission (FERC) regarding jurisdictional and other issues affecting retail wheeling. Instead of convening a hearing, the NCUC requested that interested parties suggest, by mid September 1995, specific issues for further consideration in this docket. The NCUC also indicated that it is considering holding informal proceedings to gather more information on competition issues in the future. The Company cannot predict the outcome of this matter. 2. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8, paragraph 1c.) On June 8, 1995, and July 5, 1995, the Company filed with the NCUC and the South Carolina Public Service Commission (SCPSC) respectively, an Economic Development Rider which will permit the Company to provide a discount on the first five years of electric service it provides to businesses that locate to or expand within the Company's service territory if they meet certain criteria, including threshholds for the size of new load, the amount of investment and the number of new jobs provided by the businesses. The Economic Development Rider was approved by the NCUC on July 10, 1995, and by the SCPSC on July 21, 1995. 3. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8, paragraph 1d.) In March 1995, the Company submitted bids in response to each of North Carolina Electric Membership Corporation's (NCEMC) two requests for proposals to provide (for a minimum of ten years) up to 225 MW per year of base load power to NCEMC beginning in 2001, an additional block of up to 225 MW per year beginning in 2002, and a third block of up to 225 MW per year beginning in 2003. On June 30, 1995, the Company was notified by NCEMC that one of Company's bids had been selected for further negotiations. The Company is negotiating with NCEMC and is developing new bids, which will include a hybrid of the Company's two original bids. The Company cannot predict the outcome of this matter. 4. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8. Reference is also made to the Company's Form 10-Q for the quarter ended March 31, 1995, Item 5, paragraph 2.) On July 29, 1995, the North Carolina General Assembly (General Assembly) passed a bill directing the Joint Legislative Utility Review Committee (Utility Review Committee) to study whether or not the extension of interstate natural gas pipelines into North Carolina can and should be encouraged by amending the North Carolina Public Utilities Act (Public Utilities Act) to exempt from regulation as public utilities facilities that sell electric power and thermal energy generated with natural gas from these pipelines. The bill also directs the Utility Review Committee to study whether the Public Utilities Act should be amended to encourage the construction of new interstate pipelines in North Carolina. The bill orders the Utility Review Committee to report its findings and any recommendations regarding these matters to the General Assembly in 1996. The Company cannot predict the outcome of this matter. 5. (Reference is made to the Company's 1994 Form 10-K, Competition and Franchises, page 8. Reference is also made to the Company's Form 10-Q for the quarter ended March 31, 1995, Item 5, paragraph 3.) With regard to the bill introduced in the General Assembly concerning public power agencies in the state, a substantially amended version of the bill, which authorizes internal reorganizational changes among the state's municipal power agencies, and orders the Utility Review Committee to study other issues contained in the bill as originally introduced, was passed by the General Assembly effective July 11, 1995. The Company cannot predict the outcome of this matter. 6. (Reference is made to the Company's 1994 Form 10-K, Financing Program, page 11, paragraph 4. Reference is also made to the Company's Form 10-Q for the quarter ended March 31, 1995, Item 5, paragraph 5.) Retirements since March 31, 1995 consist of the following: -- The retirement on April 1, 1995, of $77.1 million principal amount of First Mortgage Bonds, 9.14% Series, which matured on that date. -- The retirement on June 8, 1995, of $25 million principal amount of First Mortgage Bonds, 8.92% Secured Medium-Term Notes, Series A, which matured on that date. -- The retirement on July 20, 1995, of $25 million principal amount of First Mortgage Bonds, 8.86% Secured Medium-Term Notes, Series A, which matured on that date. 7. (Reference is made to the Company's 1994 Form 10-K, Retail Rate Matters, page 12, paragraph 3.) The Company filed its 1995 Integrated Resource Plan (IRP) with the NCUC on April 28, 1995, and with the SCPSC on June 30, 1995. The NCUC has scheduled a hearing regarding the Company's 1995 IRP to begin on October 10, 1995. The Company cannot predict the outcome of these matters. 8. (Reference is made to the Company's 1994 Form 10-K, Retail Rate Matters, page 12, paragraph 5.) With regard to the Company's annual North Carolina fuel case proceeding, on June 2, 1995, the Company filed an application with the NCUC to reduce the fuel expense portion of the Company's rates by approximately 15% to reflect improved nuclear performance and to refund, over a twelve-month period beginning in September 1995, approximately $50 million in fuel revenues, which exceeded actual costs for the test period, and interest. The Company's North Carolina fuel case hearing was held on August 1, 1995, but the NCUC has not yet rendered a decision. The Company cannot predict the outcome of this matter. In the South Carolina retail jurisdiction, the Company's fall 1995 South Carolina fuel case is scheduled to begin on September 13, 1995. The Company cannot predict the outcome of this matter. 9. (Reference is made to the Company's 1994 Form 10-K, Retail Rate Matters, page 12, paragraph 6.) With regard to the NCUC's biennial avoided cost proceeding (Docket No. E-100, Sub 75), on June 23, 1995, the NCUC approved, with one minor exception, the Company's proposed lower avoided cost rates. The Company anticipates that the revised lower rates will result in savings to the Company, as it enters into new purchase agreements with qualifying facilities. 10. (Reference is made to the Company's 1994 Form 10-K, Retail Rate Matters, page 12, paragraph 7.) With regard to the NCUC proceeding to consider whether the adoption of certain standards would further the purposes of the Public Utility Regulatory Policies Act, on May 16, 1995, the NCUC issued an order stating that it has already adopted the standards related to the use of integrated resource planning by electric utilities and investments in conservation and demand-side management. The order also states that the NCUC has implemented the standards related to energy efficiency investments in power generation and supply to the extent permitted by state law. 11. (Reference is made to the Company's 1994 Form 10-K, Wholesale Rate Matters, page 14.) By letter dated May 31, 1995, the Company requested that the FERC (Docket No. 95- 1139) establish a return on equity (ROE) in connection with the formula rates provided in the Power Coordination Agreement (PCA) dated August 27, 1993 between the Company and NCEMC. The requested ROE is consistent with the rate of return on common equity approved by the NCUC in the Company's 1988 rate case. The Company cannot predict the outcome of this matter. 12. (Reference is made to the Company's 1994 Form 10-K, Wholesale Rate Matters, page 14.) On May 31, 1995, the Company filed a petition with the FERC (Docket No. EL95- 50) seeking to recover certain fuel costs from the Company's wholesale customers. These costs are related to the Company's $6.8 million buyout of its contractual agreement with The Arch Coal Sales Company (Arch Coal). As a result of this buyout, the Company will purchase less coal from Arch Coal in the future and will pay a lower purchase price for that coal. The Company is seeking recovery of these costs from the NCUC and the SCPSC. The Company cannot predict the outcome of this matter. 13. (Reference is made to the Company's 1994 Form 10-K, Wholesale Rate Matters, page 14.) On July 7, 1995, Smithfield Foods, Inc., doing business as Carolina Foods Processors, Inc. (Carolina Foods), filed a Complaint with the FERC (Docket No. EL95-60) alleging that certain charges imposed upon NCEMC under the PCA between the Company and NCEMC are unreasonable. These charges are related to generation installed by Carolina Foods, which receives electric service from Four County EMC (a customer of NCEMC). The Company filed its response to the Complaint on August 10, 1995. The Company cannot predict the outcome of this matter. 14. (Reference is made to the Company's 1994 Form 10-K, Environmental Matters, page 15, paragraph 3.a.) With regard to the settlement negotiations involving the Maxey Flats Nuclear Disposal Site in Fleming County, Kentucky, on June 5, 1995, a De Maximus Consent Decree (Consent Decree) was filed on behalf of the Maxey Flats Steering Committee, which includes the Company, and eleven federal agencies in the United States District Court for the Eastern District of Kentucky (Civil Action No. 95-58). The Consent Decree provides for the performance of the Initial Remediation Phase and the Balance of Remediation Phase, and for the reimbursement of certain response costs incurred by the EPA. The Department of Justice will receive comments relating to the proposed Consent Decree until August 18, 1995. Although the Company cannot predict the outcome of this matter, it does not anticipate that costs associated with this site will be material to the results of operations of the Company. 15. (Reference is made to the Company's 1994 Form 10-K, Environmental Matters, page 15, paragraph 3.c.) With regard to the remedial activities performed at the Elliot's Auto Parts site in Benton, Arkansas, on July 12, 1995, the Company was informed that the EPA had approved the final report regarding the site on October 13, 1994. Now that the final report has been approved, the settlement agreement between the Company and the Elliot's Auto Parts Potentially Responsible Party Committee will be implemented. Although the Company cannot predict the outcome of this matter, it does not anticipate that future costs associated with this site, if any, would be material to the results of operations of the Company. 16. (Reference is made to the Company's 1994 Form 10-K, Nuclear Matters, page 19, paragraph 3.) With regard to the disposal of low-level radioactive waste, effective July 1, 1995, South Carolina withdrew from the Southeast regional compact and excluded North Carolina waste generators from the existing disposal site in South Carolina. As a result, the State of North Carolina does not have access to a low-level radioactive waste disposal facility. The North Carolina Low- Level Radioactive Waste Management Authority, which is responsible for siting and operating a new low-level radioactive waste disposal facility for the Southeast regional compact, has submitted a license application for the site it selected in Wake County, North Carolina to the North Carolina Division of Radiation Protection. The Company's nuclear plants in North Carolina are currently storing low-level waste on site and are developing additional storage capacity to accommodate future needs. The Company's nuclear plant in South Carolina has access to the existing disposal site in South Carolina. Although the Company cannot predict the outcome of this matter, it does not expect the cost of providing additional on- site storage capacity for low-level radioactive waste to be material to the results of operations of the Company. 17. (Reference is made to the Company's 1994 Form 10-K, Other Matters, page 27, paragraph 2. Reference is also made to the Company's Form 10-Q for the quarter ended March 31, 1995, Item 5, paragraph 6.) With regard to the independent safety inspection report for the Marshall Hydroelectric Project, by letter dated June 15, 1995, the FERC requested that the Company perform further analyses and submit its findings to the FERC by no later than August 14, 1995. The Company cannot predict the outcome of this matter. 18. (Reference is made to the Company's 1994 Form 10-K, Other Matters, page 27, paragraph 4.) With regard to the tax refund dispute (Civil Action No. 5:94-CV-313-BR3) in which the Company is seeking a refund of certain tax and interest related to the Harris Plant depreciation deductions that were previously disallowed by the Internal Revenue Service, it is anticipated that a trial in this matter will begin in late 1995 or early 1996. Item 6. Exhibits and Reports on Form 8-K _______ ________________________________ (a) Exhibits 3(i) Restated Charter of Carolina Power & Light Company as amended on May 10, 1995. 3(ii) By-Laws of Carolina Power & Light Company as amended on May 10, 1995. (b) Reports on Form 8-K filed during or with respect to the quarter: Date of Report (Earliest Event Reported) Date of Signature Items Reported _________________________ _________________ ______________ April 13, 1995 April 13, 1995 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits April 20, 1995 April 20, 1995 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits SIGNATURES Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAROLINA POWER & LIGHT COMPANY (Registrant) By /s/ Glenn E. Harder Executive Vice President By /s/ Paul S. Bradshaw Vice President and Controller (and Principal Accounting Officer) Date: August 10, 1995 EX-99 2 INCOME STATEMENT
Carolina Power & Light Company (ORGANIZED UNDER THE LAWS OF NORTH CAROLINA) CONSOLIDATED INTERIM FINANCIAL STATEMENTS (NOT AUDITED BY INDEPENDENT AUDITORS) JUNE 30, 1995 STATEMENTS OF INCOME Three Months Ended Six Months Ended Twelve Months Ended (In thousands June 30 June 30 June 30 except per share amounts) 1995 1994 1995 1994 1995 1994 -------------------------------------------------------------------------------------------------------------------------------- Operating Revenues $ 681,965 $ 687,310 $ 1,410,203 $ 1,431,771 $ 2,855,021 $ 2,945,077 -------------------------------------------------------------------------------------------------------------------------------- Operating Expenses Operation - fuel for generation 127,322 121,505 238,118 251,417 458,668 526,954 deferred fuel cost (credit), net (6,675) (5,964) 15,800 (8,215) 62,185 22,324 purchased power 105,137 105,814 198,796 217,355 395,741 425,372 other 139,106 139,266 266,184 270,070 536,073 528,021 Maintenance 57,353 63,777 98,108 110,736 194,105 217,628 Depreciation and amortization 90,896 109,145 181,171 214,202 364,703 420,716 Taxes other than on income 35,280 36,831 74,200 72,267 140,473 147,765 Income tax expense 32,942 23,812 94,358 81,310 211,583 183,243 Harris Plant deferred costs, net 7,178 6,694 13,783 13,172 26,940 30,457 -------------------------------------------------------------------------------------------------------------------------------- Total Operating Expenses 588,539 600,880 1,180,518 1,222,314 2,390,471 2,502,480 -------------------------------------------------------------------------------------------------------------------------------- Operating Income 93,426 86,430 229,685 209,457 464,550 442,597 -------------------------------------------------------------------------------------------------------------------------------- Other Income (Expense) Allowance for equity funds used during construction 984 1,838 1,897 4,101 3,870 9,190 Income tax credit (expense) 3,207 (1,094) 6,497 2,489 13,432 2,965 Harris Plant carrying costs 2,128 2,482 4,347 5,045 9,055 27,063 Harris Plant disallowance - Power Agency - - - - - (20,645) Interest income 2,781 10,108 5,369 11,402 8,536 34,939 Other income, net 4,250 7,525 8,271 14,015 19,846 35,587 -------------------------------------------------------------------------------------------------------------------------------- Total Other Income 13,350 20,859 26,381 37,052 54,739 89,099 -------------------------------------------------------------------------------------------------------------------------------- Income Before Interest Charges 106,776 107,289 256,066 246,509 519,289 531,696 -------------------------------------------------------------------------------------------------------------------------------- Interest Charges Long-term debt 47,248 46,589 93,841 93,965 183,767 192,428 Other interest charges 5,011 3,486 11,039 7,737 19,420 15,376 Allowance for borrowed funds used during construction (1,445) (1,001) (2,809) (2,232) (4,021) (5,661) -------------------------------------------------------------------------------------------------------------------------------- Net Interest Charges 50,814 49,074 102,071 99,470 199,166 202,143 -------------------------------------------------------------------------------------------------------------------------------- Net Income 55,962 58,215 153,995 147,039 320,123 329,553 Preferred Stock Dividend Requirements (2,402) (2,402) (4,804) (4,804) (9,609) (9,609) -------------------------------------------------------------------------------------------------------------------------------- Earnings for Common Stock $ 53,560 $ 55,813 $ 149,191 $ 142,235 $ 310,514 $ 319,944 ================================================================================================================================ Average Common Shares Outstanding (Note 3) 147,183 151,057 147,226 150,939 147,772 155,878 Earnings per Common Share (Note 3) $ 0.36 $ 0.37 $ 1.01 $ 0.94 $ 2.10 $ 2.05 Dividends Declared per Common Share $ 0.440 $ 0.425 $ 0.880 $ 0.850 $ 1.745 $ 1.685 ................................................................................................................................ See Supplemental Data and Notes to Financial Statements.
