-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J2YUNWoXwQ2+a3Ho3GcX04vaSuL2RKD4tnUFiI2rxzNo7Ne5XB0dqT9/B1G7iTSs IXfRQfA48grjhxCTf0zRKw== 0000940180-99-000562.txt : 19990524 0000940180-99-000562.hdr.sgml : 19990524 ACCESSION NUMBER: 0000940180-99-000562 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 28 FILED AS OF DATE: 19990521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CORP CENTRAL INDEX KEY: 0000030371 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560205520 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-79065 FILM NUMBER: 99632151 BUSINESS ADDRESS: STREET 1: 526 SOUTH CHURCH STREET CITY: CHARLOTTE STATE: NC ZIP: 28201-1006 BUSINESS PHONE: 7045946200 MAIL ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242 FORMER COMPANY: FORMER CONFORMED NAME: DUKE POWER CO /NC/ DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CAPITAL TRUST II CENTRAL INDEX KEY: 0001049847 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-79065-01 FILM NUMBER: 99632152 BUSINESS ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242-0001 BUSINESS PHONE: 7045940887 MAIL ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CAPITAL TRUST IV CENTRAL INDEX KEY: 0001086672 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-79065-02 FILM NUMBER: 99632153 BUSINESS ADDRESS: STREET 1: 1201 MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: 7043828152 MAIL ADDRESS: STREET 1: C/O CHASE MANHATTAN BANK, DELAWARE STREET 2: 1201 MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CAPITAL TRUST III CENTRAL INDEX KEY: 0001086673 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-79065-03 FILM NUMBER: 99632154 BUSINESS ADDRESS: STREET 1: 1201 MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: 7043828152 MAIL ADDRESS: STREET 1: C/O CHASE MANHATTAN BANK, DELAWARE STREET 2: 1201 MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19801 S-3 1 FORM S-3 As filed with the Securities and Exchange Commission on May 21, 1999 Subject to Amendment Registration Nos. 333- 333- 333- 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Duke Energy Corporation North Carolina 56-0205520 Duke Energy Capital Trust II Delaware 52-6883048 Duke Energy Capital Trust III Delaware Applied For Duke Energy Capital Trust IV Delaware Applied For (Exact name of each registrant (State or other jurisdiction of (I.R.S. Employer Identification Nos.) as specified in its charter) incorporation or organization)
526 South Church Street Charlotte, North Carolina 28202 704-594-6200 (Address, including zip code, and telephone number,including area code, of each registrant's principal executive offices) -------------- RICHARD J. OSBORNE JOHN SPUCHES Executive Vice President and Chief Financial Officer Dewey Ballantine LLP 526 South Church Street 1301 Avenue of the Americas Charlotte, North Carolina 28202 New York, New York 10019 Telephone No. 704-382-5159 Telephone No. 212-259-7700
(Names, addresses, including zip codes, and telephone numbers, including area codes, of agents for service of each registrant) -------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] __________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] __________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] -------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Proposed Maximum Amount Offering Price Proposed Maximum Title of Each Class of to be Per Aggregate Offering Amount of Securities to be Registered Registered(1) Unit(1)(2)(3) Price(1)(2)(3) Registration Fee(1) - ----------------------------------------------------------------------------------------------------------- Duke Energy Capital Trust II Trust Preferred Securities................ - ----------------------------------------------------------------------------------------------------------- Duke Energy Capital Trust III Trust Preferred Securities................ - ----------------------------------------------------------------------------------------------------------- Duke Energy Capital Trust IV Trust Preferred Securities................ - ----------------------------------------------------------------------------------------------------------- Duke Energy Corporation Junior Subordinated Notes ................. - ----------------------------------------------------------------------------------------------------------- Duke Energy Corporation Guarantees with respect to Trust Preferred Securities of Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV(4)(5)............................. - ----------------------------------------------------------------------------------------------------------- Total................................ $500,000,000 100% $500,000,000 $139,000
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) There are being registered hereunder such presently indeterminate number of Trust Preferred Securities of Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV with an aggregate initial offering price not to exceed $500,000,000. Junior Subordinated Notes also may be issued to Duke Energy Capital Trust II, Duke Energy Capital Trust III or Duke Energy Capital Trust IV and later distributed upon dissolution and distribution of the assets thereof, which would include such Junior Subordinated Notes for which no separate consideration will be received. Pursuant to Rule 457(o) under the Securities Act of 1933, which permits the registration fee to be calculated on the basis of the maximum offering price of all the securities listed, the table does not specify by each class information as to the amount to be registered, proposed maximum offering price per unit or proposed maximum aggregate offering price. (2) Estimated solely for the purpose of determining the registration fee. (3) Exclusive of accrued interest and distributions, if any. (4) No separate consideration will be received for the Duke Energy Corporation Guarantees. Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is payable in respect of the Duke Energy Corporation Guarantees. (5) Includes the obligations of Duke Energy Corporation under the respective Trust Agreements, the Subordinated Indenture, the related series of Junior Subordinated Notes, the respective Guarantees and the respective Agreements as to Expenses and Liabilities, which include the Corporation's covenant to pay any indebtedness, expenses or liabilities of the Trusts (other than obligations pursuant to the terms of the Trust Preferred Securities or other similar interests), all as described in this registration statement. -------------- The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this Prospectus is not complete and may be changed. We may + +not sell the Preferred Securities until the registration statement filed with + +the Securities and Exchange Commission is effective. This Prospectus is not + +an offer to sell the Preferred Securities and it is not soliciting an offer + +to buy the Preferred Securities in any state where the offer or sale of the + +Preferred Securities is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ PROSPECTUS SUPPLEMENT (To Prospectus dated , 1999) Subject to Completion dated May 21, 1999 [ ] Preferred Securities Duke Energy Capital Trust [ ] % Trust Preferred Securities (Liquidation amount $ per Preferred Security) Guaranteed, to the extent described herein, by Duke Energy Corporation ---------- This is an offering of % Trust Preferred Securities of Duke Energy Capital Trust [ ]. The Trust will use the proceeds from the sale of the Preferred Securities to purchase $ of Duke Energy's Series Junior Subordinated Notes. The Series Junior Subordinated Notes are unsecured subordinated obligations of Duke Energy and have payment terms similar to those of the Preferred Securities. The Trust will rely on the payments it receives on the Series Junior Subordinated Notes to fund all payments on the Preferred Securities. Duke Energy will guarantee payments on the Preferred Securities to the extent described in this Prospectus Supplement. The Preferred Securities will pay cumulative cash distributions at a yearly rate of % of the liquidation amount of $ for each Preferred Security, payable quarterly on March 31, June 30, September 30 and December 31 of each year, beginning on , . However, at any time and as often as it wishes, Duke Energy may begin an extension period, during which distributions will be deferred for up to consecutive quarters, but not beyond the maturity date of the Series Junior Subordinated Notes. During an extension period, deferred distributions on the Preferred Securities will accumulate additional distributions at a yearly rate of %, to the extent legally permitted. When the Series Junior Subordinated Notes mature or when Duke Energy redeems or repays any Series Junior Subordinated Notes, the Trust will redeem a related amount of Preferred Securities. The maturity date of the Series Junior Subordinated Notes is , . Duke Energy may redeem the Series Junior Subordinated Notes (1) at any time on or after , , in whole or in part, or (2) at any time during the 90 days after the occurrence of certain tax or regulatory developments, in whole but not in part. The redemption price of the Preferred Securities will equal their liquidation amount plus any accumulated and unpaid distributions. Duke Energy may cause the Trust to distribute to the holders of Preferred Securities an equivalent amount of Series Junior Subordinated Notes at any time in exchange for the Preferred Securities. You should carefully read "Risk Factors" beginning on page S-8 to read about specific risks associated with the Preferred Securities, as well as the other information in this Prospectus Supplement and the accompanying Prospectus, before you make your investment decision. Duke Energy intends to list the Preferred Securities on the New York Stock Exchange under the symbol " ". Duke Energy expects trading in the Preferred Securities to begin on the New York Stock Exchange within 30 days after the original issue date. ----------
Per Preferred Security Total ---------------------- ----- Initial Public Offering Price...................... Underwriting Discounts and Commissions............. (1) (1) Proceeds, before expenses, to the Trust............
- ----- (1) Underwriting commissions of $ per Preferred Security (or $ in the aggregate) will be paid by Duke Energy. ---------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus Supplement or the accompanying Prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the Preferred Securities on , . ---------- [Names of Underwriters] ---------- Prospectus Supplement dated , . You should rely only on the information contained or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus. Neither Duke Energy nor the Trust has authorized anyone else to provide you with different information. Neither Duke Energy nor the Trust is making an offer of these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this Prospectus Supplement and the accompanying Prospectus is accurate as of the date on the front of the documents only. Duke Energy's business, financial condition, results of operations and prospects may have changed since that date. TABLE OF CONTENTS
Page ---- Prospectus Supplement Summary of Offering...................................................... S-3 Risk Factors............................................................. S-8 Duke Energy Capital Trust [ ]........................................... S-11 Description of the Preferred Securities.................................. S-12 Description of the Series Junior Subordinated Notes.................... S-25 Relationship Among the Preferred Securities, the Series Junior Subordinated Notes and the Guarantee.................................... S-29 Material Federal Income Tax Considerations............................... S-30 Underwriting............................................................. S-33 Validity of the Securities............................................... S-34 Prospectus About This Prospectus.................................................... 2 Where You Can Find More Information...................................... 2 Forward-Looking Statements............................................... 3 Duke Energy Corporation.................................................. 4 Use of Proceeds.......................................................... 7 The Trusts............................................................... 7 Accounting Treatment..................................................... 8 Description of the Preferred Securities.................................. 8 Description of the Guarantees............................................ 9 Description of the Junior Subordinated Notes............................. 12 Plan of Distribution..................................................... 20 Experts.................................................................. 21 Validity of the Securities............................................... 21
S-2 SUMMARY OF OFFERING This summary highlights information appearing elsewhere in this Prospectus Supplement and in the accompanying Prospectus. This summary does not contain all the information you should consider before investing in the Preferred Securities. You should pay special attention to the Risk Factors section of this Prospectus Supplement to determine whether an investment in the Preferred Securities is appropriate for you. Duke Energy Corporation..... Duke Energy, together with its subsidiaries, is an integrated energy and energy services provider with the ability to offer physical delivery and management of both electricity and natural gas throughout the United States and abroad. Duke Energy, directly or through its subsidiaries, provides these and other services through seven business segments: Electric Operations, Natural Gas Transmission, Field Services, Trading and Marketing, Global Asset Development, Other Energy Services and Real Estate Operations. The principal executive offices of Duke Energy are located at 526 South Church Street, Charlotte, NC 28202 (telephone (704) 594-6200). The Trust................... Duke Capital Financing Trust [ ] is a statutory business trust created solely for the purpose of issuing the Preferred Securities to the public and the Common Securities to Duke Energy and investing the proceeds in an equivalent amount of Duke Energy's Series Junior Subordinated Notes due , . Preferred Securities Offered..................... % Trust Preferred Securities evidencing preferred undivided beneficial interests in the assets of the Trust. Distributions; Distribution Dates....................... Holders of the Preferred Securities are entitled to receive cumulative cash distributions at a yearly rate of % of the liquidation amount of $ per Preferred Security. Distributions will accrue from the original issue date. Distributions will be payable, unless deferred, quarterly on March 31, June 30, September 30 and December 31 of each year, commencing on , . Subject to any deferral, distributions are payable quarterly on the Preferred Securities. The distribution dates will correspond to the interest payment dates on the Series S-3 Junior Subordinated Notes and the rate at which distributions will be paid on the Preferred Securities will correspond to the interest rate on the Series Junior Subordinated Notes. If Duke Energy does not pay principal or interest on the Series Junior Subordinated Notes, no amounts will be paid on the Preferred Securities. Record Dates................ The close of business on the 15th calendar day before the relevant distribution date. Series Junior Subordinated Notes.......... $ of Duke Energy's Series Junior Subordinated Notes due , . Duke Energy will issue the Series Junior Subordinated Notes under its Subordinated Indenture. The Trust will use the proceeds from the sale of the Preferred Securities to purchase Series Junior Subordinated Notes. The Series Junior Subordinated Notes will be unsecured subordinated obligations of Duke Energy. Deferral of Distributions... Duke Energy has the right to defer payments of interest on the Series Junior Subordinated Notes by extending the interest payment period on the Series Junior Subordinated Notes, at any time and as often as it wishes, for up to consecutive quarters (each, an "extension period") but not beyond the maturity date of the Series Junior Subordinated Notes. If Duke Energy defers payments of interest on the Series Junior Subordinated Notes, distributions on the Preferred Securities will also be deferred. Deferred interest will bear interest at a yearly rate of %, compounded quarterly, to the date of payment, to the extent legally permitted. Payments of deferred interest, and any interest on deferred interest, on the Series Junior Subordinated Notes will be passed through to the holders of the Preferred Securities. The only restrictions on Duke Energy's ability to defer payments of interest are that during the extension period Duke Energy may not, with certain exceptions, (1) pay dividends on, or redeem or otherwise purchase, any of its capital stock or (2) pay principal or interest on, or redeem or otherwise purchase, any debt securities ranking equal in S-4 priority with or subordinate to the Series Junior Subordinated Notes. During an extension period, holders of Preferred Securities will recognize interest income for United States federal income tax purposes in advance of the receipt of the cash payments of those deferred distributions even if the holder is a cash basis taxpayer. Redemption.................. The Trust will redeem the Preferred Securities when Duke Energy repays the Series Junior Subordinated Notes at maturity or upon redemption. Duke Energy may redeem the Series Junior Subordinated Notes at any time, in whole or in part, on or after , . Duke Energy may also redeem the Series Junior Subordinated Notes at any time, in whole but not in part, during the 90 days after the occurrence of a Special Event (see below). Redemption Price............ If the Preferred Securities are redeemed or the Trust is terminated without distribution of the Series Junior Subordinated Notes, each holder of a Preferred Security will be entitled to receive a liquidation amount of $ per Preferred Security plus accrued and unpaid distributions (including any interest on those distributions) to the date of payment. Special Event............... A "Special Event" means a Tax Event or an Investment Company Act Event. A "Tax Event" means that because of changes in certain tax laws or regulations or in how they are interpreted or applied, there is more than an insubstantial risk that (1) the Trust would be subject to United States federal income tax with respect to income accrued or received on the Series Junior Subordinated Notes, (2) interest payable on the Series Junior Subordinated Notes would not be deductible by Duke Energy for United States federal income tax purposes or (3) the Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges. An "Investment Company Act Event" means that because of changes in certain laws or regulations or in how they are interpreted or applied, there is more than an S-5 insubstantial risk that the Trust is or will be considered an "investment company" under the Investment Company Act of 1940. Termination of Trust........ Duke Energy will have the right to terminate the Trust at any time and cause the Property Trustee to distribute Series Junior Subordinated Notes to the holders of the Preferred Securities in exchange for those Preferred Securities. This right is optional and wholly in Duke Energy's discretion. Ranking of Series Junior Subordinated Notes... The Series Junior Subordinated Notes will be subordinate and junior in right of payment to all indebtedness for borrowed money and other obligations of Duke Energy included in the definition of Senior Indebtedness. See "Description of the Junior Subordinated Notes-- Subordination" in the accompanying Prospectus for a description of Senior Indebtedness. Guarantee................... Duke Energy will guarantee the payment of distributions and other payments by the Trust on the Preferred Securities, but only to the extent that the Trust has funds legally and immediately available to make those distributions and payments. Ranking of Guarantee........ Duke Energy's obligations under the Guarantee will be subordinate and junior in right of payment to all of Duke Energy's other liabilities, other than similar guarantees. The Guarantee will rank equal in priority with Duke Energy's preferred stock and preferred stock A and with similar guarantees. Book-Entry Issuance......... The Preferred Securities will be represented by a global certificate or certificates deposited with and registered in the name of The Depository Trust Company, New York, New York or its nominee. This means that investors will not receive certificates for their Preferred Securities. Listing..................... Duke Energy intends to list the Preferred Securities on the New York Stock Exchange under the symbol " " and expects that trading in the Preferred Securities on the New York Stock Exchange will begin within 30 days after the original issue date. S-6 The Trustees................ The Chase Manhattan Bank will act as Property Trustee of the Trust. Two of Duke Energy's officers will act as the Administrative Trustees of the Trust. Chase Manhattan Bank Delaware will be the Delaware Trustee of the Trust. The Chase Manhattan Bank also serves as the Indenture Trustee--the trustee under Duke Energy's Subordinated Indenture under which the Series Junior Subordinated Notes will be issued--and will act as the Guarantee Trustee--the trustee under the Guarantee. The Chase Manhattan Bank is also the Trustee under Duke Energy's First and Refunding Mortgage and its Senior Indenture. The Property Trustee, Delaware Trustee and Administrative Trustees together are sometimes referred to as the "Securities Trustees" in this Prospectus Supplement. S-7 RISK FACTORS An investment in the Preferred Securities involves a number of risks. Some risks relate to the nature of the Preferred Securities. Other risks relate to Duke Energy. You should carefully read and consider the following risk factors, as well as the other information contained in this Prospectus Supplement and the accompanying Prospectus, before you buy any Preferred Securities. Payments on the Preferred Securities Depend upon Payments on the Series Junior Subordinated Notes The only source of funds for payments on the Preferred Securities will be the payments that Duke Energy makes on the Series Junior Subordinated Notes. If Duke Energy fails to make timely payments on the Series Junior Subordinated Notes, the Trust will lack available funds for distributions or other payments on the Preferred Securities. Rights under the Guarantee If the Trust does not have sufficient funds legally and immediately available, the holders of the Preferred Securities will not be able to rely upon the Guarantee for distributions or other payments on the Preferred Securities. Ranking of the Guarantee Duke Energy's obligations under the Guarantee will rank: . subordinate and junior in right of payment to all of Duke Energy's other liabilities, other than obligations or liabilities that rank equal in priority or subordinate by their terms; . equal in priority with Duke Energy's preferred stock and preferred stock A and similar guarantees; and . senior to Duke Energy's common stock. Ranking of the Series Junior Subordinated Notes Duke Energy's obligations under the Series Junior Subordinated Notes are subordinate and junior in right of payment to all of Duke Energy's Senior Indebtedness. As of , , Duke Energy's Senior Indebtedness totaled approximately $ . For a description of Duke Energy's Senior Indebtedness, see "Description of the Junior Subordinated Notes--Subordination" in the accompanying Prospectus. The Preferred Securities, the Series Junior Subordinated Notes and the Guarantee do not limit Duke Energy's ability to incur additional Senior Indebtedness or other indebtedness. Duke Energy conducts its non-electric operations, and certain of its electric operations outside its service area in the Carolinas, through subsidiaries. Accordingly, Duke Energy's ability to meet its obligations under the Series Junior Subordinated Notes is partly dependent on the earnings and cash flows of those subsidiaries and the ability of those subsidiaries to pay dividends or to advance or repay funds to Duke Energy. In addition, the rights that Duke Energy and its creditors will have to participate in the assets of any such subsidiary upon the subsidiary's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors. Duke Energy anticipates that certain of its subsidiaries will incur substantial amounts of debt in the expansion of their businesses. S-8 Option to Extend Interest Payment Period Duke Energy will have the right, at any time and from time to time, to defer interest payments on the Series Junior Subordinated Notes for up to consecutive quarters, but not beyond the maturity date of the Series Junior Subordinated Notes. Any such deferral period is called an "extension period" in this Prospectus Supplement. During an extension period distributions on the Preferred Securities will also be deferred. Duke Energy will pay interest on any deferred interest on the Series Junior Subordinated Notes at a yearly rate of %, compounded quarterly, to the date of payment, to the extent legally permitted. Payments of deferred interest, together with any interest on those payments, will be passed through to the holders of the Preferred Securities. If Duke Energy defers interest payments, each holder of Preferred Securities, or of Series Junior Subordinated Notes, will recognize income as original issue discount for federal income tax purposes before the holder is paid deferred distributions of interest. This will be so even if the holder is a cash basis taxpayer. A holder of Preferred Securities, or of Series Junior Subordinated Notes, will not receive cash related to that income if the holder disposes of the Preferred Securities, or the Series Junior Subordinated Notes, before the record date for the payment of such amounts. Investors should consult their own tax advisors with respect to these and other tax consequences of an investment in the Preferred Securities. Special Event Redemption Duke Energy will have the option to redeem the Series Junior Subordinated Notes in whole during the 90 days after the occurrence of a Special Event. If Duke Energy redeems the Series Junior Subordinated Notes after the occurrence of a Special Event, the Trust will redeem the Preferred Securities. Distribution of Series Junior Subordinated Notes upon Termination of Trust Duke Energy will have the right to terminate the Trust at any time and cause the Series Junior Subordinated Notes to be distributed to the holders of the Preferred Securities in liquidation of the Trust. There can be no assurance as to the market price for the Series Junior Subordinated Notes if a termination and liquidation of the Trust occurs and Series Junior Subordinated Notes are distributed in exchange for Preferred Securities. The Series Junior Subordinated Notes that the investor would receive may trade at less than the price that the investor paid to purchase the Preferred Securities. Limited Voting Rights Holders of Preferred Securities will have limited voting rights. See "Description of the Preferred Securities--Voting Rights" for additional information. S-9 In general, holders of Preferred Securities will not be entitled to vote to appoint, remove or replace any of the Securities Trustees. Duke Energy, as the holder of the Common Securities, generally has that right. However, the holders of the Preferred Securities will have the right to appoint a substitute Property Trustee or Delaware Trustee if an event of default with respect to the Series Junior Subordinated Notes occurs and is continuing. Trading Characteristics of Preferred Securities Duke Energy expects to list the Preferred Securities on the New York Stock Exchange. The Preferred Securities are expected to trade at a price that takes into account the value, if any, of accrued but unpaid distributions. Accordingly, purchasers will not pay and sellers will not receive accrued and unpaid interest with respect to Preferred Securities that is not included in the trading price of the Preferred Securities. If a holder disposes of Preferred Securities prior to the occurrence of an extension period, any portion of the amount received that is attributable to accrued interest will be treated as interest income for tax purposes and will not be treated as part of the amount realized for purposes of determining gain or loss on the disposition of the Preferred Securities. If an extension period occurs, interest on the Series Junior Subordinated Notes will be included in the income of holders of Preferred Securities as it accrues rather than when it is paid. If an extension period occurs, a holder that disposes of its Preferred Securities between record dates for payments of distributions will be required to include in income as original issue discount accrued but unpaid interest on the Series Junior Subordinated Notes through the date of disposition and to add that amount to the holder's adjusted tax basis in the related Series Junior Subordinated Notes deemed disposed of. A holder generally will recognize a capital loss to the extent the selling price is less than the holder's adjusted tax basis. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for federal income tax purposes. No public market for the Preferred Securities existed before this offering. There can be no assurance that an active public market for the Preferred Securities will develop. If an active trading market for the Preferred Securities does develop, there can be no assurance that it will be sustained after this offering. Investment in Trust Involves Risks Parallel to Those of Investment in Duke Energy An investment in the Trust, like an investment in Duke Energy, will involve risks associated with Duke Energy's operating conditions and will be affected by the competitive factors, economic conditions, industry conditions and equity market conditions to which Duke Energy is subject. Consequences of Highly Leveraged Transaction The Subordinated Indenture does not contain provisions that will protect holders of the Series Junior Subordinated Notes if Duke Energy engages in a highly leveraged transaction. The Trust Agreement does not contain provisions that will protect holders of Preferred Securities under those circumstances. S-10 DUKE ENERGY CAPITAL TRUST [ ] Duke Energy created the Trust as a statutory business trust under Delaware law. The Trust's business is defined in a trust agreement executed by Duke Energy, as depositor, and the Delaware Trustee. That trust agreement will be amended when the Preferred Securities are issued. The amended trust agreement will be in substantially the form filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus are a part. The amended trust agreement is called the "Trust Agreement" in this Prospectus Supplement. The Trust exists for the exclusive purposes of issuing and selling the Preferred Securities to the public and the Common Securities to Duke Energy and investing the gross proceeds in the Series Junior Subordinated Notes. The Trust may engage in only those other activities as are necessary, appropriate, convenient or incidental to those purposes. The Preferred Securities and the Common Securities together are sometimes called the "Trust Securities" in this Prospectus Supplement. The Trust has a term of approximately years from its creation, but may terminate earlier as provided in the Trust Agreement. The Securities Trustees will conduct the Trust's business and affairs. Duke Energy, as the holder of the Common Securities, will appoint the Securities Trustees. Two of Duke Energy's officers initially will serve as Administrative Trustees. The Chase Manhattan Bank will serve as Property Trustee. Chase Manhattan Bank Delaware will serve as Delaware Trustee. Duke Energy, as the holder of all the Common Securities, will have the right to appoint, remove or replace any of the Securities Trustees, subject to the right of the holders of a majority of the Preferred Securities to appoint a substitute Property Trustee and Delaware Trustee if an event of default with respect to the Series Junior Subordinated Notes occurs. The Property Trustee will hold legal title to the Series Junior Subordinated Notes for the benefit of the Trust and the holders of the Trust Securities. The Property Trustee will have the power, with certain exceptions, to exercise all rights, powers and privileges under the Subordinated Indenture as the holder of the Series Junior Subordinated Notes. The Series Junior Subordinated Notes will constitute substantially all the assets of the Trust. Other assets that may constitute "Trust Property" include any cash on deposit in, or owing to, the payment account established under the Trust Agreement. Trust Property will also include any other property or assets that the Property Trustee holds under the Trust Agreement. The Trust may from time to time receive cash from Duke Energy under the Agreement as to Expenses and Liabilities between Duke Energy and the Trust. The Trust's office address in the State of Delaware is c/o Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The principal place of business of the Trust will be c/o Duke Energy Corporation, 526 South Church Street, Charlotte, North Carolina 28202 (telephone (704) 594-6200). S-11 DESCRIPTION OF THE PREFERRED SECURITIES The following description of the Preferred Securities is only a summary and is not intended to be comprehensive. For additional information you should refer to the Trust Agreement. The form of the Trust Agreement is an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus are a part. General The Trust Agreement authorizes the Administrative Trustees to issue the Preferred Securities and the Common Securities on behalf of the Trust. The Preferred Securities represent preferred undivided beneficial interests in the assets of the Trust. The Common Securities represent common undivided beneficial interests in the assets of the Trust. The Trust Agreement does not permit the Trust to issue any other securities or to incur any indebtedness for borrowed money. The Preferred Securities will have an aggregate liquidation amount equal to approximately 97% of the total capital of the Trust. The Common Securities will have an aggregate liquidation amount equal to approximately 3% of the total capital of the Trust. Duke Energy will own all the Common Securities. In general, the Preferred Securities will rank equal in priority with the Common Securities and the Trust will make payments on the Preferred Securities on a pro rata basis with the Common Securities. The rights of the holders of the Preferred Securities to receive distributions and liquidation, redemption and other payments will be senior to the rights of the holder of the Common Securities if an event of default occurs under the Subordinated Indenture with respect to the Series Junior Subordinated Notes. Duke Energy has guaranteed, on a subordinated basis, certain payments with respect to the Preferred Securities. Those payments are payments of distributions and payments if the Preferred Securities are redeemed or the Trust is liquidated, in each case to the extent set forth in the Guarantee. The Guarantee does not cover those payments when the Trust does not have sufficient funds legally and immediately available to make the payments. In that event, the holders of a majority of the Preferred Securities may direct the Property Trustee to enforce its rights under the Series Junior Subordinated Notes. In addition, a holder of Preferred Securities may institute a legal proceeding directly against Duke Energy, without first instituting a legal proceeding against the Property Trustee or any other person or entity, to enforce payment to that holder of principal or interest on Series Junior Subordinated Notes having a principal amount equal to the liquidation amount of that holder's Preferred Securities on or after the due dates specified or provided for in the Series Junior Subordinated Notes. These mechanisms and obligations, together with Duke Energy's obligations under the Agreement as to Expenses and Liabilities, provide a full and unconditional guarantee by Duke Energy of the payments due on the Preferred Securities, subject to certain subordination provisions. S-12 Distributions Distributions on the Preferred Securities will be fixed at a yearly rate of % and will accrue from the original issue date of the Preferred Securities. Distributions on the Preferred Securities will be payable quarterly in arrears on the following distribution dates: March 31, June 30, September 30 and December 31 of each year, commencing on , , except if an extension period occurs. Distributions payable on a date that is not a Business Day will be paid on the next day that is a Business Day (without any interest or other payment due to the delay), except that if that Business Day falls in the next calendar year, the payment will be made on the immediately preceding Business Day. In each such case, payment will be made with the same effect as if made on the date the payment was originally payable. "Business Day" means any day other than a Saturday or Sunday, a day on which banks in New York City are authorized or obligated by law or executive order to remain closed or a day on which the principal corporate trust office of the Property Trustee or the Indenture Trustee is closed for business. Distributions on the Preferred Securities will be payable to holders of record at the close of business on the 15th calendar day before the relevant distribution date. Each payment of a distribution will be made as described under the caption "--Book-Entry Issuance--The Depository Trust Company" in this Prospectus Supplement while the Preferred Securities are in book-entry only form. Distributions will be computed on the basis of a 360-day year of twelve 30-day months. Duke Energy has the right to defer interest payments on the Series Junior Subordinated Notes by extending the interest payment period from time to time on the Series Junior Subordinated Notes. If Duke Energy exercises that right, distributions on the Preferred Securities will be deferred during the extension period. Deferred interest installments on the Series Junior Subordinated Notes will bear interest at a yearly rate of %, compounded quarterly, to the payment date, to the extent legally permitted. Duke Energy will have the right to make partial payments of interest on any interest payment date during an extension period. If distributions are deferred, the deferred distributions and accrued interest on those distributions will be paid, if funds are legally available for those payments, to holders of record of the Preferred Securities on the record date immediately after the extension period ends. The Trust will pay distributions on the Preferred Securities on the distribution dates to the extent that it has funds legally and immediately available. Those funds will be limited to payments that Duke Energy makes under the Series Junior Subordinated Notes. Redemption The Trust will redeem the Preferred Securities when Duke Energy repays the Series Junior Subordinated Notes at maturity or upon redemption. The Series Junior Subordinated Notes will mature on , . Duke Energy may redeem the Series Junior Subordinated Notes, in whole or in part, at its option at any time on or after , . Duke Energy may also redeem the Series Junior Subordinated Notes, in whole but not in part, at any time during the 90 days after the occurrence of a Special Event. In each case the redemption price will be equal to 100% of the principal amount of the Series Junior Subordinated Notes to be redeemed plus accrued but unpaid interest (including any Additional Interest as defined below) to the redemption date. Duke Energy may redeem the Series Junior Subordinated Notes only in whole if a partial redemption of the Series Junior Subordinated Notes would cause the Preferred Securities to be delisted. S-13 Any Preferred Securities that are to be redeemed will be redeemed upon at least 30 but not more than 60 days' notice at a redemption price for each Preferred Security equal to the liquidation amount of $ plus any accrued and unpaid distributions on the Preferred Security to the date of payment. Any Preferred Securities that are to be redeemed will be redeemed with the proceeds from the redemption of an equivalent amount of Series Junior Subordinated Notes. The redemption price of the Preferred Securities will be deemed payable on each redemption date only to the extent that the Trust has funds legally and immediately available for payment of that redemption price. If fewer than all the outstanding Preferred Securities are to be redeemed and the Preferred Securities are in book-entry form, DTC will reduce the amount of the interest of each of its participants in the Preferred Securities in accordance with its procedures. If the Preferred Securities are no longer in book-entry form, the Property Trustee will redeem the Preferred Securities to be redeemed in any manner that it deems fair and appropriate. Special Event Redemption or Distribution Duke Energy may at its option redeem all the Series Junior Subordinated Notes during the 90 days after the occurrence of a Special Event. In that event, the Preferred Securities will also be redeemed. A Special Event is either a Tax Event or an Investment Company Act Event. A "Tax Event" means that the Administrative Trustees and Duke Energy have received an opinion of counsel experienced in such matters to the effect that, as a result of: . any amendment to, or change (including any announced prospective change) in, the laws (or any regulations under those laws) of the United States or any political subdivision or taxing authority of or in the United States; or . any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that: . the Trust would be subject to United States federal income tax with respect to income accrued or received on the Series Junior Subordinated Notes; . interest payable on the Series Junior Subordinated Notes would not be deductible by Duke Energy for United States federal income tax purposes; or . the Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, which amendment or change becomes effective on or after the original issue date of the Preferred Securities. An "Investment Company Act Event" means that the Administrative Trustees and Duke Energy have received an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority on or after the original issue date of the Preferred Securities, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" under the Investment Company Act of 1940, which change becomes effective on or after the original issue date of the Preferred Securities. S-14 Distribution of Series Junior Subordinated Notes upon Termination of Trust Duke Energy will have the right to terminate the Trust at any time and, after the Trust satisfies its liabilities to creditors, cause the Series Junior Subordinated Notes to be distributed to the holders of the Preferred Securities in liquidation of the Trust. That right is optional and wholly within Duke Energy's discretion. Circumstances under which Duke Energy may decide to exercise its right to terminate the Trust could include: . the occurrence of an Investment Company Act Event or a Tax Event; . adverse tax consequences to Duke Energy or the Trust that the definition of a Tax Event does not cover because those consequences do not result from an amendment or change described in that definition; and . changes in the accounting requirements applicable to the Preferred Securities that are described under the caption "Accounting Treatment" in the accompanying Prospectus. If Series Junior Subordinated Notes are distributed to the holders of the Preferred Securities, Duke Energy will use its best efforts to have the Series Junior Subordinated Notes listed on the New York Stock Exchange or other exchange on which the Preferred Securities are then listed. After the date for any distribution of Series Junior Subordinated Notes upon termination of the Trust: . the Preferred Securities and the Guarantee will no longer be considered outstanding; . the securities depositary or its nominee, as the record holder of the Preferred Securities, will receive a registered global certificate or certificates representing the Series Junior Subordinated Notes delivered upon the distribution; and . any certificates representing Preferred Securities not held by the securities depositary or its nominee will be deemed to represent Series Junior Subordinated Notes. Those Series Junior Subordinated Notes will have: . an aggregate principal amount equal to the aggregate liquidation amount of those Preferred Securities; . an interest rate identical to the rate at which cumulative cash distributions are payable on those Preferred Securities; and . accrued and unpaid interest equal to the accrued and unpaid distributions on those Preferred Securities, until the certificates are presented to Duke Energy or its agent for transfer or reissuance. There can be no assurance as to the market prices for either the Preferred Securities or the Series Junior Subordinated Notes that may be distributed in exchange for the Preferred Securities if a termination and liquidation of the Trust occurs. Accordingly, the Preferred Securities that an investor may purchase, or the Series Junior Subordinated Notes that the investor may receive if the Trust is terminated or liquidated, may trade at a price less than the price paid by the investor to purchase the Preferred Securities. S-15 Redemption Procedures If the Trust has the funds required for the redemption and the Preferred Securities are in book-entry form, then the Property Trustee will irrevocably deposit sufficient funds with the securities depositary on the redemption date to pay the redemption price. If the Trust has the funds required for the redemption and the Preferred Securities are not in book-entry form, the Property Trustee will irrevocably deposit sufficient funds with the paying agent to pay the redemption price and will instruct the paying agent to pay the redemption price to the holders of the Preferred Securities upon surrender of their Preferred Securities certificates. Immediately before the close of business on the deposit date, distributions will cease to accrue and all rights of holders of Preferred Securities called for redemption will cease, except the right of those holders to receive the redemption price, without interest on it. If the redemption date is not a Business Day, the redemption price payable on that date will be paid on the next day that is a Business Day (without any interest or other payment due to the delay), except that if that Business Day falls in the next calendar year, the payment will be made on the immediately preceding Business Day. If fewer than all the Trust Securities are to be redeemed, the liquidation amount of the Trust Securities to be redeemed will be allocated 97% to the Preferred Securities and 3% to the Common Securities. If the Trust does not pay the redemption price and Duke Energy does not pay the redemption price under the Guarantee, distributions on the Preferred Securities to be redeemed will continue to accrue at the applicable rate from the redemption date originally established for those Preferred Securities to the date the redemption price is actually paid. Book-Entry Issuance--The Depository Trust Company The Preferred Securities will be book-entry securities. Upon issuance, all book-entry securities will be represented by one or more fully registered global certificates. Each global certificate will be deposited with, or on behalf of, The Depository Trust Company ("DTC"), a securities depositary, and will be registered in the name of DTC or a nominee of DTC. DTC or its nominee will thus be the only registered holder of those Preferred Securities and will be considered the sole owner of the Preferred Securities for purposes of the Trust Agreement. Purchasers of Preferred Securities may only hold interests in the global securities through DTC if they are participants in the DTC system. Purchasers may also hold interests through a securities intermediary--banks, brokerage houses and other institutions that maintain securities accounts for customers-- that has an account with DTC. DTC will maintain accounts showing the Preferred Security holdings of its participants, and those participants will in turn maintain accounts showing the Preferred Security holdings of their customers. Some of those customers may themselves be S-16 securities intermediaries holding Preferred Securities for their customers. Thus, each beneficial owner of a book-entry Preferred Security will hold that Preferred Security indirectly through a hierarchy of intermediaries, with DTC at the "top" and the beneficial owner's own securities intermediary at the "bottom." The Preferred Securities of each beneficial owner of a book-entry security will be evidenced solely by entries on the books of the beneficial owner's securities intermediary. The actual purchaser of the Preferred Securities will generally not be entitled to have the Preferred Securities represented by the global securities registered in its name and will not be considered the owner under the Trust Agreement. In most cases, a beneficial owner will also not be able to obtain a paper certificate evidencing the holder's ownership of Preferred Securities. The book-entry system for holding Preferred Securities eliminates the need for physical movement of certificates and is the system through which most publicly traded common stock is held in the United States. However, the laws of some jurisdictions require some purchasers of securities to take physical delivery of their securities in definitive form. These laws may impair the ability to transfer book-entry securities. A beneficial owner of book-entry Preferred Securities represented by a global security will receive definitive (paper) Preferred Securities only if: . DTC is unwilling or unable to continue as depositary for such global security and Duke Energy is unable to find a qualified replacement for DTC within 90 days; or . Duke Energy in its sole discretion decides to terminate the book-entry system with respect to the Preferred Securities. Definitive Preferred Securities in registered form will have the same terms and be in an equal aggregate principal amount as the equivalent book-entry Preferred Securities, and will be in denominations of $ or whole multiples of $ . Definitive Preferred Securities will be registered in the name or names of the person or persons that DTC specifies in a written instruction to the registrar of the securities. DTC may base its written instruction upon directions it receives from its participants. In this Prospectus Supplement, for book-entry Preferred Securities, references to actions taken by holders of Preferred Securities will mean actions taken by DTC upon instructions from its participants, and references to payments and notices of redemption to holders of Preferred Securities will mean payments and notices of redemption to DTC or its nominee as the registered holder of the Preferred Securities for distribution to participants in accordance with DTC's procedures. DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under section 17A of the Securities Exchange Act of 1934. The rules applicable to DTC and its participants are on file with the SEC. DTC's management is aware that some computer applications, systems and the like for processing dates that are dependent upon calendar dates, including dates before, on, and after January 1, 2000, may encounter "Year 2000 problems." DTC has informed its participants and other members of the financial community that it has developed and is implementing a program so that its S-17 systems, as they relate to the timely payment of distributions to securityholders, book-entry deliveries and settlement of trades within DTC, continue to function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within appropriate time frames. Duke Energy, the Trust and the Securities Trustees will not have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the book-entry securities or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Duke Energy and the Trust believe to be reliable, but neither Duke Energy nor the Trust takes responsibility for its accuracy. Duke Energy and the Trust have no responsibility for the performance by DTC, its participants or any securities intermediaries of their obligations, including obligations that they have under the rules and procedures that govern their operations. Liquidation Distribution upon Dissolution The Trust will terminate on , , or earlier: . if one of certain bankruptcy, insolvency or reorganization events occurs with respect to Duke Energy, Duke Energy is dissolved or liquidated, or the Trust is dissolved by judicial decree; . if Duke Energy directs the Property Trustee to terminate the Trust and to distribute the Series Junior Subordinated Notes to the holders of the Trust Securities in liquidation of the Trust; or . if Duke Energy repays all the Series Junior Subordinated Notes at maturity or redemption and the Trust Securities are paid in full as a result. If an early termination occurs as described in the first and second instances listed above, the Trust will be liquidated and the Property Trustee will distribute an equivalent amount of Series Junior Subordinated Notes to each holder of Trust Securities after the Trust satisfies its liabilities to creditors. If the Administrative Trustees determine that the distribution of Series Junior Subordinated Notes is not practical in the case of the first instance listed above, those holders instead will receive an amount equal to the liquidation amount of $ per Trust Security plus accrued and unpaid distributions to the date of payment out of the assets of the Trust that are available for distribution, after satisfaction of the Trust's liabilities to creditors. That amount is called the "liquidation distribution" in this Prospectus Supplement. If the Trust does not have sufficient assets available to pay the total liquidation distribution of the Trust Securities, then, except as described in the next sentence, the Trust will make the payment to the holders of the Preferred Securities and the holder of the Common Securities on a pro rata basis. If an event of default under the Subordinated Indenture has occurred and is continuing with respect to the Series Junior Subordinated Notes, however, the Preferred Securities will have a preference over the Common Securities with respect to the payment. S-18 Events of Default The following are events of default under the Trust Agreement: . the occurrence of an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes; . the Trust's failure to pay any distribution, when due, that continues for 30 days; . the Trust's failure to pay the redemption price of any Preferred Security or Common Security when due; . failure to perform, or breach of, any covenant or warranty of the Securities Trustees in the Trust Agreement that continues for 60 days after the holders of at least 25% of the outstanding Preferred Securities give written notice of the failure or breach, requiring it to be remedied; or . the occurrence of certain bankruptcy or insolvency events with respect to the Trust. In the case of the fourth event of default listed above, the holders of at least the same percentage of Preferred Securities as had given the default notice may extend the grace period. The grace period will be automatically extended if the Securities Trustees have initiated and are diligently pursuing corrective action. The Property Trustee will notify the holders of Trust Securities, the Administrative Trustees and Duke Energy of any default known to it within 90 days after the default occurs, unless the default has been cured or waived. For this purpose, the term "default" means any event which is an event of default or which would become an event of default after notice has been given or a grace period has expired or both, as the case may be. If an event of default occurs and is continuing: . the holders of Preferred Securities will rely on the Property Trustee, as the holder of the Series Junior Subordinated Notes, to enforce its rights against Duke Energy; and . the holders of a majority of the Preferred Securities will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or the exercise of any power of the Property Trustee under the Trust Agreement, including the right to direct the Property Trustee to exercise the remedies available to it as the holder of the Series Junior Subordinated Notes. If the Property Trustee fails to enforce its rights under the Series Junior Subordinated Notes, a holder of Preferred Securities may, to the extent permitted by law and the Trust Agreement, institute a legal proceeding against Duke Energy to enforce the Property Trustee's rights under the Trust Agreement. The holder would not need to first institute a legal proceeding against the Property Trustee, the Trust or any other person or entity. A holder of Preferred Securities may also institute a legal proceeding directly against Duke Energy to enforce payment to that holder of principal or interest on Series Junior Subordinated Notes that are equal in principal amount to the liquidation amount of the holder's Preferred Securities on or after the due dates of the Series Junior Subordinated Notes. The holder would not need to first institute a legal proceeding against the Property Trustee or any other person or entity. S-19 Duke Energy, as the holder of the Common Securities, may remove the Securities Trustees at any time unless an event of default under the Subordinated Indenture has occurred and is continuing with respect to the Series Junior Subordinated Notes. If such an event of default has occurred and is continuing, the holders of a majority of the Preferred Securities may remove the Property Trustee and the Delaware Trustee. Removal of the Property Trustee or the Delaware Trustee will become effective when the successor trustee accepts its appointment. If an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes has occurred and is continuing, the holders of Preferred Securities will have a preference over the holders of Common Securities if the Trust is dissolved. The Property Trustee will notify the holders of the Preferred Securities of any notice of default that it receives from the Indenture Trustee with respect to the Series Junior Subordinated Notes. Voting Rights So long as the Property Trustee holds any Series Junior Subordinated Notes, the Securities Trustees will not: . direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any power of the Indenture Trustee with respect to the Series Junior Subordinated Notes; . consent to waive any past default under the Subordinated Indenture; . exercise any right to rescind or annul a declaration that the principal of all the Series Junior Subordinated Notes will be due and payable; or . consent to any amendment, modification or termination of the Subordinated Indenture or the Series Junior Subordinated Notes, if that consent is required, or to any other action, as the holder of the Series Junior Subordinated Notes, under the Subordinated Indenture, without obtaining the prior approval of the holders of at least 66 2/3% of the outstanding Preferred Securities. When the Subordinated Indenture requires the consent of each holder of Series Junior Subordinated Notes affected, the Securities Trustees will not give that consent without the prior consent of each holder of outstanding Preferred Securities. The Securities Trustees may not revoke any action that the holders of the Preferred Securities have authorized or approved. If any proposed amendment to the Trust Agreement provides for any of the following or the Securities Trustees propose to effect: . any action that would adversely affect the powers, preferences or special rights of the Preferred Securities; or . the dissolution, winding-up or termination of the Trust, other than pursuant to the Trust Agreement, then the holders of outstanding Preferred Securities will have the right to vote as a class on that amendment or proposal. The amendment or proposal will be effective only if at least 66 2/3% of the outstanding Preferred Securities approve it. Holders of Preferred Securities may provide their approval at a meeting convened for that purpose or by written consent. S-20 Any Preferred Securities that Duke Energy, the Administrative Trustees, or any affiliate of Duke Energy or an Administrative Trustee owns, whether of record or beneficially, will be treated as not outstanding for purposes of a vote or consent. The holders of the Preferred Securities will have no other voting rights except those described under the caption "--Amendment of the Trust Agreement" in this Prospectus Supplement and those described under the captions "Amendments and Assignment" and "Events of Default" in "Description of the Guarantees" in the accompanying Prospectus and any other voting rights otherwise required by law and the Trust Agreement. Co-Property Trustees and Separate Property Trustees Duke Energy, as the holder of the Common Securities, and the Property Trustee will have the power to appoint one or more co-property trustees or separate property trustees for all or part of the Trust Property for the purpose of meeting certain legal requirements, including the legal requirements of any jurisdiction in which part of the Trust Property is located. The Property Trustee will have the power to make the appointment alone if Duke Energy, as depositor, does not join in the appointment within 15 days after it receives a request to do so, or in case an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes has occurred and is continuing. Amendment of the Trust Agreement Duke Energy and the Securities Trustees may amend the Trust Agreement without the consent of the holders of the Trust Securities: . to cure any ambiguity or to make any corrections or additions that are not inconsistent with the other provisions of the Trust Agreement that do not adversely affect the interests of any holder of Trust Securities in any material respect; or . to modify, eliminate or add to any provisions of the Trust Agreement to the extent necessary to ensure that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. The Trust or the Securities Trustees may make other amendments to the Trust Agreement if: . the holders of at least 66 2/3% of the outstanding Trust Securities approve the amendment; and . the Securities Trustees receive an opinion of counsel to the effect that the amendment will not affect the Trust's status as a grantor trust or the Trust's exemption from the Investment Company Act of 1940. The consent of each affected holder of Trust Securities will be required to amend the Trust Agreement to: . change the amount or timing of any distribution or any payment upon redemption, or otherwise adversely affect the amount of any distribution or any payment upon redemption required to be made on the Trust Securities as of a specified date; S-21 . restrict the right of a holder of Trust Securities to sue to enforce any of those payments on or after that date; . change the purpose of the Trust; . authorize the issuance of any additional beneficial interests in the Trust; or . change the consent required to amend the Trust Agreement. Mergers, Consolidations, Replacements, Transfers The Trust may not consolidate, amalgamate, merge with or into or be replaced by any corporation or other entity, or convey, transfer or lease substantially all of its properties and assets to any corporation or other entity, except as described below. At Duke Energy's request but without the consent of the holders of the Trust Securities, the Trust may consolidate, amalgamate, merge with or into, or be replaced by a trust organized under the laws of any state, if: . the successor entity either: . expressly assumes all the Trust's obligations with respect to the Trust Securities; or . substitutes other securities having substantially the same terms as the Trust Securities for the Preferred Securities and the Common Securities so long as those other securities--called "Successor Securities" in this Prospectus Supplement--rank equal in priority with the Trust Securities with respect to distributions and payments upon liquidation, redemption and otherwise; . Duke Energy expressly appoints a trustee of the successor entity, possessing the same powers and duties as the Property Trustee as the holder of the Series Junior Subordinated Notes; . the Preferred Securities or any Successor Securities are listed on any national securities exchange or other organization on which the Preferred Securities are then listed, or any Successor Securities will be so listed upon notification of issuance; . the consolidation, amalgamation, merger or replacement does not cause the Preferred Securities, including any Successor Securities, to be downgraded by any nationally recognized statistical rating organization; . the consolidation, amalgamation, merger or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities, including any Successor Securities, in any material respect; . the successor entity has a purpose substantially identical to that of the Trust; . prior to the consolidation, amalgamation, merger or replacement, Duke Energy and the Property Trustee have received an opinion of counsel to the effect that: . the transaction does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities, including any Successor Securities, in any material respect; and . following the transaction, neither the Trust nor the successor entity will be required to register as an "investment company" under the Investment Company Act of 1940; and S-22 . Duke Energy owns all the common securities of the successor entity and guarantees the obligations of the successor relating to the Successor Securities at least to the extent provided by the Guarantee. However, the Trust may not enter into any of the mergers, consolidations or other transactions mentioned above if that transaction would cause the Trust or its successor entity to be classified as other than a grantor trust for United States federal income tax purposes except with the consent of the holders of all the Trust Securities. Payments; Paying Agent So long as DTC is the securities depositary for the Preferred Securities, payments on the Preferred Securities will be made to DTC or its nominee and DTC will credit the relevant accounts at DTC on the applicable distribution dates. If DTC or its nominee no longer holds the Preferred Securities, the paying agent will make payments on the Preferred Securities by check mailed to the address of the holder entitled to the payment as that address appears in the security register for the Preferred Securities. The paying agent will initially be the Property Trustee. The paying agent will be permitted to resign as paying agent if it gives 30 days' written notice to the Administrative Trustees and Duke Energy. The Administrative Trustees will appoint a successor paying agent in the event of any such resignation. Transfers; Registrar and Transfer Agent There will be no service charge for registration of transfers of any Preferred Securities. However, payment of any tax or other governmental charges may be required in connection with a transfer. The registrar and transfer agent for the Preferred Securities will not be required to register any transfer of Preferred Securities that have been called for redemption. Duke Energy and the Trust anticipate that the Property Trustee or one of its affiliates will act as registrar and transfer agent for the Preferred Securities. Information Concerning the Property Trustee Before an event of default occurs under the Trust Agreement, the Property Trustee will perform only those duties that are expressly specified in the Trust Agreement. After any default, the Property Trustee will exercise the same degree of care as a prudent person would exercise in the conduct of his or her own affairs. Subject to these provisions, the Property Trustee is under no obligation to exercise any of the powers vested in it by the Trust Agreement at the request of any holder of Preferred Securities, unless that holder offers the Property Trustee reasonable indemnity against the costs, expenses and liabilities that the Property Trustee might incur as a result. The Chase Manhattan Bank is the Property Trustee. The Chase Manhattan Bank is also the Indenture Trustee and the Guarantee Trustee and serves as Trustee under Duke Energy's First and Refunding Mortgage and its Senior Indenture. Duke Energy and certain of its affiliates maintain deposit accounts and banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank serves as trustee under other indentures pursuant to which securities of Duke Energy and affiliates of Duke Energy are outstanding. S-23 Miscellaneous The Trust Agreement directs the Administrative Trustees to operate the Trust so that the Trust will not be: . deemed to be an "investment company" that is required to be registered under the Investment Company Act of 1940; or . treated as other than a grantor trust for United States federal income tax purposes. The Trust Agreement also directs the Administrative Trustees to operate the Trust so that the Series Junior Subordinated Notes will be treated as indebtedness of Duke Energy for United States federal income tax purposes. The Trust Agreement authorizes the Administrative Trustees and Duke Energy to take any action not inconsistent with applicable law, the Trust's certificate of trust or the Trust Agreement, that they determine to be necessary or desirable for those purposes. No such action may, however, materially and adversely affect the interests of the holders of the Preferred Securities. Duke Energy and its affiliates may purchase outstanding Preferred Securities by tender, in the open market or by private agreement, to the extent legally permitted. S-24 DESCRIPTION OF THE SERIES JUNIOR SUBORDINATED NOTES The following description of the Series Junior Subordinated Notes is only a summary and is not intended to be comprehensive. The description should be read together with the description of the general terms and provisions of the Junior Subordinated Notes provided under the caption "Description of the Junior Subordinated Notes" in the accompanying Prospectus. General Duke Energy will issue the Series Junior Subordinated Notes as a series of Subordinated Notes under the Subordinated Indenture. The Series Junior Subordinated Notes will be limited in principal amount to $ , which is the liquidation amount of the Trust Securities. The Series Junior Subordinated Notes will mature and become due and payable, together with any accrued and unpaid interest, including any Additional Interest, on , . The Series Junior Subordinated Notes will rank equal in priority with any other series of Junior Subordinated Notes issued under the Subordinated Indenture. The Series Junior Subordinated Notes are not subject to any sinking fund provision. Optional Redemption Duke Energy will have the right to redeem the Series Junior Subordinated Notes: . from time to time, in whole or in part, on or after , ; or . at any time, in whole but not in part, during the 90 days after the occurrence of a Special Event. Duke Energy may redeem the Series Junior Subordinated Notes upon not less than 30 nor more than 60 days' notice at a redemption price equal to the principal amount to be redeemed plus any accrued and unpaid interest, including any Additional Interest, to the redemption date. If a partial redemption of the Series Junior Subordinated Notes would cause the Preferred Securities to be delisted, Duke Energy will be required to redeem all of the Series Junior Subordinated Notes. Interest The Series Junior Subordinated Notes will bear interest at a yearly rate of % from the original issue date. Interest on the Series Junior Subordinated Notes will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on , , unless the applicable interest period is extended. Interest will be payable to the person or persons in whose name the Series Junior Subordinated Notes are registered at the close of business on the 15th calendar day before the relevant interest payment date, except that interest payable on the maturity date or on a redemption date will be paid to the person to whom principal is payable. Interest will be computed on the basis of a 360-day year of twelve 30-day months. S-25 If any date on which interest is payable on the Series Junior Subordinated Notes is not a Business Day, the interest payable on that date will be paid on the next day that is a Business Day (without any interest or other payment due to the delay), except that if that Business Day falls in the next calendar year, interest will be paid on the immediately preceding Business Day. Option to Extend Interest Payment Period Duke Energy will have the right, at any time and from time to time, to defer interest payments on the Series Junior Subordinated Notes by extending the interest payment period for up to consecutive quarters, but not beyond the maturity date. When the extension period has ended, Duke Energy will pay all accrued and unpaid interest, including any Additional Interest, on the next interest payment date. Before any extension period ends, Duke Energy may further defer interest payments by extending the interest payment period. However, an extension period, together with any previous and further extensions, may not exceed consecutive quarters. During an extension period, Duke Energy will have the right to make partial payments of interest on any interest payment date. After an extension period terminates and all amounts due are paid, Duke Energy may select a new extension period, subject to the previously mentioned requirements. Duke Energy has no present intention of exercising its right to defer payments by extending the interest payment period on the Series Junior Subordinated Notes. Duke Energy will notify the holder or holders of the Series Junior Subordinated Notes and the Indenture Trustee of its selection or extension of an extension period at least one Business Day before the earlier of: . the record date for the interest payment date on which the extension period is to begin or the record date for the interest payment date on which the extension period that is being extended would otherwise terminate; or . the date that Duke Energy or the Trust is required to give notice to the New York Stock Exchange or other self-regulatory organization of the record date or the date those distributions are payable. Additional Interest "Additional Interest" means: . those additional amounts as may be required so that the net amounts that a holder of Series Junior Subordinated Notes (if the holder is the Trust) receives and retains after paying taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority will not be less than the amounts the holder would have received had no such taxes, duties, assessments or other governmental charges been imposed; and . interest on interest due but not paid on an interest payment date for the Series Junior Subordinated Notes, accruing at a yearly rate of % from the applicable interest payment date to the date of payment, compounded quarterly, on each interest payment date, to the extent legally permitted. S-26 Certain Covenants Duke Energy will covenant, for the benefit of the holders of Series Junior Subordinated Notes and the holders of the Preferred Securities, that: . if it has given notice of its election to extend an interest payment period for the Series Junior Subordinated Notes and the extension is continuing; or . if an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes has occurred and is continuing, then it will not: . declare or pay any dividend or make any distributions with respect to any of its capital stock, or redeem, purchase, acquire or make a liquidation payment with respect to any of its capital stock; or . make any payment of interest, principal or premium on any debt securities, including guarantees other than the Guarantee, issued by it which rank equal in priority with or junior to the Series Junior Subordinated Notes, or repay, repurchase or redeem any such debt securities. However, those covenants will not restrict: . any action described in the preceding sentence that results from a reclassification of Duke Energy's capital stock or the exchange or conversion of one class or series of Duke Energy's capital stock for another class or series; . the declaration and payment of a dividend or distribution or similar share purchase rights in the future; . repurchases, redemptions or other acquisitions of shares of Duke Energy's capital stock in connection with an employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors, or a stock purchase and dividend reinvestment plan; . acquisitions of shares of Duke Energy's capital stock in connection with the issuance of shares of Duke Energy's capital stock (or securities convertible into or exchangeable for shares of Duke Energy's capital stock) as consideration in an acquisition transaction entered into before the beginning of the relevant extension period; . dividends or distributions in Duke Energy's capital stock; . the purchase of fractional interests in shares of Duke Energy's capital stock under the conversion or exchange provisions of that capital stock or the security being converted or exchanged; or . mandatory sinking fund payments with respect to any series of Duke Energy's preferred stock or preferred stock A, if the aggregate stated value of all such series outstanding at the time of the payment does not exceed 5% of the sum of: . the principal amount of all bonds or other securities representing secured indebtedness issued or assumed by Duke Energy and then outstanding; and S-27 . Duke Energy's capital and surplus to be stated on its books of account after giving effect to that payment. Any money deposited into any sinking fund that is not in violation of this provision may thereafter be applied to the purchase or redemption of that preferred stock or preferred stock A in accordance with the terms of that sinking fund without regard to the foregoing restrictions. Duke Energy will also covenant that, for so long as the Trust Securities are outstanding, it will: . continue to own all the Common Securities directly or indirectly; and . use its reasonable efforts to cause the Trust: . to remain a statutory business trust, except in connection with the distribution of Series Junior Subordinated Notes in liquidation of the Trust, the redemption of all the Trust Securities, or certain mergers, consolidations or amalgamations; and . to otherwise continue to be classified as a grantor trust for United States federal income tax purposes. Any successor of Duke Energy may, however, succeed to Duke Energy's ownership of the Common Securities without Duke Energy's violating this covenant if the successor is permitted under the Subordinated Indenture. Book-Entry Issuance Duke Energy expects that the Series Junior Subordinated Notes will be issued in the form of one or more global certificates registered in the name of the securities depositary or its nominee if the Series Junior Subordinated Notes are distributed to holders of Trust Securities in connection with the voluntary or involuntary dissolution, winding-up or liquidation of the Trust. The procedures applicable to the transfer and payment of the Series Junior Subordinated Notes are expected to be substantially similar to those applicable to the transfer and payment of the Preferred Securities. Form; Denominations The Series Junior Subordinated Notes will be issuable in registered form without coupons. The Series Junior Subordinated Notes will be issuable in denominations of $ and multiples of $ . Defeasance The Series Junior Subordinated Notes will be subject to Defeasance but not to Covenant Defeasance. Miscellaneous Duke Energy will have the right to assign any of its rights or obligations under the Subordinated Indenture with respect to the Series Junior Subordinated Notes to one of its direct or indirect wholly owned subsidiaries. Duke Energy will remain primarily liable for the performance of those obligations in the event of an assignment. S-28 RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SERIES JUNIOR SUBORDINATED NOTES AND THE GUARANTEE As long as Duke Energy makes interest and other payments on the Series Junior Subordinated Notes when due, those payments will be sufficient to cover distributions and payments due on the Preferred Securities and the Common Securities. This is the case primarily because: . the total principal amount of the Series Junior Subordinated Notes will be equal to the total liquidation amount of the Trust Securities; . the interest rate and interest and other payment dates on the Series Junior Subordinated Notes will correspond to the distribution rate and distribution and other payment dates for the Preferred Securities; . the Agreement as to Expenses and Liabilities between Duke Energy and the Trust provides that Duke Energy will pay all costs and expenses of the Trust; and . the Trust Agreement provides that the Securities Trustees will not permit the Trust to engage in any activity that is inconsistent with the purposes of the Trust. If Duke Energy does not make the required payments on the Series Junior Subordinated Notes, it is expected that the Trust will not have sufficient funds to make the related distributions on the Preferred Securities. Duke Energy will guarantee payments of distributions and other payments due on the Preferred Securities but only to the extent that the Trust has funds legally and immediately available for the payment of those distributions and other payments. If an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes occurs and is continuing, then: . the holders of Preferred Securities will rely on the Property Trustee, as the holder of the Series Junior Subordinated Notes, to enforce its rights against Duke Energy; and . the holders of a majority of the Preferred Securities will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any power of the Property Trustee under the Trust Agreement, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Series Junior Subordinated Notes. If the Property Trustee fails to enforce its rights under the Series Junior Subordinated Notes, a holder of Preferred Securities may, to the extent legally permitted, institute a legal proceeding against Duke Energy to enforce its rights under the Trust Agreement without first instituting a legal proceeding against the Property Trustee, the Trust or any other person or entity. However, a holder of Preferred Securities may institute a legal proceeding directly against Duke Energy to enforce payment to that holder of principal or interest on Series Junior Subordinated Notes having a principal amount equal to the liquidation amount of the Preferred Securities of that holder on or after the due dates specified in the Series Junior Subordinated Notes. The Trust Agreement also provides a mechanism whereby the holders of Preferred Securities may appoint a substitute Property Trustee if an event of default under the Subordinated Indenture with respect to the Series Junior Subordinated Notes occurs and is continuing. S-29 The Guarantee provides a mechanism whereby the holders of the Preferred Securities may direct the Guarantee Trustee to enforce its rights under the Guarantee if Duke Energy fails to make payments under the Guarantee. In addition, any holder of Preferred Securities may institute a legal proceeding directly against Duke Energy to enforce the Guarantee Trustee's rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee or any other person or entity. The Guarantee, the Subordinated Indenture, the Series Junior Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and Liabilities provide a full and unconditional guarantee, subject to certain subordination provisions, by Duke Energy of the payments due on the Preferred Securities. The holders of Preferred Securities will be entitled to receive the Liquidation Distribution in cash, out of assets legally available for distribution to those holders, upon any voluntary or involuntary dissolution, winding-up or termination of the Trust unless the Series Junior Subordinated Notes are distributed in connection with those events. Upon any voluntary or involuntary liquidation or bankruptcy of Duke Energy, the Property Trustee, as holder of the Series Junior Subordinated Notes, would be a subordinated creditor of Duke Energy, subordinated in right of payment to all Senior Indebtedness, but entitled to receive payment in full of principal and interest before any of Duke Energy's shareholders receive payments or distributions. Because Duke Energy is guarantor under the Guarantee and has agreed to pay all costs, expenses and liabilities of the Trust under the Agreement as to Expenses and Liabilities, other than the Trust's obligations to holders of the Preferred Securities, the positions of a holder of Preferred Securities and a holder of Series Junior Subordinated Notes relative to other creditors and Duke Energy's shareholders would be substantially the same in the event of the liquidation or bankruptcy of Duke Energy. A default or event of default under any Senior Indebtedness is not a default or an event of default under the Subordinated Indenture. However, if a default occurs with respect to Senior Indebtedness or if Senior Indebtedness is accelerated, the subordination provisions of the Series Junior Subordinated Notes provide that no payments may be made in respect of the Series Junior Subordinated Notes: . until that Senior Indebtedness has been paid in full, in the case of any payment by, or distribution of assets of, Duke Energy to creditors upon a dissolution, winding-up, liquidation or reorganization of Duke Energy; or . until all amounts due on that Senior Indebtedness have been paid, in the case of a payment default beyond any grace period under that Senior Indebtedness or the acceleration of that Senior Indebtedness because of a default with respect to that Senior Indebtedness. MATERIAL FEDERAL INCOME TAX CONSIDERATIONS Following is the opinion of Dewey Ballantine LLP, counsel to Duke Energy and the Trust, as to the material United States federal income tax consequences of the purchase, ownership and disposition of Preferred Securities by holders that acquire Preferred Securities on their original issue at the initial offering price and that hold the Preferred Securities as capital assets. The opinion does not address all tax consequences that may be important to a holder in light of the holder's peculiar S-30 circumstances or to holders subject to special rules, such as financial institutions, foreign persons, real estate investment trusts, regulated investment companies, insurance companies, tax-exempt organizations, dealers in securities or currencies, individual retirement and other tax deferred accounts, and persons engaging in straddles or hedges relating to Preferred Securities. This discussion is based on legal authorities that are subject to change at any time in a manner that could adversely affect holders. Prospective investors in Preferred Securities should consult their own tax advisors with regard to the application of the tax considerations discussed below to their own situations as well as the application of any state, local or other tax laws. The Trust will be disregarded for federal income tax purposes and each holder of Preferred Securities will be treated as the owner of a proportionate amount of the Series Junior Subordinated Notes held by the Trust. Accordingly, a holder will include in income the holder's share of the income from the Series Junior Subordinated Notes. Duke Energy believes that the likelihood of the occurrence of an extension period is remote and accordingly that under applicable income tax regulations the Series Junior Subordinated Notes should not be treated as issued with original issue discount. These regulations have not been addressed in any rulings or other interpretations by the Internal Revenue Service and it is possible that the Internal Revenue Service could take a contrary position. If, however, Duke Energy exercises its option to defer payments of interest, the Series Junior Subordinated Notes would at that time be treated as issued with original issue discount and all the stated interest payments on the Series Junior Subordinated Notes would thereafter be treated as original issue discount. As a result, holders would be required to accrue original issue discount income on an economic accrual basis, even if the holder uses the cash method of accounting for tax purposes and even though holders will not receive any payments during the extension period. Because income on the Preferred Securities will constitute interest or original issue discount, corporate holders will not be entitled to a dividends-received deduction with respect to any income from the Preferred Securities. Upon a sale, retirement or other taxable disposition of Preferred Securities, a holder will recognize gain or loss equal to the difference between the amount realized on the sale, retirement or other disposition and the holder's adjusted tax basis in the Preferred Securities. If the holder disposes of Preferred Securities prior to the occurrence of an extension period, any portion of the amount received that is attributable to accrued interest will be treated as interest income to the holder and will not be treated as part of the amount realized for purposes of determining gain or loss on the disposition of the Preferred Securities. Any recognized gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holding period for the Preferred Securities is more than one year at the time of sale, retirement or other disposition. Income on Preferred Securities will be reported to holders on Form 1099, which form should be mailed to holders of Preferred Securities by January 31 following each calendar year. A holder will generally be required to furnish a social security number or other taxpayer identification number in order to avoid "backup withholding" tax on distributions on the Preferred Securities and payment of the proceeds from the disposition of Preferred Securities. Any amount so withheld will be allowed as a refund or a credit against the holder's United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service. S-31 The United States federal income tax discussion set forth above may not be applicable to a holder, depending upon the holder's particular situation, and therefore each holder should consult a tax advisor with respect to the tax consequences of the ownership and disposition of Preferred Securities, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in federal or other tax law. S-32 UNDERWRITING Subject to the terms and conditions of an Underwriting Agreement, the Trust has agreed to sell to each of the Underwriters named below, and each of those Underwriters has severally agreed to purchase, the number of Preferred Securities specified opposite its name. In the Underwriting Agreement, the Underwriters have agreed, subject to certain conditions, to purchase all of the Preferred Securities if any of the Preferred Securities are purchased. , and are acting as Representatives for the Underwriters in the offering.