EX-99 3 BALANCE SHEET
Carolina Power & Light Company BALANCE SHEETS June 30 December 31 (In thousands) 1995 1994 1994 ------------------------------------------------------------------------------------------------------ ASSETS Electric Utility Plant Electric utility plant in service $ 9,295,945 $ 8,960,319 $ 9,190,874 Accumulated depreciation (3,337,249) (3,054,933) (3,196,139) ------------------------------------------------------------------------------------------------------ Electric utility plant in service, net 5,958,696 5,905,386 5,994,735 Held for future use 13,303 13,222 13,195 Construction work in progress 188,610 244,124 170,390 Nuclear fuel, net of amortization 181,774 199,281 171,164 ------------------------------------------------------------------------------------------------------ Total Electric Utility Plant, Net 6,342,383 6,362,013 6,349,484 ------------------------------------------------------------------------------------------------------ Current Assets Cash and cash equivalents 16,600 19,254 80,239 Accounts receivable 308,941 332,829 302,218 Fuel 97,264 81,735 96,136 Materials and supplies 126,191 118,891 122,720 Prepayments 64,935 44,589 52,988 Other current assets 29,607 15,160 24,129 ------------------------------------------------------------------------------------------------------ Total Current Assets 643,538 612,458 678,430 ------------------------------------------------------------------------------------------------------ Deferred Debits and Other Assets Income taxes recoverable through future rates 385,960 381,856 384,375 Abandonment costs 63,880 85,278 71,079 Harris Plant deferred costs 118,388 136,272 127,824 Unamortized debt expense 60,875 65,726 63,302 Miscellaneous other property and investments 428,556 314,163 360,611 Other assets and deferred debits 175,136 190,801 176,058 ------------------------------------------------------------------------------------------------------ Total Deferred Debits and Other Assets 1,232,795 1,174,096 1,183,249 ------------------------------------------------------------------------------------------------------ Total Assets $ 8,218,716 $ 8,148,567 $ 8,211,163 ====================================================================================================== CAPITALIZATION AND LIABILITIES Capitalization Common stock equity $ 2,607,920 $ 2,659,859 $ 2,586,179 Preferred stock - redemption not required 143,801 143,801 143,801 Long-term debt, net 2,683,514 2,527,025 2,530,773 ------------------------------------------------------------------------------------------------------ Total Capitalization 5,435,235 5,330,685 5,260,753 ------------------------------------------------------------------------------------------------------ Current Liabilities Current portion of long-term debt 78,000 227,050 275,050 Notes payable (principally commercial paper) 82,700 72,600 68,100 Accounts payable 187,318 181,116 285,610 Taxes accrued 87,142 77,681 4,650 Interest accrued 50,265 55,070 54,569 Dividends declared 69,925 70,095 70,658 Deferred fuel credit (cost) 44,144 (18,042) 28,344 Other current liabilities 62,508 75,888 67,161 ------------------------------------------------------------------------------------------------------ Total Current Liabilities 662,002 741,458 854,142 ------------------------------------------------------------------------------------------------------ Deferred Credits and Other Liabilities Accumulated deferred income taxes 1,630,742 1,580,845 1,628,430 Accumulated deferred investment tax credits 246,945 257,819 252,051 Other liabilities and deferred credits 243,792 237,760 215,787 ------------------------------------------------------------------------------------------------------ Total Deferred Credits and Other Liabilities 2,121,479 2,076,424 2,096,268 ------------------------------------------------------------------------------------------------------ Commitments and Contingencies (Note 4) Total Capitalization and Liabilities $ 8,218,716 $ 8,148,567 $ 8,211,163 ====================================================================================================== SCHEDULES OF COMMON STOCK EQUITY (In thousands) Common stock (Note 3) $ 1,505,093 $ 1,624,696 $ 1,510,956 Unearned ESOP common stock (197,010) (211,285) (204,947) Capital stock issuance expense (790) (790) (790) Retained earnings 1,300,627 1,247,238 1,280,960 ------------------------------------------------------------------------------------------------------ Total Common Stock Equity $ 2,607,920 $ 2,659,859 $ 2,586,179 ====================================================================================================== ...................................................................................................... See Supplemental Data and Notes to Financial Statements.
EX-99 4 STATEMENT OF CASH FLOWS
Carolina Power & Light Company STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 ----------------------------------------------------------------------------------------------------------------------------------- Operating Activities Net income $ 55,962 $ 58,215 $ 153,995 $ 147,039 $ 320,123 $ 329,553 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 107,687 124,160 222,748 243,627 452,602 474,534 Harris Plant deferred costs 5,050 4,212 9,436 8,127 17,885 3,394 Harris Plant disallowance - Power Agency - - - - - 20,645 Deferred income taxes 4,068 9,628 (7,512) 807 28,922 58,181 Investment tax credit adjustments (2,553) (2,884) (5,106) (5,768) (10,877) (12,788) Allowance for equity funds used during construction (984) (1,838) (1,897) (4,101) (3,870) (9,190) Deferred fuel cost (credit) (6,675) (5,964) 15,800 (8,215) 62,185 22,324 Net increase in receivables, inventories and prepaid expenses (35,573) (46,231) (78,965) (69,314) (83,542) (7,625) Net increase (decrease) in payables and accrued expenses 9,573 (33,956) (6,803) (26,799) (26,775) (53,269) Miscellaneous 15,248 (4,177) 27,228 15,444 6,852 (12,212) ----------------------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 151,803 101,165 328,924 300,847 763,505 813,547 ----------------------------------------------------------------------------------------------------------------------------------- Investing Activities Gross property additions (66,804) (55,628) (138,732) (127,941) (285,567) (325,596) Nuclear fuel additions (19,442) (1,212) (35,310) (12,428) (48,732) (34,486) Contributions to external decommissioning trust (8,052) (7,387) (26,616) (13,715) (34,526) (27,287) Contributions to retiree benefit trusts - - (2,400) (18,917) (2,400) (21,417) Loan transactions with SPSP Trustee, net - - - - - 16,009 Allowance for equity funds used during construction 984 1,838 1,897 4,101 3,870 9,190 Miscellaneous (16,035) - (16,522) - (22,617) - ----------------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (109,349) (62,389) (217,683) (168,900) (389,972) (383,587) ----------------------------------------------------------------------------------------------------------------------------------- Financing Activities Proceeds from issuance of long-term debt 120,939 120,339 180,670 268,325 230,556 555,104 Net increase (decrease) in short-term notes payable (maturity less than 90 days) (12,800) 65,900 14,600 (3,400) 10,100 41,700 Retirement of long-term debt (102,050) (172,616) (227,095) (268,239) (227,236) (771,555) Purchase of Company common stock (Note 3) (3,815) - (7,993) - (122,710) - Dividends paid on common stock (65,583) (64,186) (130,239) (128,172) (257,274) (259,117) Dividends paid on preferred stock (2,403) (2,403) (4,823) (4,814) (9,623) (9,484) ----------------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Financing Activities (65,712) (52,966) (174,880) (136,300) (376,187) (443,352) ----------------------------------------------------------------------------------------------------------------------------------- Net Decrease in Cash and Cash Equivalents (23,258) (14,190) (63,639) (4,353) (2,654) (13,392) Cash and Cash Equivalents at Beginning of the Period 39,858 33,444 80,239 23,607 19,254 32,646 ----------------------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of the Period $ 16,600 $ 19,254 $ 16,600 $ 19,254 $ 16,600 $ 19,254 =================================================================================================================================== Supplemental Disclosures of Cash Flow Information Cash paid during the period - interest $ 48,761 $ 43,383 $ 103,455 $ 95,630 $ 196,578 $ 203,789 income taxes $ 39,000 $ 50,675 $ 40,611 $ 52,725 $ 168,645 $ 135,996 ................................................................................................................................... See Supplemental Data and Notes to Financial Statements.
EX-99 5 SUPPLEMENTAL DATA
Carolina Power & Light Company SUPPLEMENTAL DATA Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 --------------------------------------------------------------------------------------------------------------------------- Operating Revenues (in thousands) Residential $ 193,263 $ 190,017 $ 444,618 $ 452,390 $ 908,214 $ 956,060 Commercial 149,714 149,520 290,856 293,317 593,112 603,469 Industrial 187,742 192,686 352,158 359,546 734,274 744,591 Government and municipal 18,723 19,582 37,565 39,098 76,784 79,354 Wholesale - standard rate schedules 20,125 25,137 40,525 48,991 76,309 101,146 Power Agency contract requirements 22,590 31,818 46,408 67,765 93,905 131,759 NCEMC 58,657 56,328 142,364 133,672 275,425 267,247 Other utilities 20,128 11,571 33,669 15,641 51,817 22,350 Miscellaneous revenue 11,023 10,651 22,040 21,351 45,181 39,101 --------------------------------------------------------------------------------------------------------------------------- Total Operating Revenues $ 681,965 $ 687,310 $ 1,410,203 $ 1,431,771 $ 2,855,021 $ 2,945,077 =========================================================================================================================== Energy Sales (millions of kWh) Residential 2,419 2,303 5,682 5,646 11,184 11,549 Commercial 2,247 2,167 4,338 4,218 8,811 8,703 Industrial 3,733 3,676 7,000 6,793 14,237 13,919 Government and municipal 299 304 600 610 1,252 1,260 Wholesale - standard rate schedules 473 574 935 1,052 1,866 2,132 Power Agency contract requirements 489 804 965 1,451 2,103 3,099 NCEMC 1,100 1,053 2,484 2,275 5,093 4,944 Other utilities 902 216 1,476 334 2,126 507 --------------------------------------------------------------------------------------------------------------------------- Total Energy Sales 11,662 11,097 23,480 22,379 46,672 46,113 =========================================================================================================================== Energy Supply (millions of kWh) Generated - coal 5,877 5,753 10,440 11,849 19,591 25,330 nuclear 4,044 3,668 9,891 7,051 21,352 13,995 hydro 155 232 453 537 800 734 combustion turbines 1 28 - 66 1 119 Purchased 2,034 1,859 3,544 3,816 6,767 7,879 --------------------------------------------------------------------------------------------------------------------------- Total Energy Supply (Company Share) 12,111 11,540 24,328 23,319 48,511 48,057 =========================================================================================================================== Detail of Income Taxes (in thousands) Included in Operating Expenses Income tax expense - current $ 33,016 $ 18,837 $ 110,171 $ 89,080 $ 203,736 $ 144,618 Income tax expense - deferred 2,479 7,859 (10,708) (2,002) 18,721 50,219 Income tax expense - investment tax credit adjustments (2,553) (2,884) (5,105) (5,768) (10,874) (11,594) --------------------------------------------------------------------------------------------------------------------------- Subtotal 32,942 23,812 94,358 81,310 211,583 183,243 --------------------------------------------------------------------------------------------------------------------------- Harris Plant deferred costs - investment tax credit adjustments (74) (74) (149) (149) (297) 158 --------------------------------------------------------------------------------------------------------------------------- Total Included in Operating Expenses 32,868 23,738 94,209 81,161 211,286 183,401 --------------------------------------------------------------------------------------------------------------------------- Included in Other Income Income tax expense (credit) - current (4,796) (675) (9,693) (5,298) (23,633) (9,733) Income tax expense - deferred 1,589 1,769 3,196 2,809 10,201 7,962 Income tax expense - investment tax credit adjustments - - - - - (1,194) --------------------------------------------------------------------------------------------------------------------------- Total Included in Other Income (3,207) 1,094 (6,497) (2,489) (13,432) (2,965) --------------------------------------------------------------------------------------------------------------------------- Total Income Tax Expense $ 29,661 $ 24,832 $ 87,712 $ 78,672 $ 197,854 $ 180,436 =========================================================================================================================== FINANCIAL STATISTICS Ratio of earnings to fixed charges 3.35 3.26 Return on average common stock equity 11.93 % 12.22 % Book value per common share $ 17.72 $ 17.60 Capitalization ratios Common stock equity 47.98 % 49.90 % Preferred stock - redemption not required 2.65 2.70 Long-term debt, net 49.37 47.40 --------------------------------------------------------------------------------------------------------------------------- Total 100.00 % 100.00 % =========================================================================================================================== ........................................................................................................................... See Notes to Financial Statements.