Number of Underwriter Preferred Securities ----------- --------------------- --------------- Total............................................... ===============
Since the proceeds of the sale of the Preferred Securities will be used to purchase Series Junior Subordinated Notes, the Underwriting Agreement provides that Duke Energy will pay as compensation to the Underwriters $ per Preferred Security for the accounts of the several Underwriters, or $ in the aggregate. The Underwriters have advised Duke Energy and the Trust that they propose to offer the Preferred Securities: . in part directly to the public at the initial public offering price that is stated on the cover page of this Prospectus Supplement; and . in part to certain securities dealers at that price less a concession not in excess of $ per Preferred Security. The Underwriters may allow, and those dealers may reallow, a concession not in excess of $ per Preferred Security to certain other dealers. The Representatives may vary the offering price and other selling terms from time to time after the Preferred Securities are released for sale to the public. The Preferred Securities are expected to be approved for listing on the New York Stock Exchange, subject to official notice of issuance. Trading of the Preferred Securities on the New York Stock Exchange is expected to begin within a 30-day period after the initial delivery of the Preferred Securities. The Representatives have advised Duke Energy and the Trust that they intend to make a market in the Preferred Securities before trading on the New York Stock Exchange begins. The Representatives will have no obligation to make a market in the Preferred Securities, however, and may cease market making activities, if commenced, at any time. There has been no public market for the Preferred Securities before this offering. In order to meet one of the requirements for listing the Preferred Securities on the New York Stock Exchange, S-33 the Underwriters will undertake to sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial holders. The Underwriters may purchase and sell the Preferred Securities in the open market in connection with the offering. Those transactions may include over- allotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the Preferred Securities. Syndicate short positions involve the sale by the Underwriters of a greater number of Preferred Securities than they are required to purchase from the Trust in the offering. The Underwriters also may impose a penalty bid, by which selling concessions allowed to syndicate members or other broker-dealers with respect to the Preferred Securities sold for their account in the offering may be reclaimed by the syndicate if those Preferred Securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the Preferred Securities, which may be higher than the price that might otherwise prevail in the open market. These activities, if commenced, may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise. Duke Energy and the Trust have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. Duke Energy estimates that it will spend approximately $ for printing, listing, rating agency fees, trustees' fees, legal fees and other expenses of the offering. The Underwriters and certain of their affiliates have engaged, and will in the future engage, in investment banking transactions with Duke Energy and certain of its affiliates in the ordinary course of their business. VALIDITY OF THE SECURITIES Richards, Layton & Finger, P.A., special Delaware counsel to Duke Energy and the Trust, will issue an opinion about the validity of the Preferred Securities under Delaware law on behalf of Duke Energy and the Trust. Dewey Ballantine LLP will issue an opinion about the validity of the Series Junior Subordinated Notes, the Guarantee and certain related matters as well as certain matters relating to United States federal income tax considerations on behalf of Duke Energy and the Trust. , who is Duke Energy's , will pass upon certain matters of North Carolina law on behalf of Duke Energy. owns shares of Duke Energy's common stock and options to purchase shares of Duke Energy's common stock, of which are currently exercisable. Brown & Wood LLP will issue an opinion about the validity of the Series Junior Subordinated Notes and the Guarantee for the Underwriters. S-34 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this Prospectus is not complete and may be changed. We may + +not sell the Preferred Securities until the registration statement filed with + +the Securities and Exchange Commission is effective. This Prospectus is not + +an offer to sell the Preferred Securities and it is not soliciting an offer + +to buy the Preferred Securities in any state where the offer or sale of the + +Preferred Securities is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion dated May 21, 1999 PROSPECTUS $500,000,000 Duke Energy Capital Trust II Duke Energy Capital Trust III Duke Energy Capital Trust IV Trust Preferred Securities Guaranteed, to the extent described herein, by Duke Energy Corporation ----------- This Prospectus contains summaries of the general terms of these securities. You will find the specific terms of these securities, and the manner in which they are being offered, in supplements to this Prospectus. You should read this Prospectus and the supplements carefully before you invest. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is , 1999. ABOUT THIS PROSPECTUS This Prospectus is part of a Registration Statement that Duke Energy, Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV filed with the Securities and Exchange Commission ("SEC") utilizing a "shelf" registration process. Under the shelf registration process, Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV may issue trust preferred securities in one or more offerings up to a total dollar amount of $500,000,000. Those trust preferred securities are called "Preferred Securities" in this Prospectus. This Prospectus provides a general description of the Preferred Securities. Each time Preferred Securities are sold, a Prospectus Supplement will provide specific information about the terms of that offering. The Prospectus Supplement may also add, update or change information contained in this Prospectus. The Registration Statement filed with the SEC includes exhibits that provide more details about the matters discussed in this Prospectus. You should read this Prospectus, the related exhibits filed with the SEC and any Prospectus Supplement, together with the additional information described under the next caption, "Where You Can Find More Information." WHERE YOU CAN FIND MORE INFORMATION Duke Energy files annual, quarterly and special reports and other information with the SEC. You may read and copy any document Duke Energy files at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC's toll-free telephone number at 1-800-SEC-0330 for further information about the operation of the public reference rooms. In addition, you may inspect Duke Energy's reports and other information at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, where certain of Duke Energy's securities are listed. Duke Energy's SEC filings are available on the SEC's Web site at http://www.sec.gov. Information about Duke Energy is also available on Duke Energy's Web site at http://www.duke-energy.com. The SEC allows Duke Energy to "incorporate by reference" the information Duke Energy files with it, which means that Duke Energy can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this Prospectus and should be read with the same care. Information that Duke Energy files later with the SEC will automatically update and supersede that information. The following documents are incorporated in and made a part of this Prospectus by reference: . Duke Energy's annual report on Form 10-K for the year ended December 31, 1998; . Duke Energy's quarterly report on Form 10-Q for the quarter ended March 31, 1999; . Duke Energy's current reports on Form 8-K dated January 25, 1999, February 11, 1999, March 8, 1999 and March 10, 1999; . the definitive joint proxy statement-prospectus that Duke Energy and PanEnergy Corp filed dated March 13, 1997; . the annual report on Form 10-K of PanEnergy Corp for the year ended December 31, 1996; and . the quarterly reports on Form 10-Q of PanEnergy Corp for the quarters ended March 31, 1997 and June 30, 1997. 2 Any documents that Duke Energy files with the SEC in the future under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 will also be incorporated by reference into this Prospectus until we sell all of the securities being registered. You may request a copy of these filings at no cost by writing or calling Duke Energy at the following address or one of the following telephone numbers: Investor Relations Department Duke Energy Corporation P.O. Box 1005 Charlotte, North Carolina 28201 (704) 382-3853 or (800) 488-3853 (toll-free) FORWARD-LOOKING STATEMENTS This Prospectus contains or incorporates by reference statements that do not directly or exclusively relate to historical facts. Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can typically identify forward-looking statements by the use of forward-looking words, such as "may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "continue," "potential," "plan," "forecast" and the like. Those statements represent Duke Energy's intentions, plans, expectations and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside Duke Energy's control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Those factors include: . state and federal legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed and degree to which competition enters the electric and natural gas industries; . industrial, commercial and residential growth in Duke Energy's service territories or the service territories of Duke Energy's subsidiaries; . the weather and other natural phenomena; . the timing and extent of changes in commodity prices and interest rates; . changes in environmental and other laws and regulations to which Duke Energy and its subsidiaries are subject or other external factors over which Duke Energy has no control; . the results of financing efforts; . growth in opportunities for Duke Energy's business units; . achievement of Year 2000 readiness; and . the effect of accounting policies issued periodically by accounting standard-setting bodies. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events referred to in this Prospectus and any accompanying Prospectus Supplement might not occur. 3 DUKE ENERGY CORPORATION Duke Energy, together with its subsidiaries, is an integrated energy and energy services provider with the ability to offer physical delivery and management of both electricity and natural gas throughout the United States and abroad. Duke Energy, directly or through its subsidiaries, provides these and other services through seven business segments: . Electric Operations . Natural Gas Transmission . Field Services . Trading and Marketing . Global Asset Development . Other Energy Services . Real Estate Operations Electric Operations generates, transmits, distributes and sells electric energy in central and western North Carolina and the western portion of South Carolina (doing business as Duke Power or Nantahala Power and Light). Natural Gas Transmission, through its northeast pipelines, provides interstate transportation and storage of natural gas for customers primarily in the Mid-Atlantic and New England states. Until the sale of the midwest pipelines to a subsidiary of CMS Energy Corporation, which was consummated on March 29, 1999, Natural Gas Transmission provided interstate transportation and storage services in the midwest states. Field Services gathers, processes, transports and markets natural gas and produces and markets natural gas liquids. Field Services operates gathering systems in ten states that serve major gas-producing regions in the Rocky Mountains, Permian Basin, Mid-Continent and Gulf Coast areas. Field Services significantly expanded its operations by the acquisition on March 31, 1999 of the natural gas gathering, processing, fractionation and natural gas liquids pipeline business of a unit of Union Pacific Resources. Trading and Marketing markets natural gas, electricity and other energy- related products across North America. Duke Energy owns a 60% interest in Trading and Marketing, with Mobil Corporation owning a 40% minority interest. Global Asset Development develops, owns and operates energy-related facilities worldwide. Global Asset Development conducts its operations primarily through Duke Energy Power Services, LLC and Duke Energy International, LLC. Other Energy Services provides engineering, consulting, construction and integrated energy solutions worldwide, primarily through Duke Engineering & Services, Inc., Duke/Fluor Daniel and DukeSolutions, Inc. Real Estate Operations develops high-quality commercial and residential real estate projects and manages forest holdings in the southeastern United States. Real Estate Operations conducts its business through Crescent Resources, Inc. 4 Duke Energy, then called Duke Power Company, completed a merger with PanEnergy Corp on June 18, 1997 which was accounted for as a pooling of interests. PanEnergy Corp was involved in the gathering, processing, transportation and storage of natural gas, the production of natural gas liquids and the marketing of natural gas, electricity and other energy-related products. The foregoing information about Duke Energy and its subsidiaries is only a general summary and is not intended to be comprehensive. For additional information about Duke Energy and its subsidiaries you should refer to the information described under the caption "Where You Can Find More Information." Duke Energy's principal executive offices are located at 526 South Church Street, Charlotte, North Carolina 28202, telephone (704) 594-6200. 5 Recent Financial Data The following shows only selected consolidated financial information. You should refer to the financial statements included in the documents incorporated by reference in this Prospectus for additional information. See "Where You Can Find More Information."
Three Months Ended March 31, Year Ended December 31, ---------------- ----------------------- 1999 1998 1998 1997(1) 1996(1) ------ ------ ------- ------- ------- (Millions, except per share data) Operating Revenues............... $4,160 $4,115 $17,610 $16,309 $12,302 Net Income....................... 967(2) 320 1,252 974 1,074 Earnings Available for Common Stock........................... 962(2) 314 1,231 902 1,030 Earnings per share of Common Stock (before extraordinary item) Basic.......................... $ 0.83 $ 0.89 $ 3.43 $ 2.51 $ 2.90 Dilutive....................... 0.83 0.89 3.42 2.50 2.88 Earnings per share of Common Stock Basic.......................... 2.65(2) 0.87 3.41 2.51 2.85 Dilutive....................... 2.64(2) 0.87 3.40 2.50 2.83
- -------- (1) Data reflects accounting for the combination of Duke Energy with PanEnergy Corp on June 18, 1997 as a pooling of interests. As a result, the data gives effect to the combination as if it had occurred as of January 1, 1996. (2) Reflects a one-time after-tax extraordinary gain of $660 million, or $1.82 per share of Common Stock, attributable to the sale of certain pipeline operations on March 29, 1999.
Capitalization as of March 31, 1999 -------------------- (Millions) Common Stock Equity...................................... $ 8,967 51% Preferred Stocks......................................... 333 2 Trust Preferred Securities............................... 920 5 Debt (including short-term debt)......................... 7,230 42 ------------ -------- Total.................................................. $ 17,450 100% ============ ========
Ratio of Earnings to Fixed Charges
Three Months Ended March 31, Year ended December 31, --------- ------------------------------------ 1999 1998 1998 1997(1) 1996(1) 1995(1) 1994(1) ---- ---- ---- ------- ------- ------- ------- Ratio of Earnings to Fixed Charges....................... 4.6 5.0 4.7 4.1 4.3 4.0 3.6
For purposes of this ratio (a) earnings consist of income from continuing operations before income taxes and fixed charges, and (b) fixed charges consist of all interest deductions and the interest component of rentals. - -------- (1) Data reflects accounting for the combination of Duke Energy with PanEnergy Corp on June 18, 1997 as a pooling of interests. As a result, the data gives effect to the combination as if it had occurred as of January 1, 1994. 6 USE OF PROCEEDS Each Trust will invest the proceeds it receives from the sale of the Preferred Securities in Junior Subordinated Notes. Unless the applicable Prospectus Supplement states otherwise, Duke Energy will use the net proceeds from that investment: . to redeem or purchase from time to time presently outstanding securities when it anticipates those transactions will result in an overall cost savings; . to repay maturing securities; . to finance its ongoing construction program; or . for general corporate purposes. If Duke Energy does not use the net proceeds immediately, it may temporarily invest them in short-term interest-bearing obligations or deposit them with banks. THE TRUSTS Duke Energy formed each Trust as a statutory business trust under Delaware law. Each Trust's business is defined in a trust agreement executed by Duke Energy, as depositor, and Chase Manhattan Bank Delaware. Each trust agreement will be amended when Preferred Securities are issued under it and will be in substantially the form filed as an exhibit to the Registration Statement. Each amended trust agreement is called a "Trust Agreement" in this Prospectus. The Preferred Securities and the Common Securities of each Trust represent undivided beneficial interests in the assets of that Trust. The Preferred Securities and the Common Securities together are sometimes called the "Trust Securities" in this Prospectus. The trustees of each Trust will conduct that Trust's business and affairs. Duke Energy, as the holder of the Common Securities of each Trust, will appoint the trustees of that Trust. The trustees of each Trust will consist of: . two officers of Duke Energy as Administrative Trustees; . The Chase Manhattan Bank as Property Trustee; and . Chase Manhattan Bank Delaware as Delaware Trustee. The Prospectus Supplement relating to the Preferred Securities of a Trust will provide further information concerning that Trust. No separate financial statements of any Trust are included in this Prospectus. Duke Energy considers that such statements would not be material to holders of the Preferred Securities because no Trust has any independent operations and the sole purpose of each Trust is investing the proceeds of the sale of its Trust Securities in Junior Subordinated Notes. Duke Energy does not expect that any of the Trusts will be filing annual, quarterly or current reports with the SEC. The principal place of business of each Trust will be c/o Duke Energy Corporation, 526 South Church Street, Charlotte, North Carolina 28202, telephone (704) 594-6200. 7 ACCOUNTING TREATMENT Each Trust will be treated as a subsidiary of Duke Energy for financial reporting purposes. Accordingly, Duke Energy's consolidated financial statements will include the accounts of each Trust. The Preferred Securities, along with other trust preferred securities that Duke Energy guarantees on an equivalent basis, will be presented as a separate line item in Duke Energy's consolidated balance sheets, entitled "Guaranteed Preferred Beneficial Interests in Subordinated Notes of Duke Energy Corporation or Subsidiaries." Duke Energy will record distributions that each Trust pays on the Preferred Securities as an expense in its consolidated statement of income. DESCRIPTION OF THE PREFERRED SECURITIES Each Trust may issue only one series of Preferred Securities. The Trust Agreement of each Trust will authorize the Administrative Trustees to issue the Preferred Securities of that Trust on behalf of that Trust. For additional information you should refer to the applicable Trust Agreement. The form of Trust Agreement is an exhibit to the Registration Statement. You should refer to the applicable Prospectus Supplement for the terms of any series of Preferred Securities, including: . the title of the series; . the number of Preferred Securities of the series; . the yearly distribution rate, or the method of determining that rate, and the date or dates on which distributions will be payable; . the date or dates, or method of determining the date or dates, from which distributions will be cumulative; . the amount that will be paid out of the assets of the Trust to the holders of the Preferred Securities upon the voluntary or involuntary dissolution, winding-up or termination of the Trust; . any obligation that the Trust has to purchase or redeem the Preferred Securities, and the price at which, the period within which, and the terms and conditions upon which the Trust will purchase or redeem them; . any voting rights of the Preferred Securities that are in addition to those legally required, including any right that the holders of the Preferred Securities have to approve certain actions under or amendments to the Trust Agreement; . any right that the Trust has to defer distributions on the Preferred Securities in the event that Duke Energy extends the interest payment period on the related Junior Subordinated Notes; and . any other rights, preferences, privileges, limitations or restrictions upon the Preferred Securities of the series. 8 Duke Energy will guarantee each series of Preferred Securities to the extent described below under the caption "Description of the Guarantees." The applicable Prospectus Supplement will describe any material United States federal income tax considerations that apply to the Preferred Securities. DESCRIPTION OF THE GUARANTEES Duke Energy will execute the Guarantees from time to time for the benefit of the holders of the Preferred Securities of the respective Trusts. The Chase Manhattan Bank will act as Guarantee Trustee under each Guarantee. The Guarantee Trustee will hold each Guarantee for the benefit of the holders of the Preferred Securities to which it relates. The following description of the Guarantees is only a summary and is not intended to be comprehensive. The form of Guarantee is an exhibit to the Registration Statement. General Duke Energy will irrevocably and unconditionally agree under each Guarantee to pay the Guarantee Payments that are defined below, to the extent specified in that Guarantee, to the holders of the Preferred Securities to which the Guarantee relates, to the extent that the Guarantee Payments are not paid by or on behalf of the related Trust. Duke Energy is required to pay the Guarantee Payments to the extent specified in the relevant Guarantee regardless of any defense, right of set-off or counterclaim that Duke Energy may have or may assert against any person. The following payments and distributions on the Preferred Securities of a Trust are Guarantee Payments: . any accrued and unpaid distributions required to be paid on the Preferred Securities of the Trust, but only to the extent that the Trust has funds legally and immediately available for those distributions; . the redemption price for any Preferred Securities that the Trust calls for redemption, including all accrued and unpaid distributions to the redemption date, but only to the extent that the Trust has funds legally and immediately available for the payment; and . upon a dissolution, winding-up or termination of the Trust, other than in connection with the distribution of Junior Subordinated Notes to the holders of Trust Securities of the Trust or the redemption of all the Preferred Securities of the Trust, the lesser of: . the sum of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities of the Trust to the payment date, to the extent that the Trust has funds legally and immediately available for the payment; and . the amount of assets of the Trust remaining available for distribution to holders of the Preferred Securities of the Trust in liquidation of the Trust. 9 Duke Energy may satisfy its obligation to make a Guarantee Payment by making that payment directly to the holders of the related Preferred Securities or by causing the Trust to make the payment to those holders. Each Guarantee will be a full and unconditional guarantee, subject to certain subordination provisions, of the Guarantee Payments with respect to the related Preferred Securities from the time of issuance of those Preferred Securities, except that the Guarantee will only apply to the payment of distributions and other payments on the Preferred Securities when the Trust has sufficient funds legally and immediately available to make those distributions or other payments. If Duke Energy does not make the required payments on the Junior Subordinated Notes that the Property Trustee holds under a Trust, that Trust will not make the related payments on its Preferred Securities. Subordination Duke Energy's obligations under each Guarantee will be unsecured obligations of Duke Energy. Those obligations will rank: . subordinate and junior in right of payment to all of Duke Energy's other liabilities, other than obligations or liabilities that rank equal in priority or subordinate by their terms; . equal in priority with Duke Energy's preferred stock and preferred stock A and similar guarantees; and . senior to Duke Energy's common stock. Duke Energy has preferred stock and preferred stock A outstanding that will rank equal in priority with the Guarantees and has common stock outstanding that will rank junior to the Guarantees. See "Duke Energy Corporation--Recent Financial Data" for additional information about those securities. Each Guarantee will be a guarantee of payment and not of collection. This means that the guaranteed party may institute a legal proceeding directly against Duke Energy, as guarantor, to enforce its rights under the Guarantee without first instituting a legal proceeding against any other person or entity. The terms of the Preferred Securities will provide that each holder of the Preferred Securities, by accepting those Preferred Securities, agrees to the subordination provisions and other terms of the related Guarantee. Amendments and Assignment Duke Energy may amend each Guarantee without the consent of any holder of the Preferred Securities to which that Guarantee relates if the amendment does not materially and adversely affect the rights of those holders. Duke Energy may otherwise amend each Guarantee with the approval of the holders of at least 66 2/3% of the outstanding Preferred Securities to which that Guarantee relates. 10 Termination Each Guarantee will terminate and be of no further effect when: . the redemption price of the Preferred Securities to which the Guarantee relates is fully paid; . Duke Energy distributes the related Junior Subordinated Notes to the holders of those Preferred Securities; or . the amounts payable upon liquidation of the related Trust are fully paid. Each Guarantee will remain in effect or will be reinstated if at any time any holder of the related Preferred Securities must restore payment of any sums paid to that holder with respect to those Preferred Securities or under that Guarantee. Events of Default An event of default will occur under any Guarantee if Duke Energy fails to perform any of its payment obligations under that Guarantee. The holders of a majority of the Preferred Securities of any series may waive any such event of default and its consequences on behalf of all of the holders of the Preferred Securities of that series. The Guarantee Trustee is obligated to enforce the Guarantee for the benefit of the holders of the Preferred Securities of a series if an event of default occurs under the related Guarantee. The holders of a majority of the Preferred Securities to which a Guarantee relates have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee with respect to that Guarantee or to direct the exercise of any trust or power that the Guarantee Trustee holds under that Guarantee. Any holder of the related Preferred Securities may institute a legal proceeding directly against Duke Energy to enforce that holder's rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee or any other person or entity. Concerning the Guarantee Trustee The Chase Manhattan Bank is the Guarantee Trustee. It is also the Property Trustee and the Trustee under the Subordinated Indenture. The Chase Manhattan Bank also serves as trustee under Duke Energy's First and Refunding Mortgage and its Senior Indenture. Duke Energy and certain of its affiliates maintain deposit accounts and banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank serves as trustee under other indentures pursuant to which securities of Duke Energy and affiliates of Duke Energy are outstanding. The Guarantee Trustee will perform only those duties that are specifically set forth in each Guarantee unless an event of default under the Guarantee occurs and is continuing. In case an event of default occurs and is continuing, the Guarantee Trustee will exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to those provisions, the Guarantee Trustee is under no obligation to exercise any of its powers under any Guarantee at the request of any holder of the related Preferred Securities unless that holder offers reasonable indemnity to the Guarantee Trustee against the costs, expenses and liabilities which it might incur as a result. Agreements as to Expenses and Liabilities Duke Energy will enter into an Agreement as to Expenses and Liabilities under each Trust Agreement. Each Agreement as to Expenses and Liabilities will provide that Duke Energy will, with 11 certain exceptions, irrevocably and unconditionally guarantee the full payment of any indebtedness, expenses or liabilities of the related Trust to each person or entity to whom that Trust becomes indebted or liable. The exceptions are the obligations of the Trust to pay to the holders of the related Preferred Securities or other similar interests in that Trust the amounts due to the holders under the terms of those Preferred Securities or those similar interests. DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES Duke Energy will issue the Junior Subordinated Notes in one or more series under its Subordinated Indenture dated as of December 1, 1997 between Duke Energy and The Chase Manhattan Bank, as Trustee, as supplemented from time to time. The Subordinated Indenture is called the "Subordinated Indenture" in this Prospectus. The Trustee under the Subordinated Indenture is called the "Trustee" in this Prospectus. The Subordinated Indenture is an exhibit to the Registration Statement. The Junior Subordinated Notes are unsecured obligations of Duke Energy. As of March 31, 1999, Duke Energy had approximately $2,300,000,000 of secured indebtedness outstanding. The Junior Subordinated Notes are also junior in right of payment to "Senior Indebtedness" of Duke Energy. You may find a description of the subordination provisions of the Junior Subordinated Notes, including a description of Senior Indebtedness of Duke Energy, under the caption "Subordination" in this Prospectus. Duke Energy conducts its non-electric operations, and certain of its electric operations outside its service area in the Carolinas, through subsidiaries. Accordingly, Duke Energy's ability to meet its obligations under the Junior Subordinated Notes is partly dependent on the earnings and cash flows of those subsidiaries and the ability of those subsidiaries to pay dividends or to advance or repay funds to Duke Energy. In addition, the rights that Duke Energy and its creditors would have to participate in the assets of any such subsidiary upon the subsidiary's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors. Duke Energy anticipates that certain of its subsidiaries will incur substantial amounts of debt in the expansion of their businesses. The following description of the Junior Subordinated Notes is only a summary and is not intended to be comprehensive. For additional information you should refer to the Subordinated Indenture. General The Subordinated Indenture does not limit the amount of Subordinated Notes, including Junior Subordinated Notes, that Duke Energy may issue under it. Duke Energy may issue Subordinated Notes, including Junior Subordinated Notes, from time to time under the Subordinated Indenture in one or more series by entering into supplemental indentures or by Duke Energy's Board of Directors or a duly authorized committee authorizing the issuance. The form of supplemental indenture to the Subordinated Indenture is an exhibit to the Registration Statement. The Junior Subordinated Notes of a series need not be issued at the same time, bear interest at the same rate or mature on the same date. 12 The Subordinated Indenture does not protect the holders of Junior Subordinated Notes if Duke Energy engages in a highly leveraged transaction. Provisions Applicable to Particular Series The Prospectus Supplement for a particular series of Junior Subordinated Notes will specify the terms of that series, including, if applicable: . the title of the series; . any limit on the principal amount of the Junior Subordinated Notes of the series; . the date or dates on which principal is payable or the method for determining the date or dates, and any right that Duke Energy has to change the date on which principal is payable; . the interest rate or rates, if any, or the method for determining the rate or rates, and the date or dates from which interest will accrue; . any interest payment dates and the regular record date for the interest payable on each interest payment date, if any; . whether Duke Energy may extend the interest payment periods and, if so, the terms of the extension; . the place or places where payments will be made, if other than the principal corporate trust office of the Trustee; . any obligation that Duke Energy has to redeem the Junior Subordinated Notes through a sinking fund or to purchase the Junior Subordinated Notes through a purchase fund or at the option of the holder; . whether Duke Energy has the option to redeem the Junior Subordinated Notes and, if so, the terms of its redemption option; . whether the provisions described under the caption "Defeasance and Covenant Defeasance" will not apply to the Junior Subordinated Notes; . the currency in which payments will be made if other than U.S. dollars, and the manner of determining the equivalent of those amounts in U.S. dollars; . if payments may be made, at Duke Energy's election or at the holder's election, in a currency other than that in which the Junior Subordinated Notes are stated to be payable, then the currency in which those payments may be made, the terms and conditions of the election and the manner of determining those amounts; . the portion of the principal payable upon acceleration of maturity, if other than the entire principal; . whether the Junior Subordinated Notes will be issuable as global securities and, if so, the securities depositary; . any changes in the events of default or covenants with respect to the Junior Subordinated Notes; . any index or formula used for determining principal, premium or interest; 13 . if the principal payable on the maturity date will not be determinable on one or more dates prior to the maturity date, the amount which will be deemed to be such principal amount or the manner of determining it; . the subordination of the Junior Subordinated Notes to any other of Duke Energy's indebtedness, including other series of Subordinated Notes; and . any other terms. The interest rate and interest and other payment dates of each series of Junior Subordinated Notes issued to a Trust will correspond to the rate at which distributions will be paid and the distribution and other payment dates of the Preferred Securities of that Trust. Unless the applicable Prospectus Supplement states otherwise, Duke Energy will issue the Junior Subordinated Notes only in fully registered form without coupons, and there will be no service charge for any registration of transfer or exchange of the Junior Subordinated Notes. Duke Energy may, however, require payment to cover any tax or other governmental charge payable in connection with any transfer or exchange. Transfers and exchanges of the Junior Subordinated Notes may be made at The Chase Manhattan Bank, 55 Water Street, New York, New York 10041. The Junior Subordinated Notes will be issuable in denominations of $1,000 and any multiples of $1,000, unless the applicable Prospectus Supplement states otherwise. Global Securities Duke Energy may issue some or all of the Junior Subordinated Notes as book- entry securities. Any such book-entry securities will be represented by one or more fully registered global certificates. Duke Energy will register each global security with, or on behalf of, a securities depositary identified in the applicable Prospectus Supplement. Each global certificate will be deposited with the securities depositary or its nominee or a custodian for the securities depositary. As long as the securities depositary or its nominee is the registered holder of a global security representing Junior Subordinated Notes, that person will be considered the sole owner and holder of the global security and the Junior Subordinated Notes it represents for all purposes. Except in limited circumstances, owners of beneficial interests in a global security: . may not have the global security or any Junior Subordinated Notes it represents registered in their names; . may not receive or be entitled to receive physical delivery of certificated Junior Subordinated Notes in exchange for the global security; and . will not be considered the owners or holders of the global security or any Junior Subordinated Notes it represents for any purposes under the Junior Subordinated Notes or the Subordinated Indenture. Duke Energy will make all payments of principal and any premium and interest on a global security to the securities depositary or its nominee as the holder of the global security. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in a global security. 14 Ownership of beneficial interests in a global security will be limited to institutions having accounts with the securities depositary or its nominee, which are called "participants" in this discussion, and to persons that hold beneficial interests through participants. When a global security representing Junior Subordinated Notes is issued, the securities depositary will credit on its book-entry, registration and transfer system the principal amounts of Junior Subordinated Notes the global security represents to the accounts of its participants. Ownership of beneficial interests in a global security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by: . the securities depositary, with respect to participants' interests; and . any participant, with respect to interests the participant holds on behalf of other persons. Payments participants make to owners of beneficial interests held through those participants will be the responsibility of those participants. The securities depositary may from time to time adopt various policies and procedures governing payments, transfers, exchanges and other matters relating to beneficial interests in a global security. None of the following will have any responsibility or liability for any aspect of the securities depositary's or any participant's records relating to beneficial interests in a global security representing Junior Subordinated Notes, for payments made on account of those beneficial interests or for maintaining, supervising or reviewing any records relating to those beneficial interests: . Duke Energy; . the Trustee; . the Trust; . any agent of any of the above. Redemption Any provisions relating to the redemption of Junior Subordinated Notes will be set forth in the applicable Prospectus Supplement. Unless the applicable Prospectus Supplement states otherwise, Duke Energy may redeem Junior Subordinated Notes only upon notice mailed at least 30 but not more than 60 days before the date fixed for redemption. Duke Energy will not be required to: . issue, register the transfer of, or exchange any Junior Subordinated Notes of a series during the period beginning 15 days before the date the notice is mailed identifying the Junior Subordinated Notes of that series that have been selected for redemption; or . register the transfer of, or exchange any Junior Subordinated Note of that series selected for redemption except the unredeemed portion of a Junior Subordinated Note being partially redeemed. Consolidation, Merger, Conveyance or Transfer The Subordinated Indenture provides that Duke Energy may consolidate or merge with or into, or convey or transfer all or substantially all of its properties and assets to, another corporation or other entity. Any successor must, however, assume Duke Energy's obligations under the Subordinated Indenture and the Subordinated Notes, including the Junior Subordinated Notes, issued 15 under it, and Duke Energy must deliver an officers' certificate and an opinion of counsel to the Trustee that affirm compliance with all conditions in the Subordinated Indenture relating to the transaction. When those conditions are satisfied, the successor will succeed to and be substituted for Duke Energy under the Subordinated Indenture, and Duke Energy will be relieved of its obligations under the Subordinated Indenture and the Subordinated Notes issued under it. Modification; Waiver Duke Energy may amend or modify the Subordinated Indenture with the consent of the holders of a majority of the outstanding Subordinated Notes of all series issued under it that are affected by the amendment or modification, voting as one class. The consent of the holder of each outstanding Subordinated Note affected is, however, required to: . change the maturity date of the principal, or any installment of principal or interest on that Subordinated Note; . reduce the principal amount, the interest rate or any premium payable upon redemption on that Subordinated Note; . reduce the amount of principal due and payable upon acceleration of maturity; . change the currency of payment of principal, premium or interest on that Subordinated Note; . impair the right to institute suit to enforce any such payment on or after the maturity date or redemption date; . reduce the percentage in principal amount of Subordinated Notes of any series required to amend or modify the Subordinated Indenture, to waive compliance with certain restrictive provisions of the Subordinated Indenture or to waive certain defaults; or . with certain exceptions, modify the provisions of the Subordinated Indenture governing amendments of the Subordinated Indenture or governing waiver of covenants or past defaults. Duke Energy may supplement the Subordinated Indenture to create new series of Junior Subordinated Notes and for other purposes, without the consent of any holders of Subordinated Notes, including Junior Subordinated Notes. The holders of a majority of the outstanding Junior Subordinated Notes of any series may waive, for that series, Duke Energy's compliance with certain restrictive provisions of the Subordinated Indenture under which those Junior Subordinated Notes were issued. The holders of a majority of the outstanding Subordinated Notes of all series under the Subordinated Indenture with respect to which a default has occurred and is continuing, all holders of those series voting as one class, may waive that default for all those series, except a default in the payment of principal or any premium or interest on any Subordinated Note or a default with respect to a covenant or provision which cannot be amended or modified without the consent of the holder of each outstanding Subordinated Note of the series affected. Duke Energy may not amend the Subordinated Indenture to change the subordination of any outstanding Junior Subordinated Notes without the consent of each holder of Senior Indebtedness that the amendment would adversely affect. 16 Events of Default The following are events of default under the Subordinated Indenture with respect to any series of Junior Subordinated Notes, unless the applicable Prospectus Supplement states otherwise: . failure to pay principal of or any premium on any Junior Subordinated Note of that series when due; . failure to pay any interest on any Junior Subordinated Note of that series, when due, that continues for 60 days; for this purpose, the date on which interest is due is the date on which Duke Energy is required to make payment following any deferral of interest payments by it under the terms of Junior Subordinated Notes that permit such deferrals; . failure to make any sinking fund payment when required for any Junior Subordinated Note of that series that continues for 60 days; . failure to perform any covenant in the Subordinated Indenture (other than a covenant expressly included solely for the benefit of other series) that continues for 90 days after the Trustee or the holders of at least 33% of the outstanding Junior Subordinated Notes of that series give Duke Energy written notice of the default; and . certain bankruptcy, insolvency or reorganization events with respect to Duke Energy. In the case of the fourth event of default listed above, the Trustee may extend the grace period. In addition, if holders of a particular series have given a notice of default, then holders of at least the same percentage of Junior Subordinated Notes of that series, together with the Trustee, may also extend the grace period. The grace period will be automatically extended if Duke Energy has initiated and is diligently pursuing corrective action. Additional events of default may be established for a particular series and, if established, will be described in the applicable Prospectus Supplement. If an event of default with respect to Junior Subordinated Notes of a series occurs and is continuing, then the Trustee or the holders of at least 33% of the outstanding Junior Subordinated Notes of that series may declare the principal amount of all Junior Subordinated Notes of that series to be immediately due and payable. However, that event of default will be considered waived at any time after the declaration but before a judgment for payment of the money due has been obtained if: . Duke Energy has paid or deposited with the Trustee all overdue interest, the principal and any premium due otherwise than by the declaration and any interest on such amounts, and any interest on overdue interest, to the extent legally permitted, in each case with respect to that series, and all amounts due to the Trustee under the Subordinated Indenture; and . all events of default with respect to that series, other than the nonpayment of the principal which became due solely by virtue of the declaration, have been cured or waived. A holder of Preferred Securities may institute a legal proceeding directly against Duke Energy, without first instituting a legal proceeding against the Property Trustee or any other person or entity, for enforcement of payment to that holder of principal or interest on an equivalent amount of Junior Subordinated Notes of the related series on or after the due dates specified in those Junior Subordinated Notes. 17 The Trustee is under no obligation to exercise any of its rights or powers at the request or direction of any holders of Junior Subordinated Notes unless those holders have offered the Trustee security or indemnity against the costs, expenses and liabilities which it might incur as a result. The holders of a majority of the outstanding Junior Subordinated Notes of any series have, with certain exceptions, the right to direct the time, method and place of conducting any proceedings for any remedy available to the Trustee or the exercise of any power of the Trustee with respect to those Junior Subordinated Notes. The Trustee may withhold notice of any default, except a default in the payment of principal or interest, from the holders of any series if the Trustee in good faith considers it in the interest of the holders to do so. The holder of any Junior Subordinated Note will have an absolute and unconditional right to receive payment of the principal, any premium and, within certain limitations, any interest on that Junior Subordinated Note on its maturity date or redemption date and to enforce those payments. Duke Energy is required to furnish each year to the Trustee an officers' certificate to the effect that it is not in default under the Subordinated Indenture or, if there has been a default, specifying the default and its status. Payments; Paying Agent The paying agent will pay the principal of any Junior Subordinated Notes only if those Junior Subordinated Notes are surrendered to it. Unless the applicable Prospectus Supplement states otherwise, the paying agent will pay interest on Junior Subordinated Notes, subject to such surrender, where applicable, at its office or, at Duke Energy's option: . by wire transfer to an account at a banking institution in the United States that is designated in writing to the Trustee at least 16 days prior to the date of payment by the person entitled to that interest; or . by check mailed to the address of the person entitled to that interest as that address appears in the security register for those Junior Subordinated Notes. Unless the applicable Prospectus Supplement states otherwise, the Trustee will act as paying agent for the Junior Subordinated Notes, and the principal corporate trust office of the Trustee will be the office through which the paying agent acts. Duke Energy may, however, change or add paying agents or approve a change in the office through which a paying agent acts. Any money that Duke Energy has paid to a paying agent for principal or interest on any Junior Subordinated Notes which remains unclaimed at the end of two years after that principal or interest has become due will be repaid to Duke Energy at its request. After repayment to Duke Energy, holders should look only to Duke Energy for those payments. Defeasance and Covenant Defeasance The Subordinated Indenture provides that Duke Energy may be: . discharged from its obligations, with certain exceptions, with respect to any series of Junior Subordinated Notes, such a discharge being called a "Defeasance" in this Prospectus; and 18 . released from its obligations under certain restrictive covenants especially established with respect to a series of Junior Subordinated Notes, such a release being called a "Covenant Defeasance" in this Prospectus. Duke Energy must satisfy certain conditions to effect a Defeasance. Those conditions include the irrevocable deposit with the Trustee, in trust, of money or government obligations which through their scheduled payments of principal and interest would provide sufficient money to pay the principal and any premium and interest on those Junior Subordinated Notes on the maturity dates of such payments or upon redemption. Following a Defeasance, payment of the Junior Subordinated Notes defeased may not be accelerated because of an event of default under the Subordinated Indenture. Under current United States federal income tax law, a Defeasance would be treated as an exchange of the relevant Junior Subordinated Notes in which holders of Junior Subordinated Notes might recognize gain or loss. In addition, the amount, timing and character of amounts that holders would thereafter be required to include in income might be different from what would be includible absent that Defeasance. Duke Energy urges investors to consult their own tax advisors as to the specific consequences of a Defeasance, including the applicability and effect of tax laws other than United States federal income tax laws. The Junior Subordinated Notes will not be subject to Covenant Defeasance. Subordination Each series of Junior Subordinated Notes will be subordinate and junior in right of payment, to the extent set forth in the Subordinated Indenture, to all Senior Indebtedness as defined below. If: . Duke Energy makes a payment or distribution of any of its assets to creditors upon its dissolution, winding-up, liquidation or reorganization, whether in bankruptcy, insolvency or otherwise; . a default beyond any grace period has occurred and is continuing with respect to the payment of principal, interest or any other monetary amounts due and payable on any Senior Indebtedness; or . the maturity of any Senior Indebtedness has been accelerated because of a default on that Senior Indebtedness, then the holders of Senior Indebtedness generally will have the right to receive payment, in the case of the first instance, of all amounts due or to become due upon that Senior Indebtedness, and, in the case of the second and third instances, of all amounts due on that Senior Indebtedness, or Duke Energy will make provision for those payments, before the holders of any Junior Subordinated Notes have the right to receive any payments of principal or interest on their Junior Subordinated Notes. "Senior Indebtedness" means, with respect to any series of Junior Subordinated Notes, the principal, premium, interest and any other payment in respect of any of the following: . all of Duke Energy's indebtedness that is evidenced by notes, debentures, bonds or other securities Duke Energy sells for money or other obligations for money borrowed; 19 . all indebtedness of others of the kinds described in the preceding category which Duke Energy has assumed or guaranteed or which Duke Energy has in effect guaranteed through an agreement to purchase, contingent or otherwise; and . all renewals, extensions or refundings of indebtedness of the kinds described in either of the preceding two categories. Any such indebtedness, renewal, extension or refunding, however, will not be Senior Indebtedness if the instrument creating or evidencing it or the assumption or guarantee of it provides that it is not superior in right of payment to or is equal in right of payment with those Junior Subordinated Notes. Senior Indebtedness will be entitled to the benefits of the subordination provisions in the Subordinated Indenture irrespective of the amendment, modification or waiver of any term of the Senior Indebtedness. Future series of Subordinated Notes which are not Junior Subordinated Notes may rank senior to outstanding series of Junior Subordinated Notes and would constitute Senior Indebtedness with respect to those series. The Subordinated Indenture does not limit the amount of Senior Indebtedness that Duke Energy may issue. As of March 31, 1999, Duke Energy's Senior Indebtedness totaled approximately $4,100,000,000. Concerning the Trustee The Chase Manhattan Bank is the Trustee under the Subordinated Indenture. The Chase Manhattan Bank is also the Trustee under Duke Energy's First and Refunding Mortgage and its Senior Indenture. Duke Energy and certain of its affiliates maintain deposit accounts and banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank serves as trustee under other indentures pursuant to which securities of Duke Energy and affiliates of Duke Energy are outstanding. PLAN OF DISTRIBUTION The Preferred Securities may be sold in any of three ways: . through underwriters or dealers; . directly to a limited number of institutional purchasers or to a single purchaser; or . through agents. The applicable Prospectus Supplement will describe the terms under which the Preferred Securities are offered, including: . the names of any underwriters, dealers or agents; . the purchase price and the net proceeds from the sale; . any underwriting discounts and other items constituting underwriters' compensation; . any initial public offering price; and . any discounts or concessions allowed, re-allowed or paid to dealers. 20 Any underwriters or dealers may from time to time change any initial public offering price and any discounts or concessions allowed, re-allowed or paid to dealers. If underwriters participate in the sale of Preferred Securities, those underwriters will acquire the Preferred Securities for their own account and may resell them in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of the sale. Unless the applicable Prospectus Supplement states otherwise, the obligations of any underwriter to purchase the Preferred Securities will be subject to conditions, and the underwriter will be obligated to purchase all the Preferred Securities offered, except that in some cases involving a default by an underwriter, less than all of the Preferred Securities offered may be purchased. If the Preferred Securities are sold through an agent, the applicable Prospectus Supplement will state the name and any commission that may be paid to the agent. Unless the Prospectus Supplement states otherwise, that agent will be acting on a best-efforts basis for the period of its appointment. Agents and underwriters may be entitled to indemnification against certain civil liabilities, including liabilities under the Securities Act of 1933, under agreements entered into with the applicable Trust and Duke Energy. Underwriters and their affiliates may engage in transactions with, or perform services for, the Trusts and Duke Energy or their affiliates in the ordinary course of their business. EXPERTS Duke Energy's consolidated financial statements as of December 31, 1998 and 1997 and for each of the three years in the period ended December 31, 1998, except PanEnergy Corp and subsidiaries as of and for the period ended December 31, 1996, included in Duke Energy's annual report on Form 10-K for the year ended December 31, 1998, which are incorporated by reference in this Prospectus, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated by reference in this Prospectus. The financial statements of PanEnergy Corp and subsidiaries (consolidated with Duke Energy's financial statements) as of and for the year ended December 31, 1996 have been audited by KPMG LLP, independent certified public accountants, as stated in their report incorporated by reference in this Prospectus. Those financial statements are incorporated in this Prospectus in reliance upon the respective reports of such firms given upon their authority as experts in accounting and auditing. VALIDITY OF THE SECURITIES Richards, Layton & Finger, P.A., special Delaware counsel to Duke Energy and the Trusts, will issue opinions about the validity of the Preferred Securities under Delaware law on behalf of Duke Energy and the Trusts. Dewey Ballantine LLP will issue opinions about the validity of the Junior Subordinated Notes, the Guarantees and certain related matters on behalf of Duke Energy. Ellen T. Ruff, Esq., who is Duke Energy's Vice President and General Counsel, Corporate, Gas and Electric Operations, or another of Duke Energy's lawyers will pass upon certain matters of North Carolina 21 law on behalf of Duke Energy. Ms. Ruff owns, and such other lawyer likely would own, shares of Duke Energy's common stock and options to purchase shares of Duke Energy's common stock. Counsel named in the applicable Prospectus Supplement will issue opinions about the validity of the Junior Subordinated Notes and the Guarantees on behalf of any underwriters, dealers or agents. 22 [ ] Preferred Securities Duke Energy Capital Trust [ ] % Trust Preferred Securities (Liquidation amount $ per Preferred Security) Guaranteed, to the extent described herein, by Duke Energy Corporation ------------------------------- PROSPECTUS SUPPLEMENT ------------------------------- [Names of Underwriters] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution: The estimated expenses of issuance and distribution, other than underwriting discounts and commissions, to be borne by Duke Energy Corporation are as follows: Securities and Exchange Commission Filing Fee.................. $139,000* Trustees' Fees and Expenses.................................... 30,000 Listing Fees of New York Stock Exchange........................ 100,000 Printing Costs................................................. 140,000 Legal Fees and Expenses........................................ 150,000 Accounting Fees................................................ 10,000 Blue Sky Fees and Expenses..................................... 15,000 Rating Agency Fees............................................. 200,000 Miscellaneous.................................................. 11,000 -------- Total........................................................ $795,000 ========
-------- * Actual Item 15. Indemnification of Directors and Officers. Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation Act and the By-Laws of Duke Energy Corporation permit indemnification of its directors and officers in a variety of circumstances, which may include liabilities under the Securities Act of 1933 ("Act"). In addition, Duke Energy Corporation has purchased insurance permitted by the law of North Carolina on behalf of directors, officers, employees or agents which may cover liabilities under the Act. II-1 Item 16. Exhibits.
Exhibit Number ------- 1 -- Form of Underwriting Agreement. 4.1* -- Subordinated Indenture between Duke Energy Corporation and The Chase Manhattan Bank, as Trustee, dated as of December 1, 1997 (filed with Form S-3, File No. 333-14209 effective September 3, 1998, as Exhibit 4-D-2). 4.1-A* -- First Supplemental Indenture dated as of December 8, 1997 supplementing said Subordinated Indenture (filed with Form S-3, File No. 333-14029 effective April 7, 1999, as Exhibit 4-D-2(A)). 4.2 -- Form of Supplemental Indenture to Subordinated Indenture. 4.3-A* -- Certificate of Trust of Duke Energy Capital Trust II (filed with Form S-3, File No. 333-40679 effective December 1, 1997, as Exhibit 4.3-B). 4.3-B -- Certificate of Trust of Duke Energy Capital Trust III. 4.3-C -- Certificate of Trust of Duke Energy Capital Trust IV. 4.4-A* -- Trust Agreement of Duke Energy Capital Trust II (filed with Form S- 3, File No. 333-40679 effective December 1, 1997, as Exhibit 4.4- B). 4.4-B -- Trust Agreement of Duke Energy Capital Trust III. 4.4-C -- Trust Agreement of Duke Energy Capital Trust IV. 4.5 -- Form of Amended and Restated Trust Agreement (Agreements for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV will be substantially identical except for names and dates). 4.6 -- Form of Trust Preferred Security for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV (included in Exhibit 4.5 above). 4.7 -- Form of Junior Subordinated Note (included in Exhibit 4.2 above). 4.8 -- Form of Guarantee Agreement (Agreements for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV will be substantially identical except for names and dates). 4.9 -- Form of Agreement as to Expenses and Liabilities (included in Exhibit 4.5 above). 5.1-A -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust II. 5.1-B -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust III. 5.1-C -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust IV. 5.2-A -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust II. 5.2-B -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust III. 5.2-C -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust IV. 8 -- Tax Opinion of Dewey Ballantine LLP. 12 -- Computation of ratio of earnings to fixed charges. 23.1 -- Consent of Deloitte & Touche LLP. 23.2 -- Consent of KPMG LLP. 23.3 -- Consent of Dewey Ballantine LLP (included in Exhibits 5.1-A, 5.1-B and 5.1-C above). 23.4 -- Consent of Dewey Ballantine LLP (included in Exhibit 8 above). 23.5 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibits 5.2-A, 5.2-B and 5.2-C above). 23.6 -- Consent of Ellen T. Ruff, Esq. (included in Exhibits 5.1-A, 5.1-B and 5.1-C above). 24.1 -- Power of Attorney of certain officers and directors of Duke Energy Corporation.
II-2
Exhibit Number ------- 24.2 -- Resolution of Duke Energy Corporation re: Power of Attorney. 25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Subordinated Indenture Trustee. 25.2-A -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust II. 25.2-B -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust III. 25.2-C -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust IV. 25.3-A -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust II. 25.3-B -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust III. 25.3-C -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust IV.
- -------- * previously filed Item 17. Undertakings. (a) Undertaking related to Rule 415 offering: The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post- effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, S-8 or F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. II-3 (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Undertaking related to filings incorporating subsequent Securities Exchange Act of 1934 documents by reference: The undersigned registrants hereby undertake that, for purposes of determining any liability under the Act, each filing of Duke Energy Corporation's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Undertaking related to acceleration of effectiveness: Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of each undersigned registrant pursuant to the indemnification provisions described in Item 15 above or in contractual arrangements pursuant thereto, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by each undersigned registrant of expenses incurred or paid by a director, officer or controlling person of each registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Act, each post- effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, Duke Energy Corporation, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the 21st day of May, 1999. Duke Energy Corporation R. B. Priory By:__________________________________ Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment thereto has been signed by the following directors and officers of Duke Energy Corporation in the capacities and on the date indicated.
Signature Title Date --------- ----- ---- R. B. Priory Chairman of the May 21, 1999 Board, President and Chief Executive Officer (Principal Executive Officer) Richard J. Osborne Executive Vice May 21, 1999 President and Chief Financial Officer (Principal Financial Officer) Jeffrey L. Boyer Vice President and May 21, 1999 Corporate Controller (Principal Accounting Officer) G. Alex Bernhardt Robert J. Brown William A. Coley William T. Esrey Ann M. Gray Dennis R. Hendrix Harold S. Hook All of the Directors May 21, 1999 George Dean Johnson, Jr. Max Lennon Leo E. Linbeck, Jr. James G. Martin R. B. Priory Russell M. Robinson, II
Richard J. Osborne, by signing his name hereto, does hereby sign this document on behalf of Duke Energy Corporation and on behalf of each of the above-named persons pursuant to a power of attorney duly executed by Duke Energy Corporation and such persons, filed with the Securities and Exchange Commission as an exhibit hereto. /s/ Richard J. Osborne ----------------------------------- Richard J. Osborne Attorney-in-fact II-5 Pursuant to the requirements of the Securities Act of 1933, Duke Energy Capital Trust II certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the 21st day of May, 1999. DUKE ENERGY CAPITAL TRUST II By: Duke Energy Corporation, Depositor /s/ Robert T. Lucas III By: _________________________________ Robert T. Lucas III Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, Duke Energy Capital Trust III certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the 21st day of May, 1999. DUKE ENERGY CAPITAL TRUST III By: Duke Energy Corporation, Depositor /s/ Robert T. Lucas III By: _________________________________ Robert T. Lucas III Assistant Secretary II-6 Pursuant to the requirements of the Securities Act of 1933, Duke Energy Capital Trust IV certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the 21st day of May, 1999. DUKE ENERGY CAPITAL TRUST IV By: Duke Energy Corporation, Depositor /s/ Robert T. Lucas III By: _________________________________ Robert T. Lucas III Assistant Secretary II-7 EXHIBIT INDEX
Exhibit Number Exhibit ------- ------- 1 -- Form of Underwriting Agreement. 4.1* -- Subordinated Indenture between Duke Energy Corporation and The Chase Manhattan Bank, as Trustee, dated as of December 1, 1997 (filed with Form S-3, File No. 333-14209 effective September 3, 1998, as Exhibit 4-D-2). 4.1-A* -- First Supplemental Indenture dated as of December 8, 1997 supplementing said Subordinated Indenture (filed with Form S-3, File No. 333-14029 effective April 7, 1999, as Exhibit 4-D-2(A)). 4.2 -- Form of Supplemental Indenture to Subordinated Indenture. 4.3-A* -- Certificate of Trust of Duke Energy Capital Trust II (filed with Form S-3, File No. 333-40679 effective December 1, 1997, as Exhibit 4.3-B). 4.3-B -- Certificate of Trust of Duke Energy Capital Trust III. 4.3-C -- Certificate of Trust of Duke Energy Capital Trust IV. 4.4-A* -- Trust Agreement of Duke Energy Capital Trust II (filed with Form S- 3, File No. 333-40679 effective December 1, 1997, as Exhibit 4.4- B). 4.4-B -- Trust Agreement of Duke Energy Capital Trust III. 4.4-C -- Trust Agreement of Duke Energy Capital Trust IV. 4.5 -- Form of Amended and Restated Trust Agreement (Agreements for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV will be substantially identical except for names and dates). 4.6 -- Form of Trust Preferred Security for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV (included in Exhibit 4.5 above). 4.7 -- Form of Junior Subordinated Note (included in Exhibit 4.2 above). 4.8 -- Form of Guarantee Agreement (Agreements for Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV will be substantially identical except for names and dates). 4.9 -- Form of Agreement as to Expenses and Liabilities (included in Exhibit 4.5 above). 5.1-A -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust II. 5.1-B -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust III. 5.1-C -- Opinion of Dewey Ballantine LLP relating to Duke Energy Capital Trust IV. 5.2-A -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust II. 5.2-B -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust III. 5.2-C -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Energy Capital Trust IV. 8 -- Tax Opinion of Dewey Ballantine LLP. 12 -- Computation of ratio of earnings to fixed charges. 23.1 -- Consent of Deloitte & Touche LLP. 23.2 -- Consent of KPMG LLP. 23.3 -- Consent of Dewey Ballantine LLP (included in Exhibits 5.1-A, 5.1-B and 5.1-C above). 23.4 -- Consent of Dewey Ballantine LLP (included in Exhibit 8 above). 23.5 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibits 5.2-A, 5.2-B and 5.2-C above). 23.6 -- Consent of Ellen T. Ruff, Esq. (included in Exhibits 5.1-A, 5.1-B and 5.1-C above). 24.1 -- Power of Attorney of certain officers and directors of Duke Energy Corporation.