EX-99 6 NOTES TO FINANCIAL STATEMENTS Carolina Power & Light Company NOTES TO FINANCIAL STATEMENTS 1. These interim financial statements are prepared in conformity with the accounting principles reflected in the financial statements included in the Company's 1994 Annual Report to Shareholders and the 1994 Annual Report on Form 10-K. These are interim financial statements, and because of temperature variations between seasons of the year and the timing of outages of electric generating units, especially nuclear-fueled units, the amounts reported in the Statements of Income for periods of less than twelve months are not necessarily indicative of amounts expected for the year. Certain amounts for 1994 have been reclassified to conform to the 1995 presentation. 2. In 1994, the Company established a wholly-owned subsidiary, CaroNet, Inc., which owns a ten percent interest in BellSouth Carolinas PCS, a limited partnership, led by BellSouth Personal Communications, Inc. (BellSouth). In March 1995, BellSouth won its bid for a Federal Communications Commission license for the limited partnership to operate a personal communications services (PCS) system covering most of North Carolina and South Carolina, as well as a small portion of Georgia. PCS, a wireless communications technology, is expected to provide high-quality mobile communications. BellSouth will transfer the PCS license to the limited partnership. BellSouth is the general partner and handles day-to-day management of the business. In April 1995, the Company invested $50 million in CaroNet, Inc. in anticipation of infrastructure construction. Construction of the system infrastructure began in the spring of 1995 and service start-up is expected by mid-1996. 3. In 1994, the Board of Directors of the Company authorized the Executive Committee of the Board to repurchase up to 10 million shares of the Company's common stock on the open market. In accordance with the stock repurchase program, the Company has purchased approximately 4.6 million shares through June 30,1995. The decrease in average common shares outstanding resulted in an increase in earnings per common share of approximately $.01, $.03 and $.05 for the three, six and twelve month periods ended June 30, 1995, respectively. 4. Contingencies existing as of the date of these statements are described below. No significant changes have occurred since December 31, 1994, with respect to the commitments discussed in Note 10 of the financial statements included in the Company's 1994 Annual Report to Shareholders. a) In the Company's retail jurisdictions, provisions for nuclear decommissioning costs are approved by the North Carolina Utilities Commission and the South Carolina Public Service Commission and are based on site-specific estimates that included the costs for removal of all radioactive and other structures at the site. In the wholesale jurisdiction, the provisions for nuclear decommissioning costs are based on amounts agreed upon in applicable rate settlements. Based on the site-specific estimates discussed below, and using an assumed after-tax earnings rate of 8.5% and an assumed cost escalation rate of 4%, current levels of rate recovery for nuclear decommissioning costs are adequate to provide for decommissioning of the Company's nuclear facilities. The Company's most recent site-specific estimates of decommissioningcosts were developed in 1993, using 1993 cost factors, and are based on prompt dismantlement decommissioning, which reflects the cost of removal of all radioactive and other structures currently at the site, with such removal occurring shortly after operating license expiration. These estimates, in 1993 dollars, are $257.7 million for Robinson Unit No. 2, $235.4 million for Brunswick Unit No. 1, $221.4 million for Brunswick Unit No. 2 and $284.3 million for the Harris Plant. These estimates are subject to change based on a variety of factors including, but not limited to, cost escalation, changes in technology applicable to nuclear decommissioning, and changes in federal, state orlocal regulations. The cost estimates exclude the portion attributable to North Carolina Eastern Municipal Power Agency, which holds an undivided ownership interest in certain of the Company's generating facilities. Operating licenses for the Company's nuclear units expire in the year 2010 for Robinson Unit No. 2, 2016 for Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2 and 2026 for the Harris Plant. The Financial Accounting Standards Board has added a project to its agenda regarding the electric industry's current accounting practices related to decommissioning costs. Any changes to these practices could affect such items as: 1) when the decommissioning obligation is recognized, 2) where balances of accumulated decommissioning costs are recorded, 3) where income earned on external decommissioning trust balances is recorded, and 4) the levels of annual decommissioning cost provisions. It is uncertain what impact, if any, this project may have on the Company's accounting for decommissioning costs. b) As required under the Nuclear Waste Policy Act of 1982, the Company entered into a contract with the U. S. Department of Energy (DOE) under which the DOE agreed to dispose of the Company's spent nuclear fuel. The Company cannot predict whether the DOE will be able to perform its contractual obligations and provide interim storage or permanent disposal repositories for spent nuclear fuel and/or high-level radioactive waste materials on a timely basis. With certain modifications, the Company's spent fuel storage facilities are sufficient to provide storage space for spent fuel generated on the Company's system through the expiration of the current operating licenses for all of the Company's nuclear generating units. Subsequent to the expiration of the licenses, dry storage may be necessary. c) The Company is subject to federal, state and local regulations addressing air and water quality, hazardous and solid waste management and other environmental matters. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under various federal and state laws, and a liability may exist for their remediation. There are several manufactured gas plant (MGP) sites to which the Company and certain entities that were later merged into the Company may have had some connection. In this regard, the Company, along with other entities alleged to be former owners and operators of MGP sites in North Carolina, is participating in a cooperative effort with the North Carolina Department of Environment, Health and Natural Resources, Division of Solid Waste Management (DSWM) to establish a uniform framework for addressing those sites. It is anticipated that the investigation and remediation of specific MGP sites will be addressed pursuant to one or more Administrative Orders on Consent between DSWM and individual potentially responsible parties. To date, the Company has not entered into any such orders. The Company has been approached by another North Carolina public utility concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, remediation of four MGP sites. The Company is currently engaged in discussions with the other utility regarding this matter. In addition, a current owner of property that was the site of one MGP owned by Tide Water Power Company (Tide Water Power), which merged into the Company in 1952, and the Company have entered into an agreement to share the cost of the investigation and, if necessary, the remediation of this site. The Company has also been approached by a North Carolina municipality that is the current owner of another MGP site that was formerly owned by Tide Water Power. The Company is engaged in discussions with that municipality concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, the remediation of that site. The Company is continuing its investigation regarding the identities of parties connected to several additional MGP sites, the relative relationships of the Company and other parties to those sites and the degree, if any, to which the Company should undertake shared voluntary efforts with others at individual sites. The Company has been notified by regulators of its involvement or potential involvement in several sites, other than MGP sites, that require remedial action. Although the Company cannot predict the outcome of these matters, it does not anticipate significant costs associated with these sites. The Company has accrued a liability for the estimated costs associated with investigation and remediation activities for certain MGP sites and for sites other than MGP sites. This accrual was not material to the results of operations of the Company. Due to the lack of information with respect to the operation of MGP sites for which a liability has not been accrued and due to the uncertainty concerning questions of liability and potential environmental harm, the extent and cost of required remedial action, if any, are not currently determinable. The Company cannot predict the outcome of these matters or the extent to which other MGP sites may become the subject of inquiry. EX-27 7 FINANCIAL DATA SCHEDULE
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 1995) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000017797 CAROLINA POWER & LIGHT COMPANY 6-MOS DEC-31-1995 JUN-30-1995 PER-BOOK $6,342,383 $428,556 $643,538 $629,103 $175,136 $8,218,716 $1,308,083 ($790) $1,300,627 $2,607,920 $0 $143,801 $2,683,514 $0 $0 $82,700 $78,000 $0 $0 $0 $2,622,781 $8,218,716 $1,410,203 $94,358 $1,086,160 $1,180,518 $229,685 $26,381 $256,066 $102,071 $153,995 $4,804 $149,191 $129,524 $93,841 $328,924 $1.01 $1.01
EX-3.I 8 AMENDED ARTICLES OF INCORPORATION EXHIBIT 3(i) RESTATED CHARTER OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation, pursuant to action by its shareholders, hereby executes this Restated Charter for the purpose of integrating into one document its Articles of Incorporation, entitled Agreement of Merger of Tidewater Power Company with and into Carolina Power & Light Company and all amendments thereto: FIRST: The name of the corporation is Carolina Power & Light Company ("Company"). SECOND: The location of the principal office of the Company in the State of North Carolina shall be at Raleigh. THIRD: The object or objects for which the Company is to exist are the following, to wit: The object or objects of the Company and in aid thereof and in addition thereto the following object or objects the enumeration of which shall not limit or restrict or be held to limit or restrict in any manner the object or objects of the Company, namely: To acquire, buy, hold, own, sell, lease, exchange, dispose of, finance, deal in, construct, build, equip, improve, use, operate, maintain and work upon: (a) Any and all kinds of plants and systems for the manufacture, storage, utilization, supply, transmission, distribution, or disposition of electricity, gas, water or steam, or power produced thereby, or of ice and refrigeration, of any and every kind, or telegraphs or telephones, or for the transmission of information, or any thereof; (b) Any and all kinds of street railways (except railroads) and bus lines for the transportation of passengers and/or freight, transmission lines, systems, appliances, equipment and devices and tracks, stations, buildings and other structures and facilities; (c) Any and all kinds of works, power plants, substations, systems, tracts, machinery, generators, motors, lamps, poles, pipes, wires, cables, conduits, apparatus, devices, supplies and articles of every kind pertaining to or in anywise connected with the construction, operation or maintenance of street railways (except railroads) and bus lines or in anywise connected with the manufacture, purchase, use, transmission, distribution, regulation, control or application of electricity, gas, light, heat, refrigeration, ice, water, power, telephones and telegraphs, or any other purposes; To acquire, buy, hold, own, sell, lease, exchange, dispose of, distribute, deal in, use, produce, furnish and supply electricity, gas, light, heat, refrigeration, ice, water and power and any other power or force in any form and for any purpose whatsoever; To carry on the business of general brokers and dealers in stocks, bonds, securities, mortgages and other choses in action, including the acquisition thereof by original subscription; to make investments in such property and to hold, manage, mortgage, pledge, sell, and dispose of the same in like manner as individuals may do; To carry on in States and jurisdictions when and where permissible by the laws of such States and jurisdictions, the business of constructing and operating or aiding in the construction and operation of street railways, telegraph and telephone companies, gas and electric companies. To acquire, organize, assemble, develop, build up and operate, constructing and operating and other organizations and systems and to hire, sell, lease, exchange, turn over, deliver and dispose of such organizations and systems in whole or in part, and as going organizations and systems and otherwise, and to enter into and perform contracts, agreements and undertakings of any kind in connection with any or all of the foregoing purposes; To do a general contracting business; To purchase, acquire, hold, own, develop and dispose of lands, interests in and rights with respect to lands and waters and fixed and movable property, franchises, concessions, consents, privileges and licenses in its opinion useful or desirable for or in connection with the foregoing purposes; To underwrite, acquire by purchase, subscription or otherwise, and to own, hold for investment or otherwise, and to use, sell, assign, transfer, mortgage, pledge, exchange or otherwise dispose of real and personal property of every sort and description and wheresoever situated, including shares of stock, bonds, debentures, notes, scrip, warrants, securities, evidences of indebtedness, contracts or obligations of any corporation or corporations, association or associations, domestic or foreign, or of any firm or individual of the United States or any state, territory or dependency of the United States or any foreign country, or any municipality or local authority within or without the United States, and also to issue in exchange therefor stocks, bonds or other securities or evidences of indebtedness of the Company, and while the owner or holder of any such property, to receive, collect and dispose of the interest, dividends and income on or from such property and to possess and exercise in respect thereto all of the rights, powers and privileges of ownership, including all voting powers thereon; To aid in any manner any corporation or association, domestic or foreign, or any firm or individual, any shares of stock in which or any bonds, debentures, notes, securities, evidences of indebtedness, contracts, or obligations of which are held by or for the Company, directly or indirectly, or in which, or in the welfare of which, the Company shall have any interest, and to do any acts designed to protect, preserve, improve or enhance the value of any property at any time held or controlled by the Company or in which it may be at any time interested, directly or indirectly or through other corporations or otherwise; and to organize or promote or facilitate the organization of subsidiary companies. IN FURTHERANCE AND NOT IN LIMITATION of the general powers conferred by the laws of the State of North Carolina and of the objects and purposes hereinbefore stated, it is hereby expressly provided that the Company shall also have the following powers, that is to say: To do any or all things set forth to the same extent and as fully as natural persons might or could do, and in any part of the world, and as principal, agent, contractor or otherwise, and either alone or in conjunction with any other persons, firms, associations or corporations; To borrow money, to issue bonds, promissory notes, bills of exchange, debentures and other obligations and evidences of indebtedness, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed or in payment for property purchased or acquired or for any other lawful object; to mortgage or pledge all or any part of its properties, rights, interests and franchises, including any or all shares of stock, bonds, debentures, notes, scrip, warrants or other obligation or evidences of indebtedness at any time owned by it; To guarantee the payment of dividends upon any capital stock and to endorse or otherwise guarantee the principal or interest, or both, of any bonds, debentures, notes, scrip or other obligations or evidences of indebtedness, or the performance of any contract or obligation, of any other corporation or association, domestic or foreign, or of any firm or individual in which the Company may have a lawful interest, in so far and to the extent that such guaranty may be permitted by law; To purchase or otherwise acquire its own shares of stock (so far as may be permitted by law), and its bonds, debentures, notes, scrip, warrants or other securities or evidences of indebtedness, and to cancel or to hold, sell, transfer or reissue the same; To do all and everything necessary or convenient for the accomplishment of the objects herein enumerated, and in general to carry on any lawful business, incidental, necessary or convenient to any of said objects but nothing herein contained is to be construed as authorizing the Company to carry on the business of railroads other than street railways, of banking or insurance or of building and loan associations. Nothing herein shall be deemed to limit or exclude any power, right or privilege given to the Company by law or construed to give the Company any rights, powers or privileges not permitted by the laws of the State of North Carolina to corporations organized under the statutes of the State of North Carolina for the general purposes for which the Company is organized. The foregoing clauses shall be construed as objects, purposes and powers and it is hereby expressly provided that the foregoing specific enumeration shall not be held to limit or restrict in any manner the powers of the Company. FOURTH: The total number of the authorized shares of the Company is 135,300,000 shares divided into 300,000 shares of $5 Preferred Stock (hereinafter called "$5 Preferred Stock"), 20,000,000 shares of Serial Preferred Stock (hereinafter called "Serial Preferred Stock"), 5,000,000 shares of Preferred Stock A (hereinafter called "Preferred Stock A"), 10,000,000 shares of Preference Stock, (hereinafter called "Preference Stock"), and 100,000,000 shares of Common Stock, all without nominal or par value. The preferences, limitations and relative rights of each said classes of stock shall be as follows: PREFERRED STOCKS AND COMMON STOCK (1)(a) The Board of Directors is authorized to establish and issue at any time and from time to time (i) one or more series of Serial Preferred Stock which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: Dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, amounts payable upon voluntary or involuntary liquidation, and terms and conditions on which shares may converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors, and (ii) one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, the amounts payable upon voluntary or involuntary liquidation, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolution or resolutions establishing the respective series of stock, the authority for which is hereby expressly vested in the Board of Directors. So long as shares of any series of Preferred Stock A shall be outstanding, no amendment or modification of the terms thereof fixed by the resolution or resolutions of the Board of Directors establishing any such series shall be made unless the holders of record of not less than a majority of the number of shares of such series then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at a meeting of such holders called for such purpose. (b) The $5 Preferred Stock, the Serial Preferred Stock and the Preferred Stock A are hereinafter sometimes referred to collectively as the "Preferred Stocks," and the Serial Preferred Stock and the Preferred Stock A are hereinafter sometimes referred to collectively as the "Serial Stocks." (2)(a) The $5 Preferred Stock pari passu with the Serial Stocks shall be entitled, in preference to the Preference Stock and the Common Stock, to dividends at the rate of $5 per share per annum, and the Serial Stocks pari passu with the $5 Preferred Stock shall be entitled, in preference to the Preference Stock and the Common Stock, to dividends at the rate or rates as to each series thereof fixed by resolution of the Board of Directors establishing such series of Serial Stocks, payable as the Board of Directors may from time to time determine. Dividends on the $5 Preferred Stock shall be cumulative from and after April 1, 1926, or in the case of $5 Preferred Stock issued after April 1, 1926, from the date of issue of such $5 Preferred Stock unless the Company shall have then established regular dividend periods with respect to its said $5 Preferred Stock, in which event the dividends shall be cumulative from the first day of the current dividend period within which such $5 Preferred Stock shall be issued. Dividends on each series of the Serial Preferred Stock shall be cumulative from the first day of the current dividend period within which such stock shall be issued and dividends on each share of Preferred Stock A shall be cumulative from the date on which such share shall originally have been issued and shall be payable quarterly on the first day of the months of January, April, July and October. When the stated dividends are not paid in full on all shares of the Preferred Stock such shares shall share pro rata in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends, including accumulations, if any, were paid in full. (b) In any distribution of assets other than by dividends from surplus or profits, the Preferred Stocks shall also have a preference over the Preference Stock and the Common Stock, until there shall have been paid or set apart for payment (i) on each share of the Preferred Stocks issued prior to June 1, 1980, One Hundred Dollars ($100.00), and (ii) on each share of Preferred Stock issued on or after June 1, 1980, the liquidation value thereof fixed by resolution of the Board of Directors establishing such series of Preferred Stock, plus in each case the amount, if any, by which dividends at the rate or rates per annum fixed for such stock from and after the respective dates on which dividends on such stock became cumulative to the date of such distribution exceeds the dividends actually paid thereon or declared and set apart for payment thereon. If, in any distribution of assets, the assets distributable shall be insufficient to permit payment to the holders of the Preferred Stocks of the full amounts to which they are respectively entitled as aforesaid, then such assets shall be distributed pro rata among the holders of the Preferred Stocks in proportion to the sums which would be payable on such distribution of assets if all such sums were paid in full. (c) If and so long as any quarterly dividend on any of the Preferred Stocks shall be in arrears, or if any voluntary or involuntary liquidation of the Company shall have been commenced and the amount payable with respect to any of the Preferred Stocks on such liquidation shall have not been paid in full, or if at any time the Company shall not have made all payments then or theretofore due under the terms of the sinking fund for the purchase or redemption of any series of Preferred Stock A, the Company shall not pay or declare any dividends on, or make any other distribution on, or redeem, purchase or otherwise acquire for value (including, without limitation, pursuant to any sinking fund therefor) any shares of, the Common Stock, Preference Stock or any other class of stock of the company ranking subordinate to the Preferred Stocks as to the payment of dividends or the distribution of assets. (3) The Preferred Stocks and the Preference Stock shall not receive any dividends or shares in distribution in excess of the amounts herein expressly provided, but after the payment of the dividends and/or shares in distribution of assets to which the Preferred Stocks and the Preference Stock, respectively, are entitled, in accordance with the provisions herein set forth, the Common Stock, subject to the rights of any class of stock hereafter authorized, shall receive all further dividends and shares in distribution. (4) Each holder of the $5 Preferred Stock, Serial Preferred Stock and/or Common Stock shall be entitled to one vote for each share of such stock held by him. (5) If and when dividends payable on any of the Preferred Stocks shall be in default in an amount equivalent to four full quarterly payments or more per share, and thereafter until all dividends on any of the Preferred Stocks in default shall have been paid, the holders of all of the then outstanding Preferred Stocks, voting as a class, shall be entitled to elect the smallest number of directors necessary to constitute a majority of the full Board of Directors, and the holders of the Common Stock, voting as a class, subject to the rights of the holders of the Preference Stock, shall have the right to elect the remaining directors of the company, anything herein or in the By- laws to the contrary notwithstanding. The terms of office, as directors, of all persons who may be directors of the Company at the time shall terminate upon the election of a majority of the Board of Directors by the holders of the Preferred Stocks, except that, if the holders of the Common Stock shall not have elected the remaining directors of the Company because of the lack of a quorum consisting of a majority of the outstanding Common Stock, and subject to the rights of the holders of the Preference Stock, then such remaining directors shall be elected by those directors whose term of office is thus terminated and who have not been elected by the holders of the Preferred Stocks as a class; and, in that event, such elected directors shall hold office for the interim period pending such time as a quorum shall be present at a meeting of stockholders held for the election of directors by the Common Stockholders as a class. (6) If and when all dividends then in default on any of the Preferred Stocks then outstanding shall be paid (and such dividends shall be declared and paid out of any funds legally available therefor as soon as reasonably practicable), the holders of the Preferred Stocks shall be divested of any special right with respect to the election of directors, and the voting power of the holders of the Preferred Stocks and the holders of the Common Stock shall revert, subject to the rights of the holders of the Preference Stock, to the status existing before the first dividend payment date on which dividends on any of the Preferred Stocks were not paid in full; but always subject to the same provisions for vesting such special rights in the holders of the Preferred Stocks in case of further like default or defaults in dividends thereon. Upon the termination of any such special voting right, the terms of office of all persons who may have been elected directors of the Company by vote of the holders of the Preferred Stocks, as a class, pursuant to such special voting right shall forthwith terminate, and the resulting vacancies shall be filled by the vote of a majority of the remaining directors. (7) In case of any vacancy in the office of a director occurring among the directors elected by the holders of the Preferred Stocks, voting as a class, the remaining directors elected by the holders of the Preferred Stocks, by affirmative vote of a majority thereof or the remaining director so elected if there be but one, may elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Likewise in case of any vacancy in the office of a director occurring among the directors not elected by the holders of the Preferred Stocks, subject to the provisions of subdivision (28) below, the remaining directors not elected by the holders of the Preferred Stocks or the Preference Stock, by affirmative vote of a majority thereof, or the remaining director so elected if there be but one, may elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. (8) Whenever the right shall have accrued to the holders of the Preferred Stocks to elect directors, voting as a class, then upon request in writing signed by any holder of Preferred Stocks entitled to vote, delivered by registered mail or in person to the president, a vice-president or secretary, it shall be the duty of such officer forthwith to cause notice to be given to the shareholders entitled to vote of a meeting to be held at such time as such officer may fix, not less than ten (10) nor more than sixty (60) days after the receipt of such request, for the purpose of electing directors. At all meetings of stockholders held for the purpose of electing directors during such time as the holders of the Preferred Stocks shall have the special right, voting as a class, to elect directors, the presence in person or by proxy of the holders of a majority of the outstanding Common Stock shall be required to constitute a quorum of such class for the election of directors, and the presence in person or by proxy of the holders of a majority of the outstanding Preferred Stocks shall be required to constitute a quorum of such class for the election of directors; provided, however, that the absence of a quorum of the holders of stock of either such class shall not prevent the election at any such meeting or adjournment thereof of directors by the other such class if the necessary quorum of the holders of stock of such other class is present in person or by proxy at such meeting or any adjournment thereof; and provided further that in the event a quorum of the holders of the Common Stock is present but a quorum of the holders of the Preferred Stocks is not present, then the election of the directors elected by the holders of the Common Stock shall not become effective and the directors so elected by the holders of the Common Stock shall not assume their offices and duties until the holders of the Preferred Stocks, with a quorum present, shall have elected the directors they shall be entitled to elect; and provided further, however, that in the absence of a quorum of the holders of stock of either class, a majority of the holders of the stock of the class who are present in person or by proxy shall have power to adjourn the election of the directors to be elected by such class from time to time without notice other than announcement at the meeting until the requisite number of holders of such class shall be present in person or by proxy, but such adjournment shall not be made to a date beyond the date for the mailing of notice of the next annual meeting of the Company or special meeting in lieu thereof. (9) Upon the affirmative vote of a majority of the shares of the issued and outstanding Common Stock at any annual meeting or at any special meeting called for the purpose, the $5 Preferred Stock may be redeemed in whole or in part at any time at One Hundred Ten Dollars ($110) for each share of the $5 Preferred Stock redeemed plus the amount, if any, by which Five Dollars ($5) per annum upon such shares from the date after which dividends thereon became cumulative to the date of redemption exceeds the dividends actually paid thereon or declared and set apart for payment thereon from such date to the date of redemption. If, pursuant to such vote, less than all of the shares of the $5 Preferred Stock are to be redeemed, the shares to be redeemed shall be selected by lot, in such manner as the Board of Directors shall determine, by an independent bank or trust company selected for that purpose by the Board of Directors. (10) Upon the vote of a majority of the full Board of Directors the Company may redeem any series of the Serial Stocks in whole or in part at any time at the redemption price or prices fixed for said series of Serial Stocks by resolution or resolutions of the Board of Directors establishing said series, plus, as to each share or shares so redeemed, the amount, if any, by which the rate of dividends per annum fixed for such share or shares redeemed from and after the date on which dividends thereon became cumulative to the date of redemption exceeds the dividends actually paid thereon or declared and set apart for payment thereon from such date to the date of redemption. If, pursuant to such vote, less than all of the shares of any series of the Serial Preferred Stock are to be redeemed, the shares to be redeemed shall be selected by lot, in such manner as the Board of Directors shall determine, by an independent bank or trust company selected for that purpose by the Board of Directors. If, pursuant to such vote, less than all of the shares of any series of the Preferred Stock A are to be redeemed, the shares to be redeemed shall be selected pro rata or by lot as the Board of Directors may determine in the resolution or resolutions establishing each series of Preferred Stock A, or if not determined therein, in any resolution adopted thereafter. (11) Notice of the intention of the Company to redeem any shares of the Preferred Stocks shall be mailed thirty days before the date of redemption to each holder of record of the shares to be redeemed, at his last known post office address as shown by the records of the Company. At any time after such notice has been mailed as aforesaid the Company may deposit, or may cause its nominee to deposit, the aggregate redemption price (or the portion thereof not already paid in the redemption of shares so to be redeemed) with any bank or trust company in the City of New York, a member of the Clearing House of the City of New York, named in such notice, payable in amounts aforesaid to the respective orders of the record holders of the shares so to be redeemed, on endorsement and surrender of their certificates, and thereupon said holders shall cease to be stockholders with respect to said shares and from and after the making of such deposit said holders shall have no interest in or claim against the Company or its nominee with respect to said shares, but shall be entitled only to receive said moneys from said bank or trust company without interest. If the shares to be redeemed shall be shares of the $5 Preferred Stock or any series of Serial Preferred Stock, and if such deposit shall be made by the nominee of the Company as aforesaid, such nominee shall upon such deposit become the owner of the shares with respect to which such deposit is made and certificates of stock may be issued to such nominee in evidence of such ownership. The Company may require any shares of the $5 Preferred Stock or any series of Serial Preferred Stock so called for redemption to be delivered, duly assigned, to a nominee upon payment by such nominee to the holder of said shares of all amounts payable on such redemption. Any shares of the $5 Preferred Stock or any series of Serial Preferred Stock delivered to or acquired by the nominee of the Company under the provisions hereof shall be converted into or exchanged for such other securities of the Company and on such terms as on or before such delivery or acquisition may have been provided by the Company in accordance with the next three paragraphs hereof. (12) The Company from time to time may sell any of its own stocks, acquired by it at such price as may be fixed by its Board of Directors or Executive Committee; provided, however, that any shares of any series of Preferred Stock A redeemed, purchased or otherwise acquired (including, without limitation, pursuant to the sinking fund therefor) by the Company shall be cancelled and shall not be reissued as shares of such series, but shall be restored to the status of authorized but unissued shares of Preferred Stock A. (13) The Company, subject to the restrictions herein set forth, in order to acquire funds with which to redeem any Preferred Stocks or Preference Stock may issue and sell stock of any class then authorized but unissued, bonds, notes, evidences of indebtedness, or other securities. (14) The Board of Directors may at any time authorize the conversion or exchange of the whole or any particular shares of the outstanding $5 Preferred Stock or the Serial Preferred Stock, with the consent of the holder thereof, into or for stock of any other class at the time of such consent then authorized but unissued and may fix the terms and conditions upon which such conversion or exchange may be made; provided that without the consent of the holders of record of two-thirds of the shares of Common Stock outstanding given at a meeting of the holders of the Common Stock called and held as provided by the By-laws or given in writing without a meeting, the Board of Directors shall not authorize the conversion or exchange of any $5 Preferred Stock or any Serial Preferred Stock into or for Common Stock or authorize the conversion or exchange of any $5 Preferred Stock or any Serial Preferred Stock into or for Preferred Stock of any other class, if by such conversion or exchange the amount which the holders of the shares of $5 Preferred Stock or the Serial Preferred Stock so converted or exchanged would be entitled to receive either as dividends or shares in distribution of assets in preference to the Common Stock would be increased. (15) No holder of any stock of the Company shall be entitled as of right to purchase or subscribe for any part of any authorized stock of the Company or of any additional stock of any class to be issued by reason of any increase of the authorized Capital Stock of the Company or of any bonds, certificates of indebtedness, debentures, or other securities convertible into stock of the Company, but any authorized stock or any such additional authorized issue of new stock or of securities convertible into stock may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations for such consideration and upon such terms and in such manner as the Board of Directors may in their discretion determine without offering any thereof, on the same terms or on any terms, to the stockholders then of record or to any class of stockholders. (16) A consolidation, merger or amalgamation of the Company with or into any other corporation or corporations shall not be deemed a distribution of assets of the Company within the meaning of any provision herein. (17) No new class of stock shall hereafter be created or authorized which is entitled to dividends or shares in distribution of assets on a parity with or in priority to the $5 Preferred Stock nor shall there be created or authorized any securities convertible into shares of any such stock, unless the holders of record of not less than two-thirds of the number of shares of the $5 Preferred Stock then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at the meeting of stockholders at which the creation or authorizing of such new class of stock or such convertible securities is considered; and provided further that no new class of stock shall hereafter be created or authorized which is entitled to dividends or shares in distribution of assets in priority to the Serial Stocks nor shall there be created or authorized any securities convertible into shares of any such stock, unless the holders of record of not less than two-thirds of the number of shares then outstanding of each class of the Serial Stocks so affected shall consent thereto in writing or by voting therefor in person or by proxy at the meeting of stockholders at which the creation or authorizing of such new class of stock or such convertible securities is considered. Any vote creating or authorizing a new class of stock may provide that all moneys payable by the Company with respect to any class of stock thereby authorized shall be paid in the money of any foreign country named therein or designated by the Board of Directors, pursuant to authority therein granted, at a fixed rate of exchange with the money of the United States of America therein stated or provided for and all such payments shall be made accordingly. Any such vote may authorize any shares of any class then authorized but unissued to be issued as shares of such new class or classes. (18) So long as any shares of the Preferred Stocks are outstanding, the Company shall not, without the consent (given by vote at a meeting held pursuant to notice containing a statement of such purpose) of the holders of a majority of the total number of shares of the Preferred Stocks considered as one class, then outstanding: (a) Increase the total authorized amount of any class of the Preferred Stocks; or (b) Merge or consolidate with or into any other corporation or corporations, unless such merger or consolidation, or the exchange, issuance or assumption of all securities to be issued or assumed in connection with any such merger or consolidation, shall have been ordered, approved or permitted by the Securities and Exchange Commission under the provisions of the Public Utility Holding Company Act of 1935 or by any successor commission or other regulatory authority of the United States of America having jurisdiction over the exchange, issuance or assumption of securities in connection with such merger similar to that conferred upon the Securities and Exchange Commission by such Act; provided that the provisions of this clause (b) shall not apply to a purchase or other acquisition by the Company of franchises or assets of another corporation in any manner which does not involve a merger or consolidation; or (c) Issue shares of any of the Preferred Stocks or of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to dividends or distributions, unless the net income of the company, determined after provisions for depreciation and all taxes, and in accordance with generally accepted accounting practices to be available for the payment of dividends for a period of twelve (12) consecutive calendar months within the fifteen (15) calendar months immediately preceding the issuance, sale or disposition of such stock, is at least equal to twice the annual dividend requirements on all outstanding shares of the Preferred Stocks and of all other classes of stock ranking prior to, or on a parity with, any of the Preferred Stocks as to dividends or distributions, including the shares proposed to be issued, and unless the gross income of the Company for said period, determined in accordance with generally accepted accounting practices (but in any event after deducting the amount for said period charged by the Company on its books to depreciation expense and all taxes) to be available for the payment of interest, shall have been at least one and one-half times the sum of (i) the annual interest charges on all interest bearing indebtedness of the Company and (ii) the annual dividend requirements on all outstanding shares of the Preferred Stocks and of all other classes of stock ranking prior to, or on a parity with the Preferred Stocks as to dividends or distributions, including the shares proposed to be issued. There shall be excluded from the foregoing computation, interest charges on all indebtedness and dividends on all stock which are to be retired in connection with the issue of such additional shares of stock. Where such additional shares of stock are to be issued in connection with the acquisition of new property, the net earnings of the property to be so acquired