Exhibit Number Exhibit ------- ------- 24.2 -- Resolution of Duke Energy Corporation re: Power of Attorney. 25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Subordinated Indenture Trustee. 25.2-A -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust II. 25.2-B -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust III. 25.2-C -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Property Trustee under Duke Energy Capital Trust IV. 25.3-A -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust II. 25.3-B -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust III. 25.3-C -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee with respect to Duke Energy Capital Trust IV.
- -------- * previously filed EX-1 2 FORM OF UNDERWRITING AGREEMENT EXHIBIT 1 Preferred Securities DUKE ENERGY CAPITAL TRUST [ ] % Trust Preferred Securities (Liquidation Amount $ per Preferred Security) UNDERWRITING AGREEMENT , As representatives of the several Underwriters named in Schedule A hereto Gentlemen: 1. Introductory. Duke Energy Capital Trust [ ], a Delaware statutory business trust (the "Trust"), and Duke Energy Corporation, a North Carolina corporation (the "Corporation"), propose that the Trust issue and sell to the Underwriters named in Schedule A hereto (the "Underwriters") % Trust Preferred Securities (liquidation amount $ per preferred security), representing preferred undivided beneficial interests in the assets of the Trust (the "Preferred Securities"), guaranteed by the Corporation as to the payment of distributions and payments upon liquidation or redemption, to the extent set forth in the Guarantee Agreement between the Corporation and The Chase Manhattan Bank, as trustee thereunder (the "Guarantee Trustee"), to be dated as of the Closing Date (as defined in Section 3 hereof) (the "Guarantee"), and the Trust and the Corporation hereby agree with you as hereinafter set forth in this Agreement. The entire proceeds from the sale of the Preferred Securities will be combined with the entire proceeds from the sale by the Trust to the Corporation of its common securities, representing common undivided beneficial interests in the assets of the Trust (the "Common Securities"), and will be used by the Trust to purchase the Series % Junior Subordinated Notes due (the "Notes") to be issued by the Corporation. The Preferred Securities and the Common Securities will be issued pursuant to the Amended and Restated Trust Agreement, dated as of , (the "Trust Agreement"), among the Corporation, as Depositor, and the trustees named therein, including The Chase Manhattan Bank, as property trustee (the "Property Trustee"), 1 and Chase Manhattan Bank Delaware, as Delaware trustee (the "Delaware Trustee"). The Notes will be issued pursuant to a Subordinated Indenture, dated as of December 1, 1997 (the "Original Indenture"), between the Corporation and The Chase Manhattan Bank, as Trustee (the "Indenture Trustee"), as supplemented to the date hereof and as to be supplemented by a supplemental indenture, dated as of , (the "Supplemental Indenture" and, together with the Original Indenture as theretofore amended and supplemented, the "Indenture"). 2. Representations and Warranties of the Trust and the Corporation. The Trust and the Corporation, jointly and severally, represent and warrant to, and agree with, the several Underwriters that: (a) A registration statement (Nos. , , and ), including a prospectus, relating to the Preferred Securities, the Guarantee and the Notes has been filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "1933 Act"). Such registration statement and any post-effective amendment thereto, each in the form heretofore delivered to you, and, excluding exhibits thereto but including all documents incorporated by reference in the prospectus contained therein, to you for each of the other Underwriters, have been declared effective by the Commission in such form, and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the 1933 Act being hereinafter called a "Preliminary Prospectus"; the various parts of such registration statement, including all exhibits thereto and including the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective, each as amended at the time such part of the registration statement became effective, being hereinafter called the "Registration Statement"; and the final prospectus relating to the Preferred Securities, the Guarantee and the Notes, in the form first filed pursuant to Rule 424(b) under the 1933 Act, being hereinafter called the "Prospectus"; and any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Corporation filed pursuant to Section 13(a) or 15(d) of the 1934 Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement). (b) The Registration Statement conforms and the Prospectus will conform in all material respects to the requirements of the 1933 Act and the rules and regulations thereunder ("1933 Act Regulations"), and the Registration Statement does not and the Prospectus will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, except that the Corporation 2 makes no warranty or representation to the Underwriters with respect to any statements or omissions made in reliance upon and in conformity with written information furnished to the Trust or the Corporation by any Underwriter through you specifically for use therein or any information set forth in the Prospectus under the caption "Description of the Preferred Securities--Book-Entry Issuance--The Depository Trust Company." (c) The documents incorporated by reference in the Prospectus, at the time they were filed with the Commission, conformed in all material respects to the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), and, when read together with the other information in the Prospectus, do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and any documents deemed to be incorporated by reference in the Prospectus will, when they are filed with the Commission, comply in all material respects with the requirements of the 1934 Act and the 1934 Act Regulations, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, except that the Corporation makes no warranty or representation to the Underwriters with respect to any statements or omissions made in reliance upon and in conformity with written information furnished to the Trust or the Corporation by any Underwriter through you specifically for use therein. (d) The compliance by the Corporation and the Trust with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Corporation or any of its Principal Subsidiaries is a party or by which any of them or their respective property is bound or to which any of their property or assets is subject, nor will such action result in any violation of the provisions of the Restated Articles of Incorporation or By-Laws of the Corporation, the Trust Agreement or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over (i) the Corporation or its Principal Subsidiaries or any of their respective property or (ii) the Trust; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by the Corporation or the Trust of the transactions contemplated by this Agreement, except for authorization by the North Carolina Utilities Commission and The Public Service Commission of South Carolina, the registration under the 1933 Act of the Preferred Securities, the Guarantee and the Notes and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Preferred Securities by the Underwriters. (e) Each of Duke Capital Corporation, PanEnergy Corp, Texas Eastern Transmission Corporation and Algonquin Gas Transmission Company, each a Delaware corporation (and hereinafter called a "Principal Subsidiary"), is a direct or indirect wholly-owned subsidiary of the Corporation. 3. Purchase, Sale and Delivery of Preferred Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, 3 the Trust agrees to sell to each of the Underwriters and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust at a purchase price of $ per Preferred Security, the number of Preferred Securities set forth opposite the name of such Underwriter in Schedule A hereto, plus any additional Preferred Securities which each such Underwriter may become obligated to purchase pursuant to the provisions of Section 8 hereof. As compensation to the Underwriters for their commitments hereunder, and in view of the fact that the proceeds of the sale of the Preferred Securities will be used by the Trust to purchase the Notes of the Corporation, the Corporation hereby agrees to pay at the Closing Date (as defined below) to , for the accounts of the several Underwriters, a commission equal to $ per Preferred Security, except that such commission will be $ per Preferred Security sold to certain institutions as disclosed by . The Preferred Securities to be purchased by the Underwriters hereunder will be represented by a global certificate or certificates in book-entry form which will be deposited by or on behalf of the Trust with The Depository Trust Company ("DTC") or its designated custodian and registered in the name of Cede & Co., as nominee of DTC. The Trust will deliver the Preferred Securities to , for the respective accounts of the Underwriters, against payment by or on behalf of such Underwriters of the purchase price therefor by wire transfer of immediately available funds to the Trust, by causing DTC to credit the Preferred Securities to the account of , at DTC. The time and date of such delivery and payment (the "Closing Date") shall be 10:00 a.m., New York City time, on , (unless postponed in accordance with the provisions of Section 8), or at such other time and date as you, the Trust and the Corporation may agree upon in writing, at the office of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019, or at such other place as you, the Trust and the Corporation may determine. It is understood that each Underwriter has authorized , for its account, to accept delivery of, receipt for, and make payment of the purchase price, for the Preferred Securities which it has agreed to purchase. At the Closing Date, the Corporation will pay, or cause to be paid, the compensation payable to the Underwriters under this Section 3 by wire transfer of immediately available funds to , as representative of and on behalf of the Underwriters. 4. Offering by the Underwriters. It is understood that the several Underwriters propose to offer the Preferred Securities for sale to the public as set forth in the Prospectus. 5. Covenants of the Trust and the Corporation. The Trust and the Corporation, jointly and severally, covenant and agree with the several Underwriters that: (a) The Trust and the Corporation will advise you promptly of any amendment or supplementation of the Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement, and will use their best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. 4 (b) If at any time when a prospectus relating to the Preferred Securities, the Guarantee or the Notes is required to be delivered under the 1933 Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the 1933 Act, the Trust and the Corporation promptly will prepare and file with the Commission an amendment, supplement or an appropriate document pursuant to Section 13 or 14 of the 1934 Act which will correct such statement or omission or which will effect such compliance. (c) The Trust and the Corporation, during the period when a prospectus relating to the Preferred Securities, the Guarantee or the Notes is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13 or 14 of the 1934 Act. (d) The Corporation will make generally available to its security holders, in each case as soon as practicable but not later than 60 days after the close of the period covered thereby, earnings statements (in form complying with the provisions of Section 11(a) of the 1933 Act, which need not be certified by independent certified public accountants unless required by the 1933 Act) covering (i) a twelve-month period beginning not later than the first day of the Corporation's fiscal quarter next following the effective date of the Registration Statement and (ii) a twelve-month period beginning not later than the first day of the Corporation's fiscal quarter next following the date of this Agreement. (e) The Trust and the Corporation will furnish to you, without charge, copies of the Registration Statement ( of which will be signed and will include all exhibits other than those incorporated by reference), the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as you reasonably request. (f) The Trust and the Corporation will arrange or cooperate in arrangements for the qualification of the Preferred Securities, and to the extent required or advisable, the Guarantee and the Notes for sale under the laws of such jurisdictions as you designate and will continue such qualifications in effect so long as required for the distribution; provided, however, that neither the Trust nor the Corporation shall be required to qualify as a foreign corporation or to file any general consents to service of process under the laws of any state where it is not now so subject. (g) The Corporation will pay all expenses incident to the performance of the obligations of the Trust and the Corporation under this Agreement including (i) the printing and filing of the Registration Statement and the printing of this Agreement and the Blue Sky Survey, (ii) the issuance and delivery of the Preferred Securities, the Guarantee and the Notes as specified herein, (iii) the fees and disbursements of counsel for the Underwriters in connection with the qualification of the Preferred Securities, the Guarantee and the Notes under the securities laws of any jurisdiction in accordance with the provisions of Section 5(f) and in connection with the preparation of the Blue Sky Survey, such fees not to exceed $5,000, (iv) the printing and delivery to the Underwriters, in quantities as hereinabove referred to, of copies of the Registration Statement and Prospectus and any amendments thereto, (v) any fees charged by independent rating agencies for rating the Preferred Securities, (vi) all fees and expenses of the 5 Trustees, including the Indenture Trustee, Property Trustee, Guarantee Trustee and Delaware Trustee, and the fees and disbursements of their counsel, (vii) any fees and expenses in connection with the listing of the Preferred Securities and, if applicable, the Notes on the New York Stock Exchange and the cost of registering the Preferred Securities under Section 12 of the 1934 Act, (viii) any filing fee required by the National Association of Securities Dealers, Inc. and (ix) the costs of any depositary arrangements for the Preferred Securities with DTC or any successor depositary. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Preferred Securities will be subject to the accuracy of the representations and warranties on the part of the Trust or the Corporation herein, to the accuracy of the statements of trustees or representatives of the Trust and officers of the Corporation made pursuant to the provisions hereof, to the performance by the Trust and the Corporation of their obligations hereunder and to the following additional conditions precedent: (a) Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Trust, the Corporation or you, shall be threatened by the Commission. (b) Prior to the Closing Date, the rating assigned by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group to (i) any preferred securities or any debt securities of the Corporation or (ii) any trust preferred securities of Duke Energy Capital Trust I as of the date of this Agreement shall not have been lowered. (c) Since the respective most recent dates as of which information is given in the Prospectus and up to the Closing Date, there shall not have been any material adverse change in the condition of the Trust or the Corporation, financial or otherwise, except as reflected in or contemplated by the Prospectus, and, since such dates and up to the Closing Date, there shall not have been any material transaction entered into by the Corporation other than transactions contemplated by the Prospectus and transactions in the ordinary course of business. (d) You shall have received an opinion of Ellen T. Ruff, Esq., Vice President and General Counsel, Corporate, Gas and Electric Operations, dated the Closing Date, to the effect that: (i) The Corporation has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus. (ii) Each of the Corporation and the Principal Subsidiaries is duly qualified to do business in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification, except where the failure to so qualify, considering all such cases in the aggregate, does not have a material adverse effect on the business, properties, financial position or results of operations of the Corporation and its subsidiaries taken as a whole. (iii) The Trust Agreement has been duly authorized, executed and delivered by the Corporation, and, assuming due authorization, execution and delivery thereof by The Chase Manhattan Bank, as Property Trustee, constitutes a valid and legally binding instrument of 6 the Corporation, enforceable against the Corporation in accordance with its terms, subject to the qualifications that the enforceability of the Corporation's obligations under the Trust Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (iv) The Guarantee Agreement has been duly authorized, executed and delivered by the Corporation, and, assuming due authorization, execution and delivery thereof by The Chase Manhattan Bank, as Guarantee Trustee, constitutes a valid and legally binding instrument of the Corporation, enforceable against the Corporation in accordance with its terms, subject to the qualifications that the enforceability of the Corporation's obligations under the Guarantee Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (v) The Indenture has been duly authorized, executed and delivered by the Corporation and, assuming the due authorization, execution and delivery thereof by The Chase Manhattan Bank, as Indenture Trustee, constitutes a valid and legally binding instrument of the Corporation, enforceable against the Corporation in accordance with its terms, subject to the qualifications that the enforceability of the Corporation's obligations under the Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (vi) The Notes have been duly authorized and executed by the Corporation and, when authenticated by The Chase Manhattan Bank, as Indenture Trustee, in the manner provided in the Indenture and delivered against payment therefor, will constitute valid and legally binding obligations of the Corporation, enforceable against the Corporation in accordance with their terms, subject to the qualifications that the enforceability of the Corporation's obligations under the Notes may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (vii) The Registration Statement has become effective under the 1933 Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the 1933 Act. (viii) This Agreement has been duly authorized, executed and delivered by the Corporation. (ix) The North Carolina Utilities Commission and The Public Service Commission of South Carolina have issued appropriate orders with respect to the issuance of the Notes and the Guarantee, and, to the best of the knowledge of such counsel, such orders are still in effect; the issuance of the Notes and the Guarantee is in conformity with the terms of 7 such orders; and no other authorization, approval or consent of any other governmental body is legally required for the issuance of the Notes and the Guarantee. (x) The performance by the Corporation of this Agreement and the Corporation Agreements will not contravene any of the provisions of the Restated Articles of Incorporation or By-Laws of the Corporation. (xi) The descriptions in the Registration Statement and Prospectus of legal or governmental proceedings are accurate and fairly present the information required to be shown and such counsel does not know of any other legal or governmental proceedings required to be described in the Registration Statement or Prospectus which are not described as required. Such counsel shall also state that nothing has come to her attention that has caused her to believe that the Registration Statement as of the date of effectiveness under the 1933 Act and the Prospectus as of the date it was filed with, or transmitted for filing to, the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus as of the date it was filed with, or transmitted for filing to, the Commission and at the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel may also state that, except as otherwise expressly provided in such opinion, she does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus and does not express any opinion or belief as to the financial statements or other financial data contained in or incorporated by reference into the Registration Statement and the Prospectus or as to the statement of the eligibility and qualification of each of the Indenture Trustee, Property Trustee and Guarantee Trustee. In rendering the foregoing opinion, such counsel may state that she expresses no opinion as to the laws of any jurisdiction other than North Carolina and may rely on the opinion of Austin, Lewis & Rogers of Columbia, South Carolina as to matters of South Carolina law. Such counsel may also state that she has relied as to certain factual matters on information obtained from public officials, officers of the Corporation and other sources believed by her to be responsible. (e) You shall have received an opinion or opinions of Dewey Ballantine LLP, counsel to the Corporation, dated the Closing Date, with respect to the matters set forth in (i) and (iii) through (x) of Section 6(d) and to the further effect that: (i) Each of the Principal Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus. (ii) The Indenture is duly qualified under the Trust Indenture Act of 1939. (iii) The Registration Statement as of the date of effectiveness under the 1933 Act and the Prospectus as of the date it was filed with, or transmitted for filing to, the Commission (in each case, other than the financial statements and other financial information included therein, as to which no opinion need be rendered) complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations; the 8 Corporation Agreements have each been qualified under the Trust Indenture Act of 1939; and nothing has come to their attention that would lead them to believe that the Registration Statement as of the date of effectiveness under the 1933 Act (or if an amendment to such Registration Statement or an annual report on Form 10-K has been filed by the Corporation with the Commission subsequent to the effectiveness of the Registration Statement, then at the time of the most recent such filing) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of the date it was filed with, or transmitted for filing to, the Commission and at the Closing Date contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iv) The statements made in the Prospectus under the captions "Description of the Preferred Securities," "Description of the Guarantees," "Description of the Series Junior Subordinated Notes" and "Description of the Junior Subordinated Notes," insofar as they purport to constitute summaries of the terms of the Preferred Securities, the Guarantee and the Notes, and the statements as to matters of law and legal conclusions contained in the Prospectus under the caption "Material Federal Income Tax Considerations," are correct in all material respects. In rendering the foregoing opinion or opinions, Dewey Ballantine LLP may state that such opinion or opinions are limited to the Federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware, and that they are relying on the opinion of Ellen T. Ruff, Esq. as to matters of North Carolina law and on the opinion of Austin, Lewis & Rogers of Columbia, South Carolina as to matters of South Carolina law. In addition, such counsel may state that they have relied as to certain factual matters on information obtained from public officials, officers of the Corporation and other sources believed by them to be responsible and that the signatures on all documents examined by them are genuine, assumptions which such counsel have not independently verified. (f) You shall have received the opinion of Richards, Layton & Finger, P.A., special Delaware counsel to the Trust and the Corporation, dated the Closing Date, to the effect that: (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act of the State of Delaware (the "Delaware Business Trust Act"), and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made. (ii) Under the Delaware Business Trust Act and the Trust Agreement, the Trust has the business trust power and authority to own property and conduct its business, all as described in the Prospectus. (iii) Under the Delaware Business Trust Act and the Trust Agreement, the Trust has the business trust power and authority (a) to execute and deliver this Agreement, (b) to perform its obligations under this Agreement and (c) to issue and perform its obligations under the Preferred Securities and the Common Securities. 9 (iv) Under the Delaware Business Trust Act and the Trust Agreement, the execution and delivery by the Trust of this Agreement and the performance by the Trust of its obligations hereunder and under the Trust Agreement have been duly authorized by all necessary business trust action on the part of the Trust. (v) The Trust Agreement constitutes a valid and binding obligation of the Corporation and the trustees named therein, enforceable against the Corporation and the trustees named therein, in accordance with its terms, subject, as to enforcement, to the effect upon the Trust Agreement of (a) bankruptcy, insolvency, moratorium, receivership, liquidation, fraudulent conveyance or transfer, reorganization and other similar laws relating to or affecting the remedies and rights of creditors generally, (b) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered or applied in a proceeding in equity or at law) and (c) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (vi) The Preferred Securities have been duly authorized by the Trust Agreement and are duly and validly issued and, subject to the qualifications set forth herein, fully paid and non-assessable preferred undivided beneficial interests in the assets of the Trust; the Holders of the Preferred Securities, as beneficial owners of the Trust (the "Securityholders"), are entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; provided, however, that such counsel may note that the Securityholders may be obligated, pursuant to the Trust Agreement, to (a) provide indemnity and/or security in connection with and pay a sum sufficient to cover any taxes or governmental charges arising from transfers or exchanges of Preferred Securities certificates and the issuance of replacement Preferred Securities certificates and (b) provide security and/or indemnity in connection with requests of or directions to the Property Trustee (as defined in the Trust Agreement) to exercise its rights and powers under the Trust Agreement; and under the Delaware Business Trust Act and the Trust Agreement, the issuance of the Preferred Securities is not subject to preemptive or other similar rights. (vii) The Common Securities have been duly authorized by the Trust Agreement and are duly and validly issued and fully paid common undivided beneficial interests in the assets of the Trust; and under the Delaware Business Trust Act and the Trust Agreement, the issuance of the Common Securities is not subject to preemptive or other similar rights. (viii) The issuance and sale by the Trust of the Preferred Securities and the Common Securities, the execution, delivery and performance by the Trust of this Agreement, the performance by the Trust of the Trust Agreement, the consummation by the Trust of the transactions contemplated herein and therein and the compliance by the Trust with its obligations hereunder do not violate (a) any of the provisions of the Certificate of Trust of the Trust or the Trust Agreement or (b) any applicable Delaware law or Delaware administrative regulation. (ix) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware trustee as required by the Delaware Business Trust Act and the filing of documents with the Secretary 10 of State of the State of Delaware) or employees in the State of Delaware, no authorization, approval, consent or order of any Delaware court or Delaware governmental authority or Delaware agency is required to be obtained by the Trust solely as a result of the issuance and sale of the Preferred Securities, the consummation by the Trust of the transactions contemplated in this Agreement and the Trust Agreement or the compliance by the Trust of its obligations hereunder and thereunder. (x) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware trustee as required by the Delaware Business Trust Act and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, and assuming that the Trust is treated as a grantor trust for federal income tax purposes, the Securityholders (other than those holders of the Preferred Securities who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. In rendering the opinion expressed in this paragraph (f), such counsel need express no opinion concerning the securities laws of the State of Delaware. (g) You shall have received the opinion or opinions of Brown & Wood LLP, counsel for the Underwriters, dated the Closing Date, with respect to the incorporation of the Corporation, the validity of the Notes, the Registration Statement and the Prospectus, as amended or supplemented, and such other related matters as you may require, and the Corporation shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In giving their opinion, Brown & Wood LLP may rely on the opinion of Ellen T. Ruff, Esq. as to matters of North Carolina law and on the opinion of Austin, Lewis & Rogers of Columbia, South Carolina as to matters of South Carolina law. (h) On or after the date hereof, there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally or of the securities of the Corporation or Duke Energy Capital Trust I on the New York Stock Exchange; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iii) the outbreak or material escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war if the effect of any such event specified in this clause (iii) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Preferred Securities being delivered at the Closing Date on the terms and in the manner contemplated in the Prospectus. In such event there shall be no liability on the part of any party to any other party except as otherwise provided in Section 7 hereof and except for the expenses to be borne by the Corporation as provided in Section 5(g) hereof. (i) You shall have received a certificate of the Chairman of the Board and President or any Vice President and a principal financial or accounting officer of the Corporation and a certificate of a trustee or authorized representative of the Trust, each dated the Closing Date, in which such officers or trustee or representative, as the case may be, to the best of their knowledge after 11 reasonable investigation, shall state that the representations and warranties of the Corporation and the Trust in this Agreement are true and correct as of the Closing Date, that the Corporation and the Trust have complied with all agreements and satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Date, that the conditions specified in Section 6(b) and Section 6(c) have been satisfied, and that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened by the Commission. (j) On the date of this Agreement, you shall have received letters dated the date hereof, in form and substance satisfactory to you, from the Corporation's independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus as of a specified date not more than three business days prior to the date of this Agreement. (k) At the Closing Date you shall have received from the Corporation's independent public accountants letters, dated the Closing Date, to the effect that such accountants reaffirm the statements made in the letters furnished pursuant to paragraph (j) of this Section 6, except that the specified date referred to shall be a date not more than three business days prior to the Closing Date. The Corporation will furnish you with such conformed copies of such opinions, certificates, letters and documents as you reasonably request. 