may be included on a pro forma basis in the foregoing computation, computed on the same basis as the net earnings of the Company; or (d) Issue shares of the Preferred Stocks, or of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to the payment of dividends or the distribution of assets, unless the aggregate of the capital of the Company applicable to the Common Stock and the surplus of the Company shall be not less than the aggregate stated value of the Preferred Stocks, and of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to the payment of dividends or the distribution of assets, to be outstanding immediately after the proposed issue of such additional Preferred Stocks, excluding from the foregoing computation all indebtedness and stock which are to be retired in connection with the issue of such additional shares of Preferred Stocks, or of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to the payment of dividends or the distribution of assets, provided that no portion of the surplus of the Company which shall be used to meet the requirements of this paragraph (d) shall, after the issue of such additional shares of Preferred Stocks, or of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to the payment of dividends or the distribution of assets, and until such shares or a like number of other shares of Preferred Stocks, or of any other class of stock ranking prior to or on a parity with any of the Preferred Stocks as to the payment of dividends or the distribution of assets, shall have been retired, be available for dividends or other distribution upon the Common Stock. (19) So long as any shares of Preferred Stocks are outstanding the Company shall not pay any dividends (other than dividends on Common Stock payable by the issuance of Common Stock) on, or make any distribution on, or redeem, purchase or otherwise acquire for value, any of its Common Stock or Preference Stock or other stock, if any, subordinate to such Preferred Stocks as to the payment of dividends or the distribution of assets, if, after giving effect to any such payment, distribution, redemption, purchase or other acquisition, the aggregate amount of such dividends, distributions, purchases and acquisitions paid or made subsequent to December 31, 1945, exceeds (a) 50% of the aggregate of net income available for Common Stock subsequent to December 31, 1945, if, at the end of the calendar month immediately preceding the dividend declaration date, the Common Stock Equity is less than 20% of total capitalization, including surplus, or (b) 75% of the aggregate of net income available for Common Stock subsequent to December 31, 1945, if, at the end of the calendar month immediately preceding the dividend declaration date, the Common Stock Equity is less than 25% but at least 20% of total capitalization, including surplus; provided that, when the Common Stock equity shall have reached 25% of total capitalization, including surplus, all restrictions on the payment of dividends on the Common Stock, or the purchase or acquisition of, or distributions on, the Common Stock, shall be, so long as such ratio remains at 25% or above, eliminated; provided further that, after once having reached such ratio of 25%, no dividends on or distributions, purchases or acquisitions of Common Stock shall be paid or made, aggregating an amount in excess of 75% of the current year's earnings otherwise available for Common Stock, if, after such payment, distribution, purchase or acquisition, the ratio of the Common Stock Equity to the total capitalization, including surplus, will be less than 25% but not less than 20%; and provided further that, after having once reached a ratio of 20%, no dividends on or distributions, purchases or acquisitions of Common Stock shall be paid or made, aggregating an amount in excess of 50% of the current year's earnings otherwise available for Common Stock, if, after such payment, distribution, purchase or acquisition, the ratio of the Common Stock Equity to the total capitalization, including surplus, will be less than 20%. As used in this paragraph the term "Common Stock Equity" shall mean the aggregate of (a) stated value of Common Stock of the Company (including proceeds from the sale of issuance of Common Stock subsequent to December 31, 1945) and (b) surplus. (20) The consideration received by the Company from the issuance and sale of any additional shares of Common Stock without nominal or par value shall be entered in its capital stock account and the provisions of this paragraph shall not be changed unless the holders of record of not less than two-thirds (2/3) of the number of shares of the Preferred Stocks then outstanding, voting as a single class, and of not less than two-thirds of the number of shares of Common Stock then outstanding, voting separately as a class shall consent thereto in writing or by voting therefor in person or by proxy at the meeting of stockholders at which any such change is considered. PREFERENCE STOCK (21) The Board of Directors is authorized to issue at any time and from time to time one or more series of Preference Stock as hereinafter provided. (22) To the extent that variations in the designations, preferences, limitations and relative rights as between series of the Preference Stock are not established, fixed and determined herein, authority is hereby expressly vested in the Board of Directors to fix and determine the designations, preferences, limitations and relative rights of the shares of any series of such Preference Stock hereinafter established, including authority to fix any one or more of the following: (a) The distinctive designations of such series and the number of shares which shall constitute such series; (b) The rate of dividend; (c) The right of redemption, if any, and the price at and the terms and conditions on which the shares may be redeemed; (d) The amount payable upon shares in event of involuntary liquidation; (e) The amount payable upon shares in event of voluntary liquidation; (f) Sinking fund provisions, if any, for the redemption or purchase of shares; and (g) The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion. (23) All shares of Preference Stock regardless of series shall be identical with each other in all respects except as provided in subdivision (22) above. (24) The Preference Stock is subject to the prior rights and preferences of the Preferred Stocks and all other classes of preferred stock of equal rank therewith hereafter authorized. (25) Subject to the prior rights and preferences of the Preferred Stocks, the holders of Preference Stock of each series shall be entitled to receive, out of any funds legally available for the purpose, when and as declared by the Board of Directors, cumulative cash dividends thereon at such rate per annum as fixed by resolution of the Board of Directors establishing such series. Dividends on the Preference Stock of each series shall be payable quarterly on the first day of the months of January, April, July and October in each year or otherwise as the Board of Directors may determine prior to the issue thereof. Dividends on Preference Stock of each series shall be cumulative with respect to each share from such date, if any, as may be fixed by resolution of the Board of Directors prior to the issue thereof or, if no such date is established, from the date on which such shares shall originally have been issued. Accumulation of dividends shall not bear interest. (26) In the event of any partial or complete liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, before any distribution shall be made to the holders of any shares of Common Stock, but subject to the prior rights and preferences of the Preferred Stocks, the Preference Stock of each series shall be entitled, pari passu with all stock of equal rank, to receive for each share thereof, out of any legally available assets of the Company, the amount or amounts fixed therefor by resolution of the Board of Directors establishing such series, plus, in each case, an amount equal to all cumulated unpaid dividends thereon, whether or not declared or earned, accrued to the date when payment of such preferential amounts shall be made available to the holders of the Preference Stock; and the Preference Stock shall be entitled to no further participation in such distribution. If, upon any such liquidation, dissolution or winding up of the affairs of the Company, the assets of the Company legally available for distribution as aforesaid among the holders of the Preference Stock of all series and all stock of equal rank shall be insufficient to permit the payment to them of the full preferential amounts aforesaid, then the entire assets of the Company so to be distributed shall be distributed ratably among the holders of the Preference Stock of all series and of all stock of equal rank in proportion to the full preferential amounts to which they are respectively entitled. A consolidation or merger of the Company, or a sale or transfer of all or substantially all of its assets as an entirety shall not be regarded as a "liquidation, dissolution or winding up of the affairs of the Company" within the meaning of this subdivision (26). (27) The Company may, unless otherwise prohibited by any provisions of the Company's Charter, as amended, or by any resolution adopted by the Board of Directors providing for the issuance of any series of Preference Stock of which there are shares then outstanding, at its option, expressed by resolution of its Board of Directors, at any time redeem the whole or any part of the Preference Stock or of any series thereof at the time outstanding, by the payment in cash for each share of stock to be redeemed of the then applicable redemption price or prices as shall be fixed by resolution of the Board of Directors establishing such series, plus, in any such case, a sum of money equivalent to all accrued and cumulated unpaid dividends, whether or not declared or earned, thereon to the date fixed for redemption. Notice of any proposed redemption of shares of Preference Stock shall be given by the Company by mailing a copy of such notice at least 30 days prior to the date fixed for such redemption to the holders of record of the shares of Preference Stock to be redeemed, at their respective addresses appearing on the books of the Company. Said notice shall specify the shares called for redemption, the redemption price and the place at which and the date on which the shares called for redemption will, upon presentation and surrender of the certificates of stock evidencing such shares, be redeemed and the redemption price therefor paid. If less than all of the shares of any series of Preference Stock then outstanding are to be redeemed, the shares to be redeemed shall be selected by such method, either by lot or pro rata, as shall from time to time be determined by resolution of the Board of Directors. From and after the date fixed in any such notice as the date of redemption, unless default shall be made by the Company in providing moneys at the time and place specified for the payment of the redemption price pursuant to said notice, all dividends on the shares of Preference Stock thereby called for redemption shall cease to accrue and all rights of the holders thereof as stockholders of the Company except the right to receive the redemption price, but without interest, shall cease and determine; provided, however, the Company may, in the event of any such redemption, and prior to the redemption date specified in the notice thereof, deposit in trust, for the account of the holders of the shares of Preference Stock to be redeemed, with any bank or trust company located in the City of Raleigh, North Carolina, or the City of New York, New York, named in such notice and having a capital, surplus and undivided profits aggregating at least $5,000,000, all funds necessary for such redemption, and thereupon all shares of the Preference Stock with respect to which such deposit shall have been made shall forthwith upon the making of such deposit no longer be deemed to be outstanding and all rights of the holders thereof with respect to such shares of Preference Stock shall thereupon cease and terminate, except the right of such holders to receive from the funds so deposited the amount payable upon the redemption thereof, but without interest, or, if any right of conversion conferred upon such shares shall not, by the terms thereof, previously have expired, to exercise the right to conversion thereof on or before the redemption date specified in such notice, unless such right of conversion by the terms thereof expires at an earlier time, and then only on or before such earlier time for the expiration of such right of conversion. Any funds so set aside or deposited which, because of the exercise of any right of conversion of shares called for redemption, shall not be required for such redemption, shall be released or repaid forthwith to the Company. Any funds so set aside or deposited, which shall be unclaimed at the end of six years from such redemption date, shall be released or repaid to the Company upon its request expressed in a resolution of its Board of Directors, and any depositary thereof shall thereby be relieved of all responsibility in respect thereof, after which release or repayment the holders of shares so called for redemption shall look only to the Company for payment of the redemption price, but without interest. Any interest on funds so deposited which may be allowed by any bank or trust company with which such deposit was made shall belong to the Company. If and so long as any quarterly dividend on any series of the Preferred Stocks or the Preference Stock shall be in arrears, the Company shall not redeem, purchase or otherwise acquire, by way of sinking fund payments or otherwise, any Preference Stock. Whenever there shall be deposited or set aside the whole or any part of the funds required to be deposited or set aside by the Company as a sinking fund for any series of Preference Stock there shall be also deposited or set aside at the same time the full amount or the same proportionate part, as the case may be, of the funds, if any, then due to be deposited or set aside as sinking fund for each other series of Preference Stock then outstanding. All shares of Preference Stock which shall have been redeemed, converted, purchased or otherwise acquired by the Company shall be retired and cancelled and shall have the status of authorized but unissued shares of Preference Stock. (28) Except as otherwise provided by law, the holders of the Preference Stock shall not have any right to vote for the election of directors or for any other purpose except as set forth below. In the event that at any time, or from time to time, when dividends payable on any shares of Preference Stock shall be in default in an amount equivalent to six quarterly dividends, or more, per share, and thereafter until all dividends of Preference Stock in default shall have been paid, the holders of the Preference Stock, voting as a single class separate from the holders of all other classes of stock, shall be entitled to elect two directors, subject to the prior rights of the holders of the Preferred Stocks. The terms of office, as directors, of all persons who may be directors of the Company, except those directors, if any, elected by the holders of the Preferred Stocks voting separately as a single class, shall terminate upon the election of two directors by the holders of the Preference Stock. Subject to the prior rights of the Preferred Stocks and the Preference Stock, the holders of the Common Stock, voting as a single class, shall have the right to elect the remaining directors of the Company. If the holders of the Common Stock have not exercised their right to elect directors of the Company because of the lack of a quorum consisting of a majority of the Common Stock, then the said remaining directors shall be elected by the directors whose term of office is thus terminated and who have not been elected by the holders of the Preferred Stocks; and in that event, such elected directors shall hold office for the interim period, pending such time as a quorum of the Common Stock shall be present at a meeting held for the election of directors. If and when all dividends then in default on the Preference Stock, then outstanding, shall be paid (and such dividends shall be declared and paid out of any funds legally available therefor as soon as reasonably practicable), the holders of the Preference Stock shall be divested of any special right with respect to the election of directors, and the voting power of the holders of the Preference Stock shall revert to the status existing before the first dividend payment date on which dividends on any share of the Preference Stock were not paid in full; but always subject to the same provisions for vesting such special rights in the holders of the Preference Stock in case of further like default or defaults on dividends thereon. Upon the termination of any such special voting right, the terms of office of all persons who may have been elected directors of the Company by vote of the holders of the Preference Stock as a class, pursuant to such special voting right shall forthwith terminate, and the resulting vacancies shall be filled by the vote of a majority of the remaining directors. In case of any vacancy in the office of a director occurring among the directors elected by the holders of the Preference Stock voting as a single class, separate from the holders of all other classes of stock, the remaining director elected by the holders of the Preference Stock, may elect a successor to hold office for the unexpired term of the director whose place shall be vacant. In the event of simultaneous vacancies among directors elected by the holders of the Preference Stock, an election, pursuant to the provisions of this subdivision (28) will be held. Whenever the right shall have accrued to the holders of the Preference Stock to elect directors, voting as a single class, separate from the holders of all other classes of stock, then upon request in writing signed by any holder of the Preference Stock entitled to vote, delivered by registered mail or in person to the president, a vice-resident or secretary of the Company, it shall be the duty of such officer forthwith to cause notice to be given to the shareholders entitled to vote at a meeting to be held at such time as such officer may fix, not less than ten (10) nor more than sixty (60) days after the receipt of such request, for the purpose of electing directors. At all meetings of shareholders held for the purpose of electing directors during such time as the holders of the Preference Stock shall have the special right, voting as single class, separate from the holders of all other classes of stock to elect directors, the presence in person or by proxy of the holders of a majority of the outstanding Preference Stock shall be required to constitute a quorum of such class for election of directors, and the presence in person or by proxy of the holders of a majority of all other classes of stock outstanding at the time, and not entitled to such special right, shall be required to constitute a quorum of such other classes for the election of directors. (29) So long as any shares of the Preference Stock shall remain outstanding, no dividend (other than a dividend payable in shares of Common Stock) shall be paid or declared, nor shall any distribution be made on Common Stock and no Common Stock shall be redeemed, purchased, retired or otherwise acquired either directly or indirectly, unless: (i) All dividends on the Preference Stock of all series then outstanding for all past quarterly dividend periods and for the current quarterly dividend period shall have been paid or declared and a sum sufficient for the payment thereof set apart; and (ii) All sinking fund payments and all purchase fund payments or other obligations of the Company for the periodic retirement of shares of Preference Stock of all series then outstanding required to have been made or performed by the Company shall have been made or performed. (30) The affirmative approval of the holders of at least two-thirds (2/3) of the Preference Stock at the time outstanding, voting as a class without regard to series, shall be required for any amendment of the Company's Charter altering materially any existing provision of the Preference Stock or for the creation, or an increase in the authorized amount, of any class of stock (other than the 300,000 authorized shares of $5 Preferred Stock and the 10,000,000 authorized shares of Serial Preferred Stock) ranking, as to dividends or assets, prior to the Preference Stock, and the affirmative approval of the holders of at least a majority of the Preference Stock at the time outstanding, voting as a class without regard to series, shall be required for an increase in the authorized amount of the Preference Stock or for the creation, or an increase in the authorized amount, of any class of stock ranking, as to dividends or assets, on a parity with the Preference Stock; provided, however, that if any amendment of the Company's Charter shall affect adversely the rights of preferences of one or more, but not all, of the series of Preference Stock at the time outstanding or shall unequally adversely affect the rights or preferences of different series of Preference Stock at the time outstanding, the affirmative approval of the holders of at least two-thirds (2/3) of such shares of each such series so adversely or unequally adversely affected shall be required in lieu of or (if such affirmative approval is required by law) in addition to the affirmative approval of the holders of at least two-third (2/3) of the outstanding shares of Preference Stock as a class. (31) No holder of Preference Stock shall have any preemptive right to purchase, subscribe for or otherwise acquire securities of the Company upon the issuance or sale by the Company of any type of security. FIFTH: The period of the duration of the Company shall be nine hundred and ninety-nine years from April 6, 1926. SIXTH: The number of directors of the Company shall be fourteen. Seven directors shall constitute a quorum. The names and addresses of the persons who are currently serving as directors are: Name Address Daniel D. Cameron, Sr. 404 West Renovah Circle Wilmington, NC 28401 Felton J. Capel 1009 West New Hampshire Avenue Southern Pines, NC 28387 George H.V. Cecil 436 Vanderbilt Road Biltmore, NC 28803 Charles W. Coker, Jr. Rt 5, Greenbrier Road Hartsville, SC 29550 Margaret T. Harper 105 East Bay Street Southport, NC 28461 Shearon Harris 2516 Wake Drive Raleigh, NC 27608 L. H. Harvin, Jr. 935 Hargrove Street Henderson, NC 27536 Karl G. Hudson, Jr. 2416 White Oak Road Raleigh, NC 27609 J. A. Jones 3004 Sandia Drive Raleigh, NC 27607 Edward G. Lilly, Jr. 612 Scotland Street Raleigh, NC 27609 A.C. Monk, Jr. 207 West Church Street Farmville, NC 27828 Sherwood H. Smith, Jr. 408 Drummond Drive Raleigh, NC 27609 Horace L. Tilghman, Jr. 104 Oakenwald Street Marion, SC 29571 John F. Watlington, Jr. 2020 Virginia Road Winston-Salem, NC 27104 SEVENTH: The officers of the Company shall be as prescribed by its Board of Directors and set forth in the Company's By-laws. EIGHTH: All corporate powers shall be exercised by the Board of Directors except as a otherwise provided by statute or by this Restated Charter. NINTH: An Executive Committee may be appointed by and from the Board of Directors in such manner and subject to such regulations as may be provided in the by-laws, which committee shall have and may exercise, when the Board is not in session, all the powers of said Board which may be lawfully delegated, subject to such limitations as may be provided in the by-laws or by resolutions of the Board. TENTH: A director of the Company shall not be disqualified by his office from dealing or contracting with the Company either as a vendor, purchaser or otherwise, nor shall any transaction or contract of the Company be void or voidable by reason of the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder or director, is in anyway interested in such transaction or contract, provided that such transaction or contract is or shall be authorized, ratified or approved either (1) by a vote of a majority of a quorum of the Board of Directors or of the Executive Committee without counting in such majority or quorum any director so interested or member of a firm so interested or a shareholder or director of a corporation so interested, or (2) by vote at any stockholders' meeting of the holders of record of a majority of all the outstanding shares of stock of the Company entitled to vote or by writing or writings signed by a majority of such holders; nor shall any director be liable to account to the Company for any profits realized by and from or through any such transaction, or contract of the Company authorized, ratified or approved as aforesaid by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder or director, was interested in such transaction or contract. Nothing herein contained shall create any liability in the events above described or prevent the authorization, ratification or approval of such contracts in any other manner provided by law. ELEVENTH: The directors shall hold office after the expiration of their terms until their successors are elected and have qualified. An increase in the Board of Directors shall be deemed to create vacancies in the Board, to be filled in the manner provided by the by-laws. Each director, so long as and if required by law to be a stockholder of the Company but not otherwise, shall hold at least one share of stock in the Company. The Board of Directors shall have power to hold their meetings, to have one or more offices, and to keep the corporate books (except such books as are required by law to be kept within the State of North Carolina) outside of the State of North Carolina at such places as may from time to time be designated by them. The Board of Directors shall have power to authorize and cause to be executed mortgages or deeds of trust which shall cover and create a lien upon all or any part of the property of the Company of whatsoever kind and wheresoever situated, whether then owned or thereafter acquired, and to provide in any such mortgage or deed of trust that the amount of bonds or other evidences of indebtedness to be issued thereunder and to be secured thereby shall be limited to a definite amount or limited only by the conditions therein specified. The Board of Directors shall have power from time to time to fix and determine and to vary the amount to be reserved as a working capital, to direct and determine the use and disposition of the working capital, and to determine the date or dates for the declaration and payment of dividends. Any and all of the directors may at any time be removed without cause assigned by the vote of the holders of a majority of the total number of shares of the Company then issued and outstanding and entitled to vote thereon, given at a meeting called for the purpose of considering such action. TWELFTH: The Board of Directors shall have power and power is hereby conferred upon them from time to time to adopt, amend, add to and repeal by- laws for the Company and any by-laws so made or any provision thereof may be altered or repealed by vote of the holders of a majority of the total number of shares of the Company then issued and outstanding and entitled to vote thereon at any annual meeting or at any special meeting of stockholders called for the purpose of considering such action. THIRTEENTH: Stockholders shall have no rights except as conferred by statute or by the by-laws to inspect any book, paper or account of the Company. FOURTEENTH: Upon the written consent or vote of the holders of a majority in aggregate number of the shares of stock of the Company then outstanding and entitled to vote, (1) every statute of the State of North Carolina (a) increasing, diminishing, or in any way affecting the rights, powers or privileges of stockholders of companies organized under the general laws of said State, or (b) giving effect to the action taken by any part less than all, of the stockholders of any such company, shall be binding upon the Company and every stockholder and/or (2) amendments to the charter of the Company authorized at the time of the making of such amendments by the laws of the State of North Carolina may be made. No such written consent or vote shall decrease the amounts which the holders of outstanding $5 Preferred Stock are entitled to receive as dividends or in distribution of assets in preference to the holders of the Common Stock or decrease the price at which the $5 Preferred Stock may be redeemed, all as set forth in Article Fourth hereof, unless the holders of at least 90% of the then outstanding $5 Preferred Stock consent in writing to or vote for such decrease; nor shall any such written consent or vote (a) reduce the percentage of the shares of outstanding $5 Preferred Stock required to take any action for which the consent of a particular percentage of the shares of outstanding $5 Preferred Stock is provided in Article Fourth hereof, or (b) make any other amendment, alteration, change or repeal of the express terms of the $5 Preferred Stock then outstanding in a manner substantially prejudicial to the holders thereof unless the holders of record of not less than two-thirds of the number of shares of the $5 Preferred Stock then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at the meeting at which said vote is cast. FIFTEENTH: This Restated Charter was adopted by the shareholders of the corporation on the 21st day of May, 1980 in the manner prescribed by law for adopting a charter amendment; and it supersedes the original Articles of Incorporation and all amendments thereto. The number of shares of the corporation outstanding at the time of such adoption was 51,684,509; and the number of shares entitled to vote thereon was 48,504,509. The number of shares voted for such adoption was 37,053,564; and the number of shares voted against such adoption was 522,776. Such adoption does not give rise to dissenter's rights nor to class voting rights for the reason that the only effect of this Restated Charter is to set forth without change the corresponding provisions of the Articles of Incorporation as heretofore amended. IN WITNESS WHEREOF, this statement is executed by the President and Secretary of the corporation this 22nd day of May, 1980. CAROLINA POWER & LIGHT COMPANY By Sherwood H. Smith, Jr. President By J. L. Lancaster, Jr. Secretary STATE OF NORTH CAROLINA ) COUNTY OF WAKE ) I, Marsha H. Manning, a notary public, hereby certify that on this 22nd day of May, 1980, personally appeared before me Sherwood H. Smith, Jr. and J. L. Lancaster, Jr., each of whom being by me first duly sworn, declared that he signed the foregoing documents in the capacity indicated, that he was authorized so to sign, and that the statements therein contained are true. By: Marsha H. Manning Notary Public My commission expires: June 28, 1982 EXHIBIT A CAROLINA POWER & LIGHT COMPANY Excerpts from Minutes Board of Directors - December 8, 1954 RESOLVED that the Board of Directors of Carolina Power & Light Company does hereby create and establish an initial series of the Company's Serial Preferred Stock and does hereby fix the designation, dividend rate, and redemption prices of said series as follows: (1) the designation of said initial series of the Company's Serial Preferred Stock shall by "Serial Preferred Stock, $4.20 Series"; (2) the dividend rate of said initial series of the Company's Serial Preferred Stock shall be $4.20 per share per annum; (3) the redemption prices of said initial series of the Company's Serial Preferred Stock shall be: for the period from January 12, 1955 to and including January 12, 1960, $104.25 per share; thereafter to and including January 12, 1965, $103.25 per share; thereafter to and including January 12, 1970, $102.50 per share; and thereafter $102.00 per share; plus, in each case, as to each share redeemed, the amount, if any, by which $4.20 per annum upon such share from and after the date upon which dividends thereon shall become cumulative to the date of redemption exceeds the dividends actually paid thereon or declared or set apart for payment thereon from such date to the date of redemption, said initial series of the Company's Serial Preferred Stock otherwise to have the preferences, voting powers, restrictions, and qualifications which are applicable to all shares of the Company's Serial Preferred Stock, irrespective of series, as set forth in the Agreement of Merger of Tide Water Power Company with and into Carolina Power & Light Company, dated December 12, 1951, as amended; and further RESOLVED that the calendar quarters of each year are hereby established as the regular dividend periods for the Serial Preferred Stock, $4.20 Series, of the Company; and further.... EXHIBIT B CAROLINA POWER & LIGHT COMPANY Excerpts from Minutes Board of Directors - January 17, 1967 RESOLVED, that the Board of Directors of Carolina Power & Light Company does hereby create and establish and authorize the issuance of a new series of the Company's Serial Preferred Stock and does hereby fix the designation, dividend rate, and redemption prices of said series as follows: (1) the designation of said new series of the Company's Serial Preferred Stock shall be "Serial Preferred Stock, $5.44 Series"; (2) the Serial Preferred Stock, $5.44 Series, is hereby authorized to be issued in the amount of 250,000 shares; (3) the dividend rate of the Serial Preferred Stock, $5.44 Series shall be $5.44 per share per annum; (4) the redemption prices of the Serial Preferred Stock, $5.44 Series shall be: for the period from January 24, 1967, to and including January 24, 1974, $112 per share; thereafter to and including January 24, 1977, $105 per share; thereafter to and including January 24, 1982, $103 per share; and thereafter $101 per share; plus, in each case, as to each share redeemed, the amount, if any, by which $5.44 per annum upon such share from and after the date upon which dividends thereon shall become cumulative to the date of redemption exceeds the dividends actually paid thereon or declared or set apart for payment thereon from such date to the date of redemption, said Serial Preferred Stock, $5.44 Series, otherwise to have the preferences, voting powers, restrictions, and qualifications which are applicable to all shares of the Company's Serial Preferred Stock, irrespective of series, as set forth in the Agreement of Merger of Tide Water Power Company with and into Carolina Power & Light Company, dated December 12, 1951, as amended; and further RESOLVED, that regular dividend periods for the Serial Preferred Stock $5.44 Series, are hereby established as the period commencing January 24, 1967 to and including March 31, 1967 and thereafter as the quarterly periods commencing April 1, July 1, October 1, and January 1 of each year. EXHIBIT C STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the preferences, limitations and relative rights of a series of a class of its shares: 1. The name of the Corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a regular meeting of the shareholders duly convened and held on March 11, 1953, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the preferences, limitations and relative rights of the shares of Serial Preferred Stock of the corporation, and which authorizes the Board of Directors to issue one or more series of Serial Preferred Stock with such dividend rates, redemption prices and series designations as may be fixed by resolution of the Board of Directors, which Certificate of Amendment is on file in the Office of the Secretary of State of North Carolina, and is set out below: "The preferences, voting powers, restrictions, and qualifications of each of said classes of stock shall be as follows: "The term `Serial Preferred Stock' as used herein means Preferred Stock of any series of the 200,000 shares authorized by this Article Fourth. The Board of Directors is authorized to issue at any time and from time to time one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors." The number of authorized shares of Serial Preferred Stock was increased to 1,000,000 by Articles of Amendment to the Charter adopted at a regular meeting of the shareholders in May 1969, which Articles of Amendment are on file in the Office of the Secretary of State of North Carolina. 3. On May 4, 1970, the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 300,000 shares of a new series of Serial Preferred Stock, without par value, designated as "Serial Preferred Stock, $9.10 Series" bearing a dividend rate of $9.10 per share per annum; and with the following redemption prices: $112 per share for the period May 12, 1970 through May 12, 1977; $105 per share thereafter through May 12, 1980; $103 per share thereafter through May 12, 1985; and $101 per share thereafter. A copy of the resolutions creating and authorizing the issuance and sale of the $9.10 Series and the Company's Serial Preferred Stock is attached hereto and incorporated fully herein by reference. IN WITNESS WHEREOF, this statement is signed by the executive vice president and secretary of the corporation this 7th day of May, 1970. CAROLINA POWER & LIGHT COMPANY By: W. Reid Thompson Executive Vice President ATTEST: By: R. S. Mallison Secretary EXHIBIT D STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the preferences, limitations and relative rights of a series of a class of its shares: 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a regular meeting of the shareholders duly convened and held on March 11, 1953, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the preferences, limitations and relative rights of the shares of Serial Preferred Stock of the corporation, and which authorizes the Board of Directors to issue one or more series of Serial Preferred Stock with such dividend rates, redemption prices and series designations as may be fixed by resolution of the Board of Directors, which Certificate of Amendment is on file in the Office of the Secretary of State of North Carolina, and is set out below: "The preferences, voting powers, restrictions and qualifications of each of said classes of stock shall be as follows: "The term `Serial Preferred Stock' as used herein means Preferred Stock of any series of the 200,000 shares authorized by this Article Fourth. The Board of Directors is authorized to issue at any time and from time to time one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors." The number of authorized shares of Serial Preferred Stock was increased to 1,000,000 by Articles of Amendment to the Charter adopted at a regular meeting of the shareholders in May 1969, which Articles of Amendment are on file in the Office of the Secretary of State of North Carolina. 3. On January 6, 1971, the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 350,000 shares of a new series of Serial Preferred Stock, without par value, designated as "Serial Preferred Stock, $7.95 Series" bearing a dividend rate of $7.95 per share per annum; and with the following redemption prices: for the period from January 14, 1971, to and including January 14, 1976, $115 per share; thereafter to and including January 14, 1979, $110 per share; thereafter to and including January 14, 1982, $107 per share; thereafter to and including January 14, 1985, $104 per share; and thereafter $101 per share. A copy of the resolutions creating and authorizing the issuance and sale of the $7.95 Series of the Company's Serial Preferred Stock is attached hereto and incorporated fully herein by reference. IN WITNESS WHEREOF, this statement is signed by a vice president and an assistant secretary of the corporation this 13th day of January, 1971. CAROLINA POWER & LIGHT COMPANY By: Charles F. Rouse Vice President ATTEST: By: J. L. Lancaster, Jr. Assistant Secretary (Corporate Seal) EXHIBIT E STATEMENT OF CLASSIFICATION SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the preferences, limitations and relative rights of a series of a class of its shares: 1. The name of the Corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a regular meeting of the shareholders duly convened and held on May 19, 1971, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the preferences, limitations and relative rights of the shares of Serial Preferred Stock of the corporation, and which authorizes the Board of Directors to issue one or more series of Serial Preferred Stock with such dividend rates, redemption prices and series designations as may be fixed by resolution of the Board of Directors, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out below: (1) The term "Serial Preferred Stock" as used herein means Preferred Stock of any series of the 5,000,000 shares authorized by this Article Fourth. The $5 Preferred Stock and the Serial Preferred Stock are hereinafter sometimes referred to collectively as the "Preferred Stocks." The Board of Directors is authorized to issue at any time and from time to time one or more series of Serial Preferred Stock with such dividends rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors. 3. On September 6, 1972, the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of $500,000 shares of a new series of Serial Preferred Stock, without par value, designated as "Serial Preferred Stock, $7.72 Series" bearing a dividend rate of $7.72 per share per annum; and with the following redemption prices: for the period from September 14, 1972, to and including September 14, 1977, $115 per share; thereafter to and including September 14, 1980, $110 per share; thereafter to and including September 14, 1983, $107 per share; thereafter to and including September 14, 1986, $104 per share; and thereafter $101 per share. A copy of the resolutions creating and authorizing the issuance and sale of the $7.72 Series of the Company's Serial Preferred Stock is attached hereto and incorporated fully herein by reference. IN WITNESS WHEREOF, this statement is signed by a Senior Vice President and the Secretary of the corporation this 7th day of September, 1972. CAROLINA POWER & LIGHT COMPANY By: Sherwood H. Smith, Jr. Senior Vice President Attest: By: J. L. Lancaster, Jr. Secretary (Corporate Seal) EXHIBIT F STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the relative rights and preferences of a series within a class of its shares: 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a special meeting of the shareholders duly convened and held on October 23, 1973, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the relative rights and preferences of a series of Preferred Stock A of the corporation, and which authorizes the Board of Directors to establish and issue one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices, and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolution or resolutions establishing the respective series of such stock, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out in part below: (1) (a) The Board of Directors is authorized to establish and issue at any time and from time to time (i) one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors and (ii) one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors. So long as shares of any series of Preferred Stock A shall be outstanding, no amendment or modification of the terms thereof fixed by the resolution or resolutions of the Board of Directors establishing any such series shall be made unless the holders of record of not less than a majority of the number of shares of such series then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at a meeting of such holders for such purpose. 3. On September 19, 1973, subject to the adoption by the shareholders of the Amendment to the Charter of the corporation authorizing a class of stock designated Preferred Stock A which Amendment was duly adopted by the shareholders on October 23, 1973, the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 500,000 share of Preferred Stock A, $7.45 Series, with a dividend rate of $7.45 per share per annum; a mandatory sinking fund commencing in 1984 designed to redeem 20,000 shares annually at a redemption price of $100 per share; a noncumulative option in the corporation to redeem not less than an additional 20,000 shares annually at a redemption price of $100 per share up to a maximum of 120,000 shares in the aggregate without premium; and redeemable at any time at prices ranging from $115 per share to $101 per share, subject to certain limitations on refundings prior to September 2, 1980. The above description is qualified by reference to the resolutions creating and authorizing the issuance of the corporation's Preferred Stock A, $7.45 Series, which are attached hereto and incorporated herein by reference. IN WITNESS WHEREOF, this statement is signed by a Senior Vice President and an Assistant Secretary of the corporation this 23rd day of October, 1973. CAROLINA POWER & LIGHT COMPANY By: Edward G. Lilly, Jr. Senior Vice President ATTEST: By: Robert M. Williams Assistant Secretary (Corporate Seal) EXHIBIT G STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the relative rights and preferences of a series within a class of its shares: 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a special meeting of the shareholders duly convened and held on October 23, 1973, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the relative rights and preferences of a series of Serial Preferred Stock of the corporation, and which authorizes the Board of Directors to establish and issue one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out in part below: (l) (a) The Board of Directors is authorized to establish and issue at any time and from time to time (i) one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors and (ii) one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors. So long as shares of any series of Preferred Stock A shall be outstanding, no amendment or modification of the terms thereof fixed by the resolution or resolutions of the Board of Directors establishing any such series shall be made unless the holders of record of not less than a majority of the number of shares of such series then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at a meeting of such holders for such purpose. 3. On February 20, 1974, the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 650,000 shares of a new series of Serial Preferred Stock designated as "Serial Preferred Stock, $8.48 Series" bearing a dividend rate of $8.48 per share per annum; and with the following redemption prices: for the period from February 28, 1974, to and including February 28, 1979, $115 per share; thereafter to and including February 28, 1982, $108 per share; thereafter to and including February 28, 1985, $105 per share; thereafter to and including February 28, 1988, $103 per share; and thereafter $101 per share. A copy of the resolutions creating and authorizing the issuance and sale of the $8.48 Series of the Company's Serial Preferred Stock is attached hereto and incorporated fully herein by reference. IN WITNESS WHEREOF, this statement is signed by a Senior Vice President and the Secretary of the corporation this 22nd day of February, 1974. CAROLINA POWER & LIGHT COMPANY By: Sherwood H. Smith, Jr. Senior Vice President ATTEST: By: J. L. Lancaster, Jr. Secretary (Corporate Seal) EXHIBIT H STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned Company hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the preferences, limitations and relative rights of a series of a class of its shares: 1. The name of the Company is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the Company adopted at a regular meeting of the shareholders duly convened and held on May 19, 1971, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the preferences, limitations and relative rights of the shares of Preference Stock of the Company, and which authorizes the Board of Directors to issue one or more series of Preference Stock with such dividend rates, redemption prices and series designations as may be fixed by resolution of the Board of Directors, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out below: PREFERENCE STOCK (22) The Board of Directors is authorized to issue at any time and from time to time one or more series of Preference Stock as hereinafter provided. (23) To the extent that variations in the designations, preferences, limitations and relative rights as between series of the Preference Stock are not established, fixed and determined herein, authority is hereby expressly vested in the Board of Directors to fix and determine the designations, preferences, limitations and relative rights of the shares of any series of such Preference Stock hereinafter established, including authority to fix any one or more of the following: (a) The distinctive designations of such series and the number of shares which shall constitute such series; (b) The rate of dividend; (c) The right of redemption, if any, and the price at and the terms and conditions on which the shares may be redeemed; (d) The amount payable upon shares in event of involuntary liquidation; (e) The amount payable upon shares in event of voluntary liquidation; (f) Sinking fund provisions, if any, for the redemption or purchase of shares; and (g) The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion. 3. On March 12, 1975, the Executive Committee of the Board of Directors of the Company duly adopted resolutions authorizing the issuance and sale of 2,000,000 shares of the A Series of Preference Stock, without par value, designated as "$2.675 Preference Stock, Series A" bearing a dividend rate of $2.675 per share per annum; and with the following redemption prices: For the period from March 20, 1975, to and including March 31, 1980, $27.68 per share; thereafter to and including March 31, 1985, $26.50 per share; thereafter to and including March 31, 1990, $25.75 per share; and thereafter $25.25 per share. A copy of the resolutions creating and authorizing the issuance and sale of the A Series of the Company's Preference Stock is attached hereto and incorporated fully herein by reference. IN WITNESS WHEREOF, this statement is signed by a Vice President and the Secretary of the Company this 13th day of March, 1975. CAROLINA POWER & LIGHT COMPANY By: William E. Graham, Jr. Vice President ATTEST: By: J. L. Lancaster, Jr. Secretary (Corporate Seal) EXHIBIT I STATEMENT OF CLASSIFICATIONS OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the relative rights and preferences of a series within a class of its shares: 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a special meeting of the shareholders duly convened and held on October 23, 1973, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the relative rights and preferences of a series of Preferred Stock A of the corporation, and which authorizes the Board of Directors to establish and issue one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices, and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolution or resolutions establishing the respective of such stock, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out in part below: (1) (a) The Board of Directors is authorized to establish and issue at any time and from time to time (i) one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors and (ii) one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors. So long as shares of any series of Preferred Stock A shall be outstanding, no amendment or modification of the terms thereof fixed by the resolution or resolutions of the Board of Directors establishing any such series shall be made unless the holders of record of not less than a majority of the number of shares of such series then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at a meeting of such holders for such purpose. 3. On September 6, 1979 the Executive Committee of the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 500,000 shares of Preferred Stock A, $8.75 Series, with a dividend rate of $8.75 per share per annum; a mandatory sinking fund commencing in 1985 designed to redeem 20,000 shares annually at a redemption price of $100 per share until 1999, after which 40,000 shares per year shall be redeemed; a noncumulative option in the corporation to redeem not greater than an additional 20,000 shares annually (40,000 shares after 1999) at a redemption price of $100 per share which shall be credited against the sinking fund redemption requirement in reverse chronological order; and which are redeemable at any time at prices ranging from $108.75 per share to $100.00 per share, subject to certain limitations on refinancings prior to September 1, 1989 and other specified means of redemption. The above description is qualified by reference to the resolutions creating and authorizing the issuance of the corporation's Preferred Stock A, $8.75 Series, which are attached hereto and incorporated herein by reference. IN WITNESS WHEREOF, this statement is signed by a Senior Vice President and an Assistant Secretary of the corporation this 7th day of September, 1979. CAROLINA POWER & LIGHT COMPANY By: William E. Graham, Jr. Senior Vice President ATTEST: By: Robert M. Williams Assistant Secretary (Corporate Seal) EXHIBIT J STATEMENT OF CLASSIFICATION OF SHARES OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes this Statement of Classification of Shares pursuant to Section 55-42 of the North Carolina General Statutes relating to the relative rights and preferences of a series within a class of its shares: 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Certificate of Amendment to the Charter of the corporation adopted at a special meeting of the shareholders duly convened and held on October 23, 1973, contained a resolution amending the Charter, which resolution, in part, relates to the fixing of the relative rights and preferences of a series of Preferred Stock A of the corporation, and which authorizes the Board of Directors to establish and issue one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices, and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolution or resolutions establishing the respective series of such stock, which Certificate of Amendment is on file in the office of the Secretary of State of North Carolina, and is set out in part below: (1) (a) The Board of Directors is authorized to establish and issue at any time and from time to time (i) one or more series of Serial Preferred Stock with such dividend rates and redemption prices and bearing such series designations as may be fixed by the Board of Directors and stated and expressed in the resolution or resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors and (ii) one or more series of Preferred Stock A which shall be of equal rank and identical in all respects except that there may be variations between series in the following relative rights and preferences: dividend rates, redemption prices and the terms and conditions on which shares may be redeemed, sinking fund provisions for the redemption or purchase of shares, and terms and conditions on which shares may be converted, if shares are issued with the privilege of conversion, and bearing such series' designations, all as may be fixed by the Board of Directors and stated or expressed in the resolutions establishing the respective series of such stock, the authority for which is hereby expressly vested in the Board of Directors. So long as shares of any series of Preferred Stock A shall be outstanding, no amendment or modification of the terms thereof fixed by the resolution or resolutions of the Board of Directors establishing any such series shall be made unless the holders of record of not less than a majority of the number of shares of such series then outstanding shall consent thereto in writing or by voting therefor in person or by proxy at a meeting of such holders for such purpose. 3. On February 20, 1980 the Executive Committee of the Board of Directors of the corporation duly adopted resolutions authorizing the issuance and sale of 180,000 shares of Preferred Stock A, $9.25 Series, with a dividend rate of $9.25 per share per annum; which are redeemable at any time at prices ranging from $109.00 per share to $100.00 per share, subject to certain limitations on refinancings prior to March 1, 1985 and other specified means of redemption. The above description is qualified by reference to the resolutions creating and authorizing the issuance of the corporation's Preferred Stock A, $9.25 Series, which are attached hereto and incorporated herein by reference. IN WITNESS WHEREOF, this statement is signed by a Senior Vice President and an Assistant Secretary of the corporation this 20th day of February, 1980. CAROLINA POWER & LIGHT COMPANY By: William E. Graham, Jr. Senior Vice President ATTEST: By: Robert M. Williams Assistant Secretary (Corporate Seal) ARTICLES OF AMENDMENT OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby executes these Articles of Amendment for the purpose of amending its charter: 1. The name of the corporation is Carolina Power & Light Company. 2. The following amendment to the Eleventh Article of the Restated Charter of the corporation was adopted by its shareholders of the 10th day of May, 1989, in the manner prescribed by law: To the fullest extent permitted by the North Carolina Business Corporation Act as it exists or may hereafter be amended, a director of the corporation shall not be liable to the corporation or any of its shareholders for monetary damages for breach of duty as a director. 3. The number of shares of the corporation outstanding at the time of such adoption was 84,210,520, and the number of shares entitled to vote thereon was 82,755,520. All classes entitled to vote on the amendment voted as one class. 4. The number of shares voted for such amendment was 64,941,613, and the number of shares voted against such amendment was 3,311,105. 5. The amendment herein effected does not give rise to dissenter's rights to payment for the reason that the only effect of such amendment is to eliminate directors' liability for monetary damages for certain breaches of their duties as directors pursuant to N.C.G.S. Section 55-7(11). IN WITNESS WHEREOF, these articles of amendment are signed by the Senior Vice President and Assistant Secretary of the corporation this 19th day of May, 1989. CAROLINA POWER & LIGHT COMPANY By Charles D. Barham, Jr. SEAL Senior Vice President By Robert M. Williams Assistant Secretary State of North Carolina ) County of Wake ) I, Fay P. Frederick, a notary public, hereby certify that on this 19th day of May, 1989, personally appeared before me Charles D. Barham, Jr. and Robert M. Williams, each of whom being by me first duly sworn, declared that he signed the foregoing document in the capacity indicated, that he was authorized so to sign, and that the statements therein contained are true. By: Fay P. Frederick Notary Public My commission expires: March 11, 1991 ARTICLES OF AMENDMENT OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby submits these Articles of Amendment for the purpose of amending its Restated Charter. 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Restated Charter of the corporation is hereby amended to increase the authorized number of shares of Common Stock from 100,000,000 to 200,000,000 by amending the first paragraph of Article Fourth as follows: a. The figure "135,300,000" there appearing shall be deleted in its entirety and in lieu and substitution thereof the figure "235,300,000" shall be added. b. The figure "100,000,000" there appearing shall be deleted in its entirety and in lieu and substitution thereof the figure "200,000,000" shall be added. As amended, the full text of the first paragraph of Article Fourth of the corporation's Restated Charter is as follows: FOURTH: The total number of the authorized shares of the Company is 235,300,000 shares divided into 300,000 shares of $5 Preferred Stock (hereinafter called "$5 Preferred Stock"), 20,000,000 shares of Serial Preferred Stock (hereinafter called "Serial Preferred Stock"), 5,000,000 shares of Preferred Stock A (hereinafter called "Preferred Stock A"), 10,000,000 shares of Preference Stock (hereinafter called "Preference Stock"), and 200,000,000 shares of Common Stock, all without nominal or par value. 3. Shareholder approval of the foregoing Amendment was obtained on the 13th day of May, 1992, as required by the North Carolina Business Corporation Act. This 27th day of May, 1992. CAROLINA POWER & LIGHT COMPANY By: Sherwood H. Smith, Jr. Title: Chairman/President and Chief Executive Officer ARTICLES OF AMENDMENT OF CAROLINA POWER & LIGHT COMPANY The undersigned corporation hereby submits these Articles of Amendment for the purpose of amending its Restated Charter. 1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY. 2. The Restated Charter of the corporation is hereby amended to establish a variable range for the size of the Board of Directors by amending Article SIXTH of the Restated Charter. As amended, the full text of Article SIXTH of the corporation's Restated Charter is as follows: SIXTH: The number of directors constituting the Board of Directors shall be determined in accordance with the Company's By-Laws. At least fifty percent of the number of directors so determined shall constitute a quorum. 3. Shareholder approval of the foregoing Amendment was obtained on the 10th day of May, 1995, as required by the North Carolina Business Corporation Act. This 10th day of May, 1995. CAROLINA POWER & LIGHT COMPANY By: Sherwood H. Smith, Jr. Title: Chairman and Chief Executive Officer EX-3.II 9 AMENDED BY-LAWS EXHIBIT 3(ii) B Y - L A W S of CAROLINA POWER & LIGHT COMPANY Raleigh, North Carolina (As Amended May 10, 1995) Meetings of Stockholders ________________________ Section 1. The annual meeting of the stockholders of the Company shall be held at the principal office of the Company, on the second Wednesday of May in each year, if not a legal holiday, and if a legal holiday, then on the next day not a legal holiday, at ten o'clock A.M., or at such other date, or hour, or at such other place within or without the State of North Carolina as stated in the notice of the meeting as the Board of Directors may determine. Section 2. Special meetings of the stockholders of the Company may be held upon call by a majority of the Board of Directors or of the Executive Committee, or by the Chairman of the Board, or by the President of the Company, at the principal office of the Company or at such other place within or without the State of North Carolina, and at such time, as may be stated in the call and notice. Section 3. Written notice of the time and place of every meeting of stockholders may be given, and shall be deemed to have been duly given, by mailing the same at least ten, but not more than sixty, days prior to the meeting, to each stockholder of record, entitled to vote at such meeting, and addressed to him at his address as it appears on the records of the Company, with postage thereon prepaid. Notice may also be given by any other lawful means. Section 4. In accordance with Section 55-7-20 of the General Statutes of North Carolina, the Company, or an officer having charge of the record of stockholders of the Company, shall prepare a list of stockholders which shall be available for inspection by stockholders, or their agents or attorneys. Section 5. The holders of a majority of the stock of the Company having voting powers must be present in person or represented by proxy at each meeting of the stockholders to constitute a quorum; absent such quorum, the meeting may be adjourned by a majority of shares voting on a motion to adjourn. If such adjournment is for less than thirty days, notice other than announcement at the meeting need not be given. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting. Section 6. When a quorum is present at any meeting, the vote of the holders of a majority of the outstanding stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of any applicable statute or of the Charter a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 7. The Board of Directors in advance of any meeting of stockholders may appoint two voting inspectors to act at any such meeting or adjournment thereof. If they fail to make such appointment, or if their appointees or any of them fail to appear at the meeting of stockholders, the chairman of the meeting may appoint such inspectors or any inspector to act at that meeting. Section 8. Meetings of the stockholders shall be presided over by the Chairman of the Board of Directors, or, if he is not present, the President, or, if the President is not present, a Vice President, or if neither of said officers is present, by a chairman pro tem to be elected at the meeting. The Secretary of the Company shall act as secretary of such meetings, if present, but if not present, some person shall be appointed by the presiding officer to act during the meeting. Section 9. Each holder of Preferred Stock and/or Common Stock shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of such stock held by such stockholder. Except where the transfer books of the Company have been closed or a date has been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted at any election for directors which has been transferred on the books of the Company within twenty days next preceding such election of directors. Directors and Meetings of Directors ___________________________________ Section 10. (a) The number of directors of the Company shall not be less than eleven (11) nor more than fifteen (15). The authorized number of directors, within the limits above specified, shall be determined by the affirmative vote of a majority of the whole board given at any regular or special meeting of the Board of Directors, provided that, the number of directors shall not be reduced to a number less than the number of directors then in office unless such reduction shall become effective only at and after the next ensuing meeting of the shareholders for the election of directors. This subsection (a) was adopted by the stockholders of the Company. (b) The directors shall appoint from among their number a Chairman, who shall serve at the pleasure of the Board. Members of the Board of Directors of the Company who are full-time employees of the Company shall retire from the Board upon attaining the age of 65 years; provided, however, that the Chairman and Chief Executive Officer of the Company shall be eligible to continue as a member of the Board after attaining the age of 65 years and will be considered a Director who is not employed full-time by the Company. Those persons who are not employed full-time by the Company shall not be eligible for election as a Director in any calendar year (or subsequent year) in which he or she has reached or will reach the age of 71 years. Any Director who reaches the age of 71 during a term of office shall resign as of the first day of the month so following unless otherwise determined by the Board. (c) The election of directors shall be held at the annual meeting of stockholders. The directors, other than those who may be elected under circumstances specified in the Company's Restated Charter, as it may be amended, by the holders of any class of stock having a preference over the Common Stock as to dividends or in liquidation, shall be classified into three classes, as nearly equal in number as possible. The initial terms of directors first elected or re-elected by the stockholders on the date this amendment to the By- Laws is adopted shall be for the following terms of office: Class I: One year Class II: Two years Class III: Three years and until their successors shall be elected and shall qualify. Upon the expiration of the initial term specified for each class of directors their successors shall be elected for three-year terms or until such time as their successors shall be elected and qualified. In the event of any increase or decrease in the number of directors, the additional or eliminated directorships, shall be classified or chosen so that all classes of directors shall remain or become equal in number, as nearly as possible. This subsection (c) was adopted by the stockholders of the Company. Section 11. In case of any vacancy in the number of directors through death, resignation, disqualification, increase in the number of directors or other cause, the remaining directors present at the meeting, by affirmative vote of a majority thereof, though less than a quorum, may elect a successor to hold office until the next shareholders' meeting at which directors are elected and until the election of his successor. Section 12. Regular meetings of the Board of Directors shall be held at times fixed by resolution of the Board,and special meetings may be held upon the written call of the Executive Committee, or by the Chairman of the Board, or by the President or by any two directors; and the Secretary or officer performing his duties shall give reasonable notice of all meetings of directors; provided, that a meeting may be held without notice immediately after the annual election, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the directors are present, or if those not present waive notice either before or after the meeting. All regular and special meetings shall be held at the principal offices of the Company, provided that the Board, from time to time, may order that any meeting be held elsewhere within or without the State of North Carolina. A majority of the whole Board of Directors shall constitute a quorum and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater proportion is required by the Charter. Section 13. The business and affairs of the Company shall be managed by its Board of Directors, which may exercise all such powers of the Company and do all such lawful acts and things which are not by law or by the Charter directed or required to be exercised or done by the stockholders; provided, however, that the officers of the Company shall, without prior action of the Board of Directors, perform all acts and things incidental to the usual and ordinary course of the business in which the Company is engaged as hereinafter provided by the By-Laws or as may hereafter be delegated by the Board of Directors. A majority of the Board of Directors may create one or more Committees and appoint other members of the Board of Directors to serve on such Committees. Each such Committee shall have two or more members, who serve at the pleasure of the Board of Directors. Any such Committee may exercise authority over any matters except those matters described in Section 55-8-25(e) of the General Statutes of North Carolina. Section 14. A majority of the whole Board of Directors, present at any meeting held after their election in each year, may appoint an Executive Committee, to consist of three or more directors, which Committee shall have and may exercise, during the intervals between meetings of the Board, by a majority vote of those present at a meeting, all the powers vested in the Board, except the following matters as more fully described in Section 55-8-25(e) of the General Statutes of North Carolina: - Authorize distributions; - Approve or propose to shareholders action that is by law required to be approved by the shareholders; - Fill vacancies on the Board of Directors or on any of its Committees; - Amend the Company's Articles of Incorporation pursuant to N.C.G.S. Section 55-10-102; - Adopt, amend or repeal the Company's By-Laws; - Approve a plan of merger not requiring shareholder approval; - Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or - Authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares. A majority of the whole Board of Directors present at any meeting shall have the power at any time to change the membership of such Committee and to fill vacancies in it. The Executive Committee may make rules for the conduct of its business. A majority of the members of said Committee shall constitute a quorum. The Chairman of the Executive Committee shall be appointed by the Board of Directors from the membership of the Executive Committee. Notices _______ Section 15. Notices to directors or stockholders shall be in writing and given personally or by mail to the directors and by mail to the stockholders at their addresses appearing on the books of the Company; provided, however, that no notice need be given any stockholder or director whose address is outside of the United States. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given verbally, or by telegram, or cable, and any such notice shall be deemed to be given when delivered to and accepted for transmittal by an office of the transmitting company. Section 16. Whenever any notice is required to be given under the provisions of applicable statutes or of the Charter or of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice in apt time. Officers, Their Authority, and Their Terms of Office ____________________________________________________ Section 17. The Board of Directors shall elect the officers of the Company, who shall consist of a Chairman, a President, one or more Senior Executive Vice Presidents and Executive Vice Presidents, two or more Senior Vice Presidents, three or more Vice Presidents, a Secretary, a Treasurer, a Controller and such other officers or assistant officers and agents as may be appointed by the Board of Directors. From time to time the Board of Directors may also elect a Vice Chairman who shall have such duties as described herein and as may from time to time be directed. Any two offices may be held by the same person but, no officer may act in more than one capacity where action of two or more officers is required. The Chairman and Vice Chairman, if any, of the Board of Directors shall be chosen from among the Directors, but the other officers need not be Directors of the Company. The Officers shall be chosen annually by the Board of Directors at its first meeting held after the Annual Meeting of Stockholders, or as soon thereafter as may be practical, and shall serve for the period specified or until a successor is chosen. Section 18. The Chairman shall be the Chief Executive Officer. In the event the Chairman is unavailable at the time for needed action, or in other circumstances as directed by the Chairman,then the Vice Chairman, if any, or the President if there is no Vice Chairman, shall be the next officer in line of authority to perform the duties of Chief Executive Officer. If the Chairman, the Vice Chairman and the President should be unavailable at the time for needed action, or in other circumstances as directed by the Chief Executive Officer, then the next officer in line of authority to perform the duties of the Chief Executive Officer shall be a Senior Executive Vice President or Executive Vice President as designated by the Chief Executive Officer. Section 19. Any officer may be reassigned duties by appropriate members of Senior Management at any time. Any officer may be removed from office at any time by the Board of Directors, without prejudice to the rights of the officer removed under an employment agreement in writing previously duly authorized by the Board of Directors or an Executive Committee of the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors, the President or any other officer of the Company. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The Board of Directors or an Executive Committee of the Board of Directors may fill any vacancy in any office occurring by virtue of the incumbent's death, resignation, removal or otherwise at any duly convened meeting of the Board. Section 20. The Board of Directors or the Chief Executive Officer of the Company may require the Treasurer and any other officer, employee or agent of the Company to give bond, in such sum and with such surety or sureties as either shall determine, for the faithful discharge of their duties. Section 21. Unless otherwise provided by the Board of Directors, the Company's Chief Executive Officer is vested with full power, authority, and the duty, to perform in person, and by delegation of authority to subordinate officers and employees of the Company, all acts and things deemed by him to be reasonably necessary or desirable to direct, handle, and manage, and in general carry on the Company's business transactions authorized by its Charter, in respect to all matters except those which by law must be performed by the Directors, including but not limited to the following: (a) constructing and contracting for the construction of generating plants authorized by the Directors;(b) operating and maintaining generating plants and appurtenant works; (c) constructing, maintaining, and operating substations, lines and all other facilities, appurtenant to the transmission, distribution and delivery of electricity; (d) acquiring by direct purchase, gift, exchange, or by condemnation, all rights of way, easements, lands, and estates in lands, flowage and water rights; (e) acquiring, maintaining and disposing of tools, machinery, appliances, materials, vehicles, and other appurtenant facilities;(f) employing, and fixing compensation of, Company personnel (except that the compensation of the Chief Executive Officer and the other Company employees who are members of the Board shall be fixed by the Board of Directors) in compliance with any procedures established by the Board; (g) borrowing money from time to time for terms not exceeding three years, and in connection therewith pledging the credit of the Company and executing unsecured loan agreements, promissory notes, and other desirable instruments evidencing obligations to the lender; (h) fixing the rates and conditions of service and dealing with regulatory bodies in respect thereto, and promoting the use of electricity by means of sales representatives, advertising and otherwise; (i) collecting and keeping accounts of all monies due the Company and making and preserving records of the Company's properties and accounts and fiscal affairs; and (j) possessing, preserving, and protecting all property, assets, and interests of the Company and instituting, prosecuting, intervening in, and defending actions and proceedings in any court or before any administrative agency or tribunal affecting the Company's interests and welfare. Certificates of Stock _____________________ Section 22. Every holder of stock in the Company shall be entitled to have a certificate or certificates certifying the number of fully paid shares owned by him in the Company which shall be in form consistent with law and with the Charter of the Company and as shall be approved by the Board of Directors. The stock certificates shall be signed by: 1) either the Chairman of the Board of Directors or the President, and 2) either the Secretary or Treasurer. Such signatures may be facsimile or other similar method. Section 23. All transfers of stock of the Company shall be made upon its books by authority of the holder of the shares or of his legal representative, and before a new certificate is issued the old certificate shall be surrendered for cancellation, provided that in case any certificate is lost, stolen or destroyed, a new certificate therefor may be issued pursuant to the provisions of Section 24 hereof. Section 24. No certificate of shares of stock of the Company shall be issued in place of any certificate alleged to have been lost or stolen or destroyed, except upon the approval of the Board of Directors who may require delivery to the Company of a bond in such sum as it may direct and subject to its approval as indemnity against any claim in respect to such lost or stolen or destroyed certificate; provided that the Board of Directors may delegate to the Company's Transfer Agent and Registrar authority to issue and register, respectively, from time to time without further action or approval of the Board of Directors, new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with corporate surety satisfactory to them in each instance protecting the Company and them against loss. Such legal evidence of such loss or theft or destruction shall be furnished to the Board of Directors as may be required by them. Section 25. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the capital stock of the Company, not inconsistent with the laws of North Carolina, the Charter of the Company and these By-Laws. The Board of Directors is authorized to appoint one or more transfer agents and registrars for the capital stock of the Company. Section 26. The Board of Directors shall have power to close the stock transfer books or in lieu thereof to fix record dates as authorized by law. General _______ Section 27. Subject to the provisions of the applicable statutes and the Charter of the Company, dividends, either cash or stock, upon the capital stock of the Company may be declared by the Board of Directors at any meeting thereof. Section 28. Deeds, bonds, notes, mortgages and contracts of the Company may be executed on behalf of the Company by the President, or a Vice President, or any one of such other persons as shall from time to time be authorized by the Board of Directors, and when necessary or appropriate may be attested or countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer. The corporate seal of the Company may be affixed to deeds, bonds, notes, mortgages, contracts or stock certificates by an appropriate officer of the Company by impression thereon, or, by order of an appropriate officer of the Company, a facsimile of said seal may be affixed thereto by engraving, printing, lithograph or other method. Section 29. The monies of the Company shall be deposited in the name of the Company in such bank or banks or trust company or trust companies as the Treasurer, with approval of the Chief Executive Officer, shall from time to time select, and shall be drawn out only by checks or other orders signed by persons designated by resolution by the Board of Directors. Section 30. As and when used in any of the foregoing By-Laws the words "stockholder" and "stockholders" shall be deemed and held to be synonymous with the words "shareholder" and "shareholders", and the word "stock" shall be deemed and held to be synonymous with the words "share" or "shares", respectively, as used in Chapter 55 of the General Statutes of North Carolina. Amendment of By-Laws ____________________ Section 31. The Board of Directors shall have power from time to time to adopt, amend, alter, add to, and repeal By-Laws for the Company by affirmative vote of a majority of the directors then holding office, provided, however, that the By-Laws may not be amended by the Board of Directors to require more than a majority of the voting shares for a quorum at a stockholder's meeting, or more than a majority vote at such meeting, except where higher percentages are required by law. Any By-Laws so made or any provisions thereof may be altered or repealed by vote of the holders of a majority of the total number of shares of the Company then issued and outstanding and entitled to vote thereon at any annual stockholders' meeting. Additionally, any By-Law adopted, amended or repealed by the stockholders may not be readopted, amended or repealed by the Board of Directors unless the Charter or a By-Law adopted by the stockholders authorizes the Board of Directors to adopt, amend or repeal that particular By- Law or the By-Laws generally. Indemnity of Officers and Directors ___________________________________ Section 32. (a) The Company shall reimburse or indemnify any past, present or future officer or director of the Company for and against such liabilities and expenses as are authorized by (1) a resolution adopted by the Company's stockholders at a special meeting held on December 31, 1943, which is made a part hereof as though incorporated herein, or (2) by Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina. Persons serving as officers or directors of the Company or serving in any such capacity at the request of the Company in any other corporation, partnership, joint venture, trust or other enterprise shall be provided reimbursement and indemnification by the Company to the maximum extent allowed hereunder or under applicable law, including without limitation Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina. (b) In addition to the reimbursement and indemnification provisions set forth above, any person who at any time serves or has served (1) as an officer or director of the Company, or (2) at the request of the Company as an officer of director (or in any position of similar authority, by whatever title known) of any other corporation, partnership, joint venture, trust or other enterprise, or(3) as an individual trustee or administrator under any employee benefit plan, shall have a right to be indemnified by the Company to the fullest extent permitted by law against (i) all reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with any pending, threatened or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by the Company or on behalf of the Company in a derivative action, seeking to hold him liable by reason of or arising out of his status as such or his activities in any of the foregoing capacities, and (ii) payments made by him in satisfaction of any judgement, money decree, fine, penalty or settlement for which he may have become liable in any such action, suit or proceeding;provided, however, that the Company shall not indemnify any person against liability or litigation expense 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 Company. (c) The Board of Directors shall take all action as may be necessary or appropriate to authorize the Company to pay all amounts required under these Sections 32(a),(b) and (c) of the By-Laws including, without limitation and to the extent deemed to be appropriate, necessary, or required by law (1) making a good faith evaluation of the manner in which the claimant for indemnity acted and of the reasonable amount of indemnity due such individual, or (2) making advances of costs and expenses, or (3) giving notice to, or obtaining approval by, the shareholders of the Company. (d) Any person who serves or has served in any of the aforesaid capacities for or on behalf of the Company shall be deemed to be doing or to have done so in reliance upon, and as consideration for, the rights of reimbursement and indemnification provided for herein. Such rights of reimbursement and indemnification shall inure to the benefit of the legal representatives of such individuals, shall include amounts paid in settlement and shall not be exclusive of any other rights to which such individuals shall be entitled apart from the provisions of this Section. (e) The Company may, in its sole discretion, wholly or partially indemnify and advance expenses to any employee or agent of the Company to the same extent as provided herein for officers and directors.