7. Indemnification. (a) The Trust and the Corporation, jointly and severally, agree to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the prospectus constituting a part of the Registration Statement in the form in which it became effective or the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with written information furnished to the Trust or the Corporation by any Underwriter through you expressly for use in the Registration Statement (or any amendment thereto) or such Preliminary Prospectus, such prospectus, or the Prospectus (or any amendment or supplement thereto); (ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Trust and the Corporation; and 12 (iii) against any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above. In no case shall the Trust or the Corporation be liable under this indemnity agreement with respect to any claim made against any Underwriter or any such controlling person unless the Trust and the Corporation shall be notified in writing of the nature of the claim within a reasonable time after the assertion thereof, but failure so to notify the Trust or the Corporation shall not relieve either of them from any liability which either of them may have otherwise than on account of this indemnity agreement. The Trust and the Corporation shall be entitled to participate at their own expense in the defense, or, if they so elect, within a reasonable time after receipt of such notice, to assume the defense of any suit brought to enforce any such claim, but if they so elect to assume the defense, such defense shall be conducted by counsel chosen by them and approved by the Underwriter or Underwriters or controlling person or persons, or defendant or defendants in any suit so brought, which approval shall not be unreasonably withheld. In any such suit, any Underwriter or any such controlling person shall have the right to employ its own counsel, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the Trust and the Corporation and such Underwriter shall have mutually agreed to the employment of such counsel, or (ii) the named parties to any such action (including any impleaded parties) include both such Underwriter or such controlling person and the Trust or the Corporation and such Underwriter or such controlling person shall have been advised by such counsel that a conflict of interest between the Trust or the Corporation and such Underwriter or such controlling person may arise and for this reason it is not desirable for the same counsel to represent both the indemnifying party and also the indemnified party (it being understood, however, that the Trust and the Corporation shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for all such Underwriters and all such controlling persons, which firm shall be designated in writing by you). The Trust and the Corporation agree to notify you within a reasonable time of the assertion of any claim against them, any of their officers, directors or trustees or any person who controls the Trust or the Corporation within the meaning of Section 15 of the 1933 Act, in connection with the sale of the Preferred Securities. (b) Each Underwriter severally agrees that it will indemnify and hold harmless the Trust and the Corporation, their directors, trustees, representatives and each of the officers of the Corporation who signed the Registration Statement and each person, if any, who controls them within the meaning of Section 15 of the 1933 Act to the same extent as the indemnity contained in subsection (a) of this Section, but only with respect to statements or omissions made in the Registration Statement (or any amendment thereto) or any Preliminary Prospectus, such prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Trust or the Corporation by such Underwriter through you expressly for use in the Registration Statement (or any amendment thereto), such Preliminary Prospectus, such prospectus or the Prospectus (or any amendment or supplement thereto). In case any action shall be brought against the Trust or the Corporation or any person so indemnified based on the Registration Statement (or 13 any amendment thereto) or such Preliminary Prospectus, such prospectus or the Prospectus (or any amendment or supplement thereto) and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Trust and the Corporation, and the Trust and the Corporation and each person so indemnified shall have the rights and duties given to the Underwriters, by the provisions of subsection (a) of this Section. 8. Default by One or More of the Underwriters. (a) If any Underwriter shall default in its obligation to purchase the Preferred Securities which it has agreed to purchase hereunder on the Closing Date, you may in your discretion arrange for you or another party or other parties to purchase such Preferred Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Preferred Securities, then the Trust and the Corporation shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Preferred Securities on such terms. In the event that, within the respective prescribed periods, you notify the Trust and the Corporation that you have so arranged for the purchase of such Preferred Securities, or the Trust or the Corporation notifies you that it has so arranged for the purchase of such Preferred Securities, you, the Trust or the Corporation shall have the right to postpone such Closing Date for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Trust and the Corporation agree to file promptly any amendments to the Registration Statement or the Prospectus which may be required. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Preferred Securities. (b) If, after giving effect to any arrangements for the purchase of the Preferred Securities of a defaulting Underwriter or Underwriters by you, the Trust or the Corporation as provided in subsection (a) above, the aggregate number of such Preferred Securities which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Preferred Securities to be purchased at such Closing Date, then the Trust and the Corporation shall have the right to require each non-defaulting Underwriter to purchase the number of Preferred Securities which such Underwriter agreed to purchase hereunder at such Closing Date and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Preferred Securities which such Underwriter agreed to purchase hereunder) of the Preferred Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Preferred Securities of a defaulting Underwriter or Underwriters by you, the Trust or the Corporation as provided in subsection (a) above, the aggregate number of such Preferred Securities which remains unpurchased exceeds one- eleventh of the aggregate number of all the Preferred Securities to be purchased at such Closing Date, or if the Trust or the Corporation shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Preferred Securities of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Trust or the Corporation, except for the expenses to be borne by the Corporation as provided in Section 5(g) hereof and the indemnity agreement in Section 7 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 14 9. Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the Trust and the Corporation or their officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters or the Trust and the Corporation, or any of their officers, directors, trustees, representatives or any controlling person, and will survive delivery of and payment for the Preferred Securities. 10. Reliance on Your Acts. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by on behalf of you as the representatives. 11. Notices. All communications hereunder will be in writing and, if sent to the Underwriters, will be mailed, delivered, or telecopied and confirmed to you as the representatives in care of at , attention of , or, if sent to the Trust or the Corporation, will be mailed, delivered, or telecopied and confirmed to them at 526 South Church Street, Charlotte, N.C. 28202, telephone number (704) 382-5159, attention of Richard J. Osborne, Executive Vice President and Chief Financial Officer; provided, however, that any notice to an Underwriter pursuant to Section 7 hereof shall be delivered or sent by mail or telecopy to such Underwriter at its address or telecopy number set forth in its Underwriters' Questionnaire or telex constituting such Questionnaire, which address or telecopy number will be supplied to the Trust and the Corporation by you. Any such communications shall take effect upon receipt thereof. 12. Business Day. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 13. Successors. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Trust and the Corporation and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and the officers, directors, trustees and representatives referred to in Section 7, and their respective successors, heirs and legal representatives any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective successors and said controlling persons, officers, directors, trustees and representatives and their respective successors, heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Preferred Securities from any Underwriter shall be deemed to be a successor or assign by reason merely of such purchase. 14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 15. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. 15 If the foregoing is in accordance with your understanding, kindly sign and return to us two counterparts hereof, and upon your acceptance on behalf of each of the Underwriters, this letter and such acceptance will become a binding agreement between the Trust and the Corporation, on the one hand, and each of the Underwriters, on the other hand, in accordance with its terms. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement Among Underwriters, the form of which shall be submitted to the Trust and the Corporation for examination, but without warranty on your part as to the authority of the signers thereof. Very truly yours, Duke Energy Capital Trust [ ] By: Duke Energy Corporation as Depositor By: _________________________________ Duke Energy Corporation By: _________________________________ The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. By: ___________________________ 16 SCHEDULE A
Number of Preferred Securities to Underwriter be Purchased ----------- ------------- ------ Total........................................................... ======
17 EX-4.2 3 FORM OF SUPPLEMENTAL INDENTURE EXHIBIT 4.2 DUKE ENERGY CORPORATION TO THE CHASE MANHATTAN BANK Trustee ---------------- Supplemental Indenture Dated as of , ---------------- $ Series % Junior Subordinated Notes Due , ---------------- TABLE OF CONTENTS (1) ARTICLE 1 Series % Junior Subordinated Notes
Page ---- Section 101. Establishment............................................. 1 Section 102. Definitions............................................... 2 Section 103. Payment of Principal and Interest......................... 4 Section 104. Deferral of Interest Payments............................. 5 Section 105. Denominations............................................. 6 Section 106. Global Securities......................................... 6 Section 107. Redemption................................................ 7 Section 108. Additional Interest....................................... 7 Section 109. Limitations on Dividend and Certain Other Payments........ 8 Section 110. Covenants Regarding Securities Trust...................... 9 Section 111. No Fiduciary Duty of Trustee to Holders of Trust Securities................................................ 9 Section 112. Listing of Series Notes................................ 9 Section 113. Covenant Defeasance....................................... 9 Section 114. Set-Off................................................... 9 Section 115. Subordination............................................. 10 Section 116. Paying Agent.............................................. 10 ARTICLE 2 Miscellaneous Provisions Section 201. Recitals by Corporation................................... 10 Section 202. Ratification and Incorporation of Original Indenture...... 10 Section 203. Executed in Counterparts.................................. 10 Section 204. Assignment................................................ 10 Section 205. Enforcement by Holders of Preferred Securities of Right of Holders to Receive Principal and Interest................. 10
- -------- (1) This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions. i THIS SUPPLEMENTAL INDENTURE is made as of the day of , , by and between DUKE ENERGY CORPORATION, a North Carolina corporation, having its principal office at 526 South Church Street, Charlotte, North Carolina 28202 (the "Corporation"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as Trustee (herein called the "Trustee"). W I T N E S S E T H: WHEREAS, the Corporation has heretofore entered into a Subordinated Indenture, dated as of December 1, 1997 (the "Original Indenture") with The Chase Manhattan Bank, as Trustee; WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented to the date hereof, including by this Supplemental Indenture, is herein called the "Indenture"; WHEREAS, under the Indenture, a new series of Securities may at any time be established in accordance with the provisions of the Indenture and the terms of such series may be described by a supplemental indenture executed by the Corporation and the Trustee; WHEREAS, the Corporation proposes to create under the Indenture a series of Securities; WHEREAS, additional Securities of other series hereafter established, except as may be limited in the Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Corporation have been done or performed. NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1 Series % Junior Subordinated Notes Due Section 101. Establishment. There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Corporation's Series % Junior Subordinated Notes due , (the "Series Notes"). There are to be authenticated and delivered $ principal amount of Series Notes, and no further Series Notes shall be authenticated and delivered except as provided by Sections 304, 305, 306, 906 or 1106 of the Original Indenture. The Series Notes shall be issued in definitive fully registered form without coupons. 1 The Series Notes shall be in substantially the form set out in Exhibit A hereto. The entire principal amount of the Series Notes shall initially be evidenced by one certificate issued to the Property Trustee of Duke Energy Capital Trust [ ]. The form of the Trustee's Certificate of Authentication for the Series Notes shall be in substantially the form set forth in Exhibit B hereto. Each Series Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for. Section 102. Definitions. The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture. "Additional Interest" means (i) such additional amounts as may be required so that the net amounts received and retained by the Holder (if the Holder is the Securities Trust) after paying taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority will not be less than the amounts the Holder would have received had not such taxes, duties, assessments, or other governmental charges been imposed; and (ii) such interest as shall accrue on interest due and not paid on an Interest Payment Date, accruing at the rate of % per annum from the applicable Interest Payment Date to the date of payment, compounded quarterly, on each Interest Payment Date, to the extent permitted by applicable law. "Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office or the principal corporate trust office of the Property Trustee is closed for business. "Deferred Interest" means such installments of interest as are not paid during any Extension Period, plus Additional Interest (as defined in clause (ii) of the definition thereof) thereon. "Extension Period" means any period during which the Corporation has elected to defer payments of interest, which deferral may be for a period of up to ( ) consecutive quarters. "Guarantee" means the Guarantee Agreement executed and delivered by the Corporation and The Chase Manhattan Bank, as guarantee trustee, for the benefit of the holders of the Preferred Securities, as such Agreement may be amended from time to time. "Interest Payment Dates" means March 31, June 30, September 30 and December 31 of each year. "Investment Company Act Event" means that the Administrative Trustees (as defined in the Trust Agreement) and the Corporation shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the 2 Securities Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change becomes effective on or after the Original Issue Date. "Original Issue Date" means , . "Outstanding," when used with respect to the Series Notes, means, as of the date of determination, all Series Notes theretofore authenticated and delivered under the Indenture, except: (i) Series Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Series Notes for whose payment or redemption the necessary amount of money or money's worth has been theretofore deposited with the Trustee or any Paying Agent (other than the Corporation) in trust or set aside and segregated in trust by the Corporation (if the Corporation shall act as its own Paying Agent) for the Holders of such Series Notes; provided that if such Series Notes are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Series Notes as to which Defeasance has been effected pursuant to Section 1302 of the Original Indenture; and (iv) Series Notes that have been paid or in exchange for or in lieu of which other Series Notes have been authenticated and delivered pursuant to the Indenture, other than any such Series Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Series Notes are held by a bona fide purchaser in whose hands such Series Notes are valid obligations of the Corporation; provided, however, that in determining, during any period in which any Series Notes are owned by any Person other than the Corporation or any Affiliate thereof, whether the Holders of the requisite principal amount of Outstanding Series Notes have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, Series Notes owned, whether of record or beneficially, by the Corporation or any Affiliate thereof (with the exception of the Securities Trust) shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon such request, demand, authorization, direction, notice, consent, waiver or other action, only Series Notes that the Trustee knows to be so owned by the Corporation or an Affiliate of the Corporation (with the exception of the Securities Trust) in the above circumstances shall be so disregarded. Series Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Series Notes and that the pledgee is not the Corporation or any Affiliate of the Corporation. "Preferred Securities" means the % Trust Preferred Securities issued by the Securities Trust. "Property Trustee," when used with respect to the Series Notes, means the Person designated as such in the Trust Agreement. 3 "Regular Record Date" means, with respect to each Interest Payment Date, the close of business on the 15th calendar day preceding such Interest Payment Date. "Securities Trust" means Duke Energy Capital Trust [ ], a statutory business trust formed by the Corporation under Delaware law to issue the Trust Securities, the proceeds of which will be used to purchase Series Notes, or a successor thereof. "Special Event" means an Investment Company Act Event or Tax Event. "Stated Maturity" means , . "Tax Event" means that the Administrative Trustees and the Corporation shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that (i) the Securities Trust would be subject to United States federal income tax with respect to income accrued or received on the Series Notes, (ii) interest payable on the Series Notes would not be deductible by the Corporation for United States federal income tax purposes, or (iii) the Securities Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, which change or amendment becomes effective on or after the Original Issue Date. "Trust Agreement" means the Amended and Restated Trust Agreement that governs the affairs of the Securities Trust. "Trust Securities" means the securities issued by the Securities Trust evidencing the entire beneficial interest therein. Section 103. Payment of Principal and Interest. The unpaid principal amount of the Series Notes shall bear interest at the rate of % per annum until paid or duly provided for, such interest to accrue from , or from the most recent Interest Payment Date to which interest has been paid or duly provided for. Interest shall be paid quarterly in arrears on each Interest Payment Date commencing , to the Person in whose name the Series Notes are registered on the Regular Record Date for such Interest Payment Date; provided that interest payable at the Stated Maturity of principal or on a Redemption Date as provided herein will be paid to the Person to whom principal is payable. So long as an Extension Period is not occurring, any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in whose name the Series Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee ("Special Record Date"), notice whereof shall be given to Holders of the Series Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Series Notes may be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture. 4 Payments of interest on the Series Notes will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for the Series Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Series Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. Payment of the principal and interest (including Additional Interest, if any) on the Series Notes shall be made at the office of the Paying Agent in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, with any such payment that is due at the Stated Maturity or at earlier redemption of any Series Notes being made upon surrender of such Series Notes to the Paying Agent. Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Corporation, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto. The Corporation shall pay, as additional interest on the Series Notes, when due to the United States or any other taxing authority, the amounts set forth in clause (i) of the definition of Additional Interest. Section 104. Deferral of Interest Payments. The Corporation has the right at any time and from time to time to extend the interest payment period of the Series Notes for up to ( ) consecutive quarters (each, an "Extension Period"), during which Extension Period the Corporation shall have the right to make partial payments of interest on any Interest Payment Date; provided, however, that no such Extension Period may extend beyond the Stated Maturity. Notwithstanding the foregoing, the Corporation has no right to extend its obligation to pay such amounts as are defined in clause (i) of the definition of Additional Interest. Prior to the termination of any such Extension Period, the Corporation may further extend the interest payment period; provided that such Extension Period, together with all such previous and further extensions of that Extension Period, shall not exceed ( ) consecutive quarters. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due, the Corporation may select a new Extension Period, subject to the above limitations and requirements. Upon the termination of any Extension Period, which termination shall be on an Interest Payment Date, the Corporation shall pay all Deferred Interest on the next succeeding Interest Payment Date to the Person or Persons in whose name the Series Notes are registered on the Regular Record Date for such Interest Payment Date; provided that Deferred Interest payable at Stated Maturity or on any Redemption Date will be paid to the Person or Persons to whom principal is payable. 5 The Corporation shall give the Holder or Holders of the Series Notes and the Trustee notice, as provided in Sections 105 and 106, respectively, of the Original Indenture, of its selection or extension of an Extension Period at least one Business Day prior to the earlier of (i) the Regular Record Date relating to the Interest Payment Date on which the Extension Period is to commence or relating to the Interest Payment Date on which an Extension Period that is being extended would otherwise terminate, or (ii) the date the Corporation or the Securities Trust is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization of the record date or the date such distributions are payable. The Corporation shall cause the Securities Trust to give notice of the Corporation's selection of such Extension Period to Holders of the Trust Securities. The month in which any notice is given pursuant to the immediately preceding sentence of this Section shall constitute the first month of the first quarter of the ( ) consecutive quarters which comprise the maximum Extension Period. At any time any of the foregoing notices are given to the Trustee, the Corporation shall give to the Paying Agent for the Series Notes such information as said Paying Agent shall reasonably require in order to fulfill its tax reporting obligations with respect to such Series Notes. Section 105. Denominations. The Series Notes may be issued in denominations of $ or any integral multiple thereof. Section 106. Global Securities. If the Series Notes are distributed to holders of the Trust Securities in liquidation of such holders' interests therein, the Series Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee. Except under the limited circumstances described below, Series Notes represented by such Global Security or Global Securities will not be exchangeable for, and will not otherwise be issuable as, Series Notes in definitive form. The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee. Owners of beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Series Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee or except as described below. The rights of Holders of such Global Security shall be exercised only through the Depositary. A Global Security shall be exchangeable for Series Notes registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Corporation that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Corporation within 90 days of receipt by the Corporation of such notification, or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Corporation within 90 days after it becomes aware of such cessation, or (ii) the Corporation in its sole discretion determines that such Global Security shall be so exchangeable. Any Global Security that is 6 exchangeable pursuant to the preceding sentence shall be exchangeable for Series Notes registered in such names as the Depositary shall direct. Section 107. Redemption. The Series Notes shall be subject to redemption at the option of the Corporation, in whole or in part, without premium or penalty, at any time or from time to time on or after , , at a Redemption Price equal to 100% of the principal amount to be redeemed plus accrued but unpaid interest (including any Additional Interest) to the Redemption Date; provided, however, that, if a redemption in part shall result in the delisting of the Preferred Securities, the Corporation may redeem the Series Notes only in whole. In addition, upon the occurrence of a Special Event, the Corporation may, within ninety (90) days following the occurrence thereof and subject to the terms and conditions of the Indenture, redeem the Series Notes, in whole, at a price equal to 100% of the principal amount to be redeemed plus any accrued but unpaid interest (including Additional Interest, if any) to the Redemption Date. In the event of redemption of the Series Notes in part only, a new Series Note or Notes for the unredeemed portion shall be issued in the name or names of the Holders thereof upon the surrender thereof. The Series Notes shall not have a sinking fund. Notice of redemption shall be given as provided in Section 1104 of the Original Indenture. Notwithstanding the foregoing, no notice of redemption that is given pursuant to such Section with respect to any Series Notes shall, while any Preferred Securities are outstanding, contain a condition that provides that redemption of the Series Notes, or the part thereof, specified therein, shall be conditional upon receipt by the Trustee or the Paying Agent for such Series Notes, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and any interest on such Series Notes. Any notice provided to the Trustee under Section 1102 of the Original Indenture shall also be provided by the Corporation to the Property Trustee; provided that the Corporation shall provide notice pursuant to such Section 1102 on a date less than 45 days prior to the Redemption Date only if such shorter notice is satisfactory to both the Trustee and the Property Trustee. Any redemption of less than all of the Series Notes shall, with respect to the principal thereof, be divisible by $ . Section 108. Additional Interest. Whenever there is mentioned in the Indenture, in any context, the payment of the principal of, or any premium or interest on, or in respect of, Securities of any series, such mention shall, with respect to the Series Notes, be deemed to include mention of the payment of Additional Interest provided for by the terms of the Series Notes to the extent that, in such context, Additional Interest is, was or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Interest in any provisions of this Supplemental Indenture shall not be construed as excluding Additional Interest in those provisions of the Original Indenture or this Supplemental Indenture in which such express mention is not made. If, subsequent to the date that a satisfaction and discharge or Defeasance is effected pursuant to Section 401 or 1302, respectively, of the Original Indenture, Additional Interest (for purposes of this 7 paragraph, as defined in clause (i) of the definition thereof) (in excess of that established as of the date that such discharge or Defeasance is effected) becomes payable in respect of the Series Notes so discharged or defeased, the Corporation shall irrevocably deposit or cause to be irrevocably deposited in accordance with the provisions of Section 401 or 1304 of the Original Indenture, as the case may be, within ten Business Days prior to the date the first payment in respect of any portion of such excess Additional Interest becomes due, such additional moneys or Government Obligations as are necessary to satisfy the provisions of Section 401 or 1304 of the Original Indenture, as the case may be, as if a discharge or Defeasance were being effected as of the date of such subsequent deposit. Except as otherwise provided in or pursuant to the Indenture, at least 10 days prior to the first Interest Payment Date upon which Additional Interest (for purposes of this paragraph, as defined in clause (i) of the definition thereof) shall be payable, and at least 10 days prior to each date of payment of principal and any premium or interest if there has been any change with respect to the information set forth in the Officers' Certificate hereinafter mentioned, the Corporation shall furnish the Trustee and any Paying Agent, if other than the Trustee or the Corporation, with an Officers' Certificate stating the amount of the Additional Interest payable per minimum authorized denomination of the Series Notes. Section 109. Limitations on Dividend and Certain Other Payments. The Corporation covenants, for the benefit of the Holders of the Series Notes, that, subject to the next succeeding sentence, (a) the Corporation shall not declare or pay any dividend on, or make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, and (b) the Corporation shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees other than the Guarantee) issued by the Corporation which rank pari passu with or junior to the Series Notes (i) if at such time the Corporation shall have given notice of its election to extend an interest payment period for the Series Notes and such extension shall be continuing or (ii) if at such time an Event of Default with respect to the Series Notes shall have occurred and be continuing. The preceding sentence, however, shall not restrict (A) any of the actions described in the preceding sentence resulting from any reclassification of the Corporation's capital stock or the exchange or conversion of one class or series of the Corporation's capital stock for another class or series of the Corporation's capital stock, (B) the declaration and payment of a dividend or distribution or similar share purchase rights in the future, (C) repurchases, redemptions or other acquisitions of shares of the Corporation's capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase and dividend reinvestment plan, (D) acquisitions of shares of the Corporation's capital stock in connection with the issuance of shares of the Corporation's capital stock (or securities convertible into or exchangeable for shares of the Corporation's capital stock) as consideration in an acquisition transaction that was entered into prior to the commencement of the relevant Extension Period, (E) dividends or distributions in capital stock of the Corporation, (F) the purchase of fractional interests in shares of the Corporation's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, or (G) mandatory sinking fund payments with respect to any series of the Corporation's preferred stock or preferred stock A; provided that the aggregate stated value of all such series outstanding at the time of any such payment does not exceed 8 5% of the aggregate of (1) the total principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the Corporation and then outstanding and (2) the capital and surplus of the Corporation to be stated on the books of account of the Corporation after giving effect to such payment; provided, however, that any moneys deposited into any sinking fund and not in violation of this provision may thereafter be applied to the purchase or redemption of such preferred stock or preferred stock A in accordance with the terms of such sinking fund without regard to the restrictions contained in this Section 109. Section 110. Covenants Regarding Securities Trust. For so long as the Trust Securities remain outstanding, the Corporation covenants (i) directly or indirectly to maintain 100% ownership of the Common Securities (as defined in the Trust Agreement) of the Securities Trust; provided, however, that any permitted successor of the Corporation under the Indenture may succeed to the Corporation's ownership of such Common Securities, and (ii) to use its reasonable efforts to cause the Securities Trust (a) to remain a statutory business trust, except in connection with the distribution of Series Notes to the holders of Trust Securities in liquidation of the Securities Trust, the redemption of all of the Trust Securities, or certain mergers, consolidations or amalgamations, each as permitted under the Trust Agreement, and (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes. The Corporation shall deliver to the Trustee, no later than the Business Day on which the event occurs, written notice of the liquidation, dissolution or winding-up of the Securities Trust if such liquidation, dissolution or winding-up would occur earlier than the Stated Maturity of the Series Notes owned by such Securities Trust. Section 111. No Fiduciary Duty of Trustee to Holders of Trust Securities. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Trust Securities and shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of a Trust Security to establish that such Person is such a holder. Section 112. Listing of Series Notes. If the Series Notes are to be issued as a Global Security or Global Securities in connection with the distribution of the Series Notes to the holders of the Preferred Securities, the Corporation shall use its best efforts to list such Series Notes on the New York Stock Exchange or any other exchange on which such Preferred Securities are then listed. The Corporation shall notify the Trustee if and when the Series Notes become admitted to trading on the New York Stock Exchange or any other national securities exchange. Section 113. Covenant Defeasance. Section 1303 of the Original Indenture shall not apply to any of the Series Notes. Section 114. Set-Off. Notwithstanding anything to the contrary in the Indenture or in any Series Note, prior to the dissolution of the Securities Trust, the Corporation shall have the right to set off and apply against any payment it is otherwise required to make hereunder or thereunder with respect to the principal of or interest (including any Additional Interest) on the Series Notes with and to the extent the Corporation has theretofore made, or is concurrently on the date of such payment making, a payment with respect to the Preferred Securities under the Guarantee. Contemporaneously with, or as promptly as practicable after, any such payment under the Guarantee, the Corporation shall deliver to the Trustee an Officers' Certificate (upon which the Trustee shall be entitled to rely conclusively without any requirement to investigate the facts contained therein) to the 9 effect that such payment has been made and that, as a result of such payment, the corresponding payment under the Series Notes has been set off in accordance with this Section 114. Section 115. Subordination. The indebtedness evidenced by the Series Notes shall be, to the extent and in the manner set forth in the Original Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Original Indenture) with respect to the Series Notes, and the Series Notes shall rank pari passu in right of payment with each other series of Securities issued under the Indenture, with the exception of any series of Securities which by its terms provides otherwise. Section 116. Paying Agent. The Trustee shall initially serve as Paying Agent with respect to the Series Notes, with the Place of Payment initially being the Corporate Trust Office of the Trustee. ARTICLE 2 Miscellaneous Provisions Section 201. Recitals by Corporation. The recitals in this Supplemental Indenture are made by the Corporation only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Series Notes and of this Supplemental Indenture as fully and with like effect as if set forth herein in full. Section 202. Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this Supplemental Indenture shall be read, taken and construed as one and the same instrument. Section 203. Executed in Counterparts. This Supplemental Indenture may be executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. Section 204. Assignment. The Corporation shall have the right at all times to assign any of its rights or obligations under this Indenture with respect to the Series Notes to a direct or indirect wholly owned subsidiary of the Corporation; provided that, in the event of any such assignment, the Corporation shall remain primarily liable for the performance of all such obligations. The Indenture may also be assigned by the Corporation in connection with a transaction described in Article Eight of the Original Indenture. Section 205. Enforcement by Holders of Preferred Securities of Right of Holders to Receive Principal and Interest. So long as the Series Notes are held by the Property Trustee on behalf of the Securities Trust, a registered holder of Preferred Securities may institute a legal proceeding directly against the Corporation, without first instituting a legal proceeding directly against or requesting or directing that action be taken by the Property Trustee or any other Person, for enforcement of payment to such registered holder of principal of or interest on Series Notes having a principal amount equal to the aggregate stated liquidation amount of such Preferred Securities of such registered holder on or after the due dates therefor specified or provided for in the 10 Series Notes. This Section 205 and Section 109 of this Supplemental Indenture are for the benefit of the registered holders of Preferred Securities and, prior to the dissolution of the Securities Trust, may be enforced by such holders. A holder of a Preferred Security shall not have the right, as such holder, to enforce any other provision of the Indenture. IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written. Duke Energy Corporation By: _________________________________ Attest: _________________________________ The Chase Manhattan Bank, as Trustee By: _________________________________ Attest: _________________________________ 11 EXHIBIT A FORM OF SERIES % JUNIOR SUBORDINATED NOTE DUE , No. CUSIP No. THE INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS, AND THIS SECURITY IS ISSUED SUBJECT TO THE PROVISIONS OF THE INDENTURE WITH RESPECT THERETO. DUKE ENERGY CORPORATION SERIES % JUNIOR SUBORDINATED NOTE DUE , Principal Amount: $ Regular Record Date: 15th calendar day prior to Interest Payment Date Original Issue Date: , Stated Maturity: , Interest Payment Dates: March 31, June 30, September 30, December 31 Interest Rate: % per annum Authorized Denomination: $ or any integral multiple thereof Initial Redemption Date: ,
Duke Energy Corporation, a North Carolina corporation (the "Corporation," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of DOLLARS ($ ) on the Stated Maturity shown above (or upon earlier redemption), and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on each Interest Payment Date as specified above, commencing on , , and on the Stated Maturity (or upon earlier redemption) at the rate per annum shown above (the "Interest Rate") until the principal hereof is paid or made available for payment and on any overdue principal and on any overdue installment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment Date that is the Stated Maturity or a Redemption Date) will, as provided in such Indenture, be paid to the Person in whose name this Series % Junior Subordinated Note due , (this "Security") is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date; provided that any interest payable at Stated Maturity or on any Redemption Date will be paid to the Person to whom principal A-1 is payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Securities of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in said Indenture. Payments of interest on this Security will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Security shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Security is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. "Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office or the principal corporate trust office of the Property Trustee is closed for business. The Corporation shall have the right at any time and from time to time during the term of this Security to extend the interest payment period of such Security for up to consecutive quarters (each, an "Extension Period"), but not beyond the Stated Maturity of this Security, during which Extension Periods interest shall accrue on unpaid installments of interest at the Interest Rate, compounded quarterly, to the date of payment to the extent permitted by applicable law (such unpaid interest plus such interest thereon being called "Deferred Interest"); provided, however, that the Corporation shall have the right to make partial payments of interest on any Interest Payment Date during any Extension Period. Upon the termination of each Extension Period, which shall be an Interest Payment Date, the Corporation shall pay all Deferred Interest on the next succeeding Interest Payment Date to the Person in whose name this Security is registered at the close of business on the Regular Record Date for such Interest Payment Date; provided that any Deferred Interest payable at Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable. Prior to the termination of any such Extension Period, the Corporation may further extend the interest payment period; provided that such Extension Period together with all such previous and further extensions thereof shall not exceed ( ) consecutive quarters. Upon the termination of any such Extension Period, and the payment of all accrued and unpaid interest (including any Additional Interest) then due, the Corporation may select a new Extension Period, subject to the above requirements. The Corporation shall not (i) declare or pay any dividend or distribution on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, and (ii) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees other than the Guarantee) issued by the Corporation that rank pari passu with or junior to this Security if the Corporation shall have given notice of its A-2 election to extend an interest payment period for this Security and such extension shall be continuing or if at such time an Event of Default with respect to the series of which this Security is a part shall have occurred and be continuing. The preceding sentence, however, shall not restrict (A) any of the actions described in the preceding sentence resulting from any reclassification of the Corporation's capital stock or the exchange or conversion of one class or series of the Corporation's capital stock for another class or series of the Corporation's capital stock, (B) the declaration and payment of a dividend or distribution or similar share purchase rights in the future, (C) repurchases, redemptions or other acquisitions of shares of the Corporation's capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase and dividend reinvestment plan, (D) acquisitions of shares of the Corporation's capital stock in connection with the issuance of shares of the Corporation's capital stock (or securities convertible into or exchangeable for shares of the Corporation's capital stock) as consideration in an acquisition transaction that was entered into prior to the commencement of the relevant Extension Period, (E) dividends or distributions on capital stock of the Corporation, (F) the purchase of fractional interests in shares of the Corporation's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, or (G) mandatory sinking fund payments with respect to any series of the Corporation's preferred stock or preferred stock A; provided that the aggregate stated value of all such series outstanding at the time of any such payment does not exceed 5% of the aggregate of (1) the total principal amount of all bonds or other securities representing secured indebtedness issued or assumed by the Corporation and then outstanding and (2) the capital and surplus of the Corporation to be stated on the books of account of the Corporation after giving effect to such payment; provided, however, that any moneys deposited into any sinking fund and not in violation of this provision may thereafter be applied to the purchase or redemption of such preferred stock or preferred stock A in accordance with the terms of such sinking fund without regard to the restrictions contained in this provision. The Corporation shall give the Holder of this Security and the Trustee notice of its selection or extension of an Extension Period at least one Business Day prior to the earlier of (i) the Regular Record Date relating to the Interest Payment Date on which the Extension Period is to commence or relating to the Interest Payment Date on which an Extension Period that is being extended would otherwise terminate or (ii) the date the Corporation or the Securities Trust is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization of the record date or the date such distributions are payable. The Corporation also shall be obligated to pay when due and without extension all additional amounts as may be required so that the net amount received and retained by the Holder of this Security (if the Holder is the Securities Trust) after paying taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority will not be less than the amounts such Holder would have received had no such taxes, duties, assessments, or other governmental charges been imposed. Payment of the principal of and interest (including Additional Interest, if any) due at the Stated Maturity or earlier redemption of this Security shall be made upon surrender of this Security, at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payment of interest (including interest on an Interest Payment Date) will be made, subject to such surrender where A-3 applicable, at the option of the Corporation, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto. The indebtedness evidenced by this Security is, to the extent and in the manner set forth in the Indenture, subordinate in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture), and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness whether now outstanding or hereafter incurred and waives reliance by each such holder upon said provisions. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed under its corporate seal. Dated: Duke Energy Corporation By: _________________________________ Attest: _________________________________ A-4 CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The Chase Manhattan Bank, as Trustee By: _________________________________ Authorized Officer A-5 (Reverse Side of Security) This Security is one of a duly authorized issue of Securities of the Corporation (the "Securities"), issued and issuable in one or more series under a Subordinated Indenture, dated as of December 1, 1997, as supplemented (the "Indenture"), between the Corporation and The Chase Manhattan Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Corporation, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof as Series % Junior Subordinated Notes due , (the "Series Notes") in the aggregate principal amount of up to $ . Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture. The Corporation shall have the right, subject to the terms and conditions of the Indenture, to redeem this Security at any time on or after , at the option of the Corporation, without premium or penalty, in whole or in part, at a Redemption Price equal to 100% of the principal amount to be redeemed plus accrued but unpaid interest (including any Additional Interest) to the Redemption Date. Upon the occurrence of a Special Event (as defined below), the Corporation may, within 90 days following the occurrence thereof and subject to the terms and conditions of the Indenture, redeem this Security without premium or penalty, in whole, at a Redemption Price equal to 100% of the principal amount thereof plus accrued but unpaid interest (including any Additional Interest) to the Redemption Date. A Special Event may be a Tax Event or an Investment Company Act Event. "Tax Event" means that the Administrative Trustees and the Corporation shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that (i) the Securities Trust would be subject to United States federal income tax with respect to income accrued or received on the Series Notes, (ii) interest payable on the Series Notes would not be deductible by the Corporation for United States federal income tax purposes, or (iii) the Securities Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, which change or amendment becomes effective on or after the Original Issue Date. "Investment Company Act Event" means that the Administrative Trustees and the Corporation shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Securities Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change becomes effective on or after the Original Issue Date. In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof. The Securities of this series will not have a sinking fund. A-6 If an Event of Default with respect to the Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Corporation and the rights of the Holders of the Securities of all series affected under the Indenture at any time by the Corporation and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected thereby (voting as one class). The Indenture contains provisions permitting the Holders of not less than a majority in principal amount of the Outstanding Securities of all series with respect to which a default under the Indenture shall have occurred and be continuing (voting as one class), on behalf of the Holders of the Securities of all such series, to waive, with certain exceptions, such default under the Indenture and its consequences. The Indenture also permits the Holders of not less than a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Corporation with certain provisions of the Indenture affecting such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Corporation for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than a majority in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request and shall have failed to A-7 institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any interest hereon on or after the respective due dates expressed herein. The Indenture contains provisions for defeasance at any time of the entire indebtedness of the Securities of this series upon compliance with certain conditions set forth in the Indenture. Prior to due presentment of this Security for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Corporation, the Trustee nor any such agent shall be affected by notice to the contrary. The Securities of this series are issuable only in registered form without coupons in denominations of $ and any integral multiple thereof. As provided in the Indenture and subject to the limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Security or Securities to be exchanged at the office or agency of the Corporation. This Security shall be governed by, and construed in accordance with, the internal laws of the State of New York. A-8 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______ Custodian ______ (Cust) (Minor) TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors JT TEN -- as joint tenants with Act ______________________ rights of survivorship and (State) not as tenants in common Additional abbreviations may also be used though not on the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto (please insert Social Security or other identifying number of assignee) - -------------------------------------------------------------------------------- Please Print or Typewrite Name and Address, Including Postal Zip Code of Assignee - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the within Security and all rights thereunder, hereby irrevocably constituting and appointing - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer said Security on the books of the Corporation, with full power of substitution in the premises. Dated: _____________________________ -------------------------------------- -------------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever. A-9 EXHIBIT B CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The Chase Manhattan Bank, as Trustee By: _________________________________ Authorized Officer B-1 EX-4.3(B) 4 CERTIFICATE OF TRUST - DUKE ENERGY CAP TRUST III EXHIBIT 4.3-B CERTIFICATE OF TRUST OF DUKE ENERGY CAPITAL TRUST III THIS Certificate of Trust of Duke Energy Capital Trust III (the "Trust"), dated as of May 13, 1999, is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. (S)3801, et seq.). ------- -- --- 1. Name. The name of the business trust formed hereby is Duke ---- Energy Capital Trust III. 2. Delaware Trustee. The name and business address of the trustee ---------------- of the Trust with a principal place of business in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. 3. Effective Date. This Certificate of Trust shall be effective upon -------------- filing. IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as trustee of the Trust By: /s/ Denis Kelly _________________________________________ Name: Denis Kelly Title: Trust Officer EX-4.3(C) 5 CERTIFICATE OF TRUST - DUKE ENERGY CAP TRUST IV EXHIBIT 4.3-C CERTIFICATE OF TRUST OF DUKE ENERGY CAPITAL TRUST IV THIS Certificate of Trust of Duke Energy Capital Trust IV (the "Trust"), dated as of May 13, 1999, is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. (S)3801, et seq.). ------- -- --- 1. Name. The name of the business trust formed hereby is Duke ---- Energy Capital Trust IV. 2. Delaware Trustee. The name and business address of the trustee ---------------- of the Trust with a principal place of business in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. 3. Effective Date. This Certificate of Trust shall be effective upon -------------- filing. IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as trustee of the Trust By: /s/ Denis Kelly _________________________________________ Name: Denis Kelly Title: Trust Officer EX-4.4-B 6 TRUST AGREEMENT DUKE ENERGY CAP TRUST III EXHIBIT 4.4-B TRUST AGREEMENT OF DUKE ENERGY CAPITAL TRUST III THIS TRUST AGREEMENT is made as of May 13, 1999 (this "Declaration"), by and among Duke Energy Corporation, a North Carolina corporation, as depositor (the "Depositor"), and Chase Manhattan Bank Delaware, a Delaware banking corporation, as trustee (the "Trustee"). The Depositor and the Trustee hereby agree as follows: 1. The trust created hereby shall be known as "Duke Energy Capital Trust III" (the "Trust"), in which name the Trustee or the Depositor, to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trust the sum of $10. Such amount shall constitute the initial trust estate. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. (S)3801, et seq. (the "Business Trust Act"), and that this document ------- -- ---- constitute the governing instrument of the Trust. The Trustee is hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in such form as the Trustee may approve. 3. The Depositor and the Trustee will enter into an amended and restated Trust Agreement or Declaration satisfactory to each such party to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement or Declaration, the Trustee shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. Notwithstanding the foregoing, the Trustee may take all actions deemed proper as are necessary to effect the transactions contemplated herein. 4. The Depositor is hereby authorized, in its sole discretion, (i) to file with the Securities and Exchange Commission (the "Commission") and to execute, in the case of the 1933 Act Registration Statement and 1934 Act Registration Statement (as herein defined), on behalf of the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including pre- effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of 1933, as amended (the "1933 Act"), of the Preferred Securities of the Trust, (b) any preliminary prospectus or prospectus or supplement thereto relating to the Preferred Securities required to be filed under the 1933 Act, and (c) if required, a Registration Statement on Form 8-A or other appropriate form (the "1934 Act Registration Statement")(including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange or any other exchange (collectively, the "Exchange") and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the Exchange; (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable; (iv) to execute, deliver and perform on behalf of the Trust, an underwriting agreement with the Depositor and the underwriter or underwriters of the Preferred Securities of the Trust; (v) to execute, deliver and perform a depository agreement with the initial clearing agency, relating to the Preferred Securities; and (vi) to apply for and obtain a tax identification number for the Trust. In the event that any filing referred to in this Section 4 is required by the rules and regulations of the Commission, PORTAL or state securities or Blue Sky laws to be executed on behalf of the Trust by the Trustee, the Trustee, in its capacity as trustee of the Trust, is hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that Chase Manhattan Bank Delaware, in its capacity as trustee of the Trust, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, PORTAL or state securities or Blue Sky laws. In connection with all of the foregoing, the Depositor hereby constitutes and appoints Robert T. Lucas III, as its true and lawful attorney- in-fact and agent, with full power of substitution and resubsititution for the Depositor or in the Depositor's name, place and stead, in any and all capacities, to sign any and all amendments (including all pre-effective and post-effective amendments) to the 1933 Act Registration Statement and any 1934 Act Registration Statement and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his respective substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration may be executed in one or more counterparts. 6. The number of trustees of the Trust initially shall be one and thereafter the number of trustees of the Trust shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of trustees of the Trust; provided, however, that to the extent required by the Business Trust Act, one trustee of the Trust shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any trustee of the Trust at any time. Any trustee of the Trust may resign upon thirty days' prior notice to the Depositor. 7. This Declaration shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles). -2- IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be duly executed as of the day and year first above written. DUKE ENERGY CORPORATION, as Depositor By: /s/ Robert T. Lucas III ---------------------------------- Name: Robert T. Lucas III Title: Assistant Secretary CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as trustee of the Trust By: /s/ Denis Kelly ---------------------------------- Name: Denis Kelly Title: Trust Officer -3- EX-4.4-C 7 TRUST AGREEMENT DUKE ENERGY CAP TRUST IV EXHIBIT 4.4-C TRUST AGREEMENT OF DUKE ENERGY CAPITAL TRUST IV THIS TRUST AGREEMENT is made as of May 13, 1999 (this "Declaration"), by and among Duke Energy Corporation, a North Carolina corporation, as depositor (the "Depositor"), and Chase Manhattan Bank Delaware, a Delaware banking corporation, as trustee (the "Trustee"). The Depositor and the Trust hereby agree as follows: 1. The trust created hereby shall be known as "Duke Energy Capital Trust IV" (the "Trust"), in which name the Trustee or the Depositor, to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trust the sum of $10. Such amount shall constitute the initial trust estate. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. S3801, et seq. (the "Business Trust Act"), and that this document ------- -- ---- constitute the governing instrument of the Trust. The Trustee is hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in such form as the Trustee may approve. 3. The Depositor and the Trustee will enter into an amended and restated Trust Agreement or Declaration satisfactory to each such party to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement or Declaration, the Trustee shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. Notwithstanding the foregoing, the Trustee may take all actions deemed proper as are necessary to effect the transactions contemplated herein. 4. The Depositor is hereby authorized, in its sole discretion, (i) to file with the Securities and Exchange Commission (the "Commission") and to execute, in the case of the 1933 Act Registration Statement and 1934 Act Registration Statement (as herein defined), on behalf of the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including pre-effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of 1933, as amended (the "1933 Act"), of the Preferred Securities of the Trust, (b) any preliminary prospectus or prospectus or supplement thereto relating to the Preferred Securities required to be filed under the 1933 Act, and (c) if required, a Registration Statement on Form 8-A or other appropriate form (the "1934 Act Registration Statement") (including all pre-effective and post- effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange or any other exchange (collectively, the "Exchange") and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the Exchange; (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable; (iv) to execute, deliver and perform on behalf of the Trust, an underwriting agreement with the Depositor and the underwriter or underwriters of the Preferred Securities of the Trust; (v) to execute, deliver and perform a depository agreement with the initial clearing agency, relating to the Preferred Securities; and (vi) to apply for and obtain a tax identification number for the Trust. In the event that any filing referred to in this Section 4 is required by the rules and regulations of the Commission, PORTAL or state securities or Blue Sky laws to be executed on behalf of the Trust by the Trustee, the Trustee, in its capacity as trustee of the Trust, is hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that Chase Manhattan Bank Delaware, in its capacity as trustee of the Trust, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, PORTAL or state securities or Blue Sky laws. In connection with all of the foregoing, the Depositor hereby constitutes and appoints Robert T. Lucas III, as its true and lawful attorney- in-fact and agent, with full power of substitution and resubstitution for the Depositor or in the Depositor's name, place and stead, in any and all capacities, to sign any and all amendments (including all pre-effective and post-effective amendments) to the 1933 Act Registration Statement and any 1934 Act Registration Statement and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his respective substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration may be executed in one or more counterparts. 6. The number of trustees of the Trust initially shall be one and thereafter the number of trustees of the Trust shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of trustees of the Trust; provided, however, that to the extent required by the Business Trust Act, one trustee of the Trust shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any trustee of the Trust at any time. Any trustee of the Trust may resign upon thirty days' prior notice to the Depositor. 7. This Declaration shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles). -2- IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be duly executed as of the day and year first above written. DUKE ENERGY CORPORATION, as Depositor By: /s/ Robert T. Lucas III _______________________________________________ Name: Robert T. Lucas III Title: Assistant Secretary CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as trustee of the Trust By: /s/ Denis Kelly _______________________________________________ Name: Denis Kelly Title: Trust Officer -3- EX-4.5 8 FORM OF AMENDED AND RESTATED TRUST AGREEMENT EXHIBIT 4.5 Duke Energy Capital Trust [ ] AMENDED AND RESTATED TRUST AGREEMENT among DUKE ENERGY CORPORATION, as Depositor, THE CHASE MANHATTAN BANK, as Property Trustee CHASE MANHATTAN BANK DELAWARE, as Delaware Trustee and Robert T. Lucas III and S.L. Love, as Administrative Trustees Dated as of , DUKE ENERGY CAPITAL TRUST [ ] Certain Sections of this Trust Agreement relating to Sections 310 through 318 of the Trust Indenture Act of 1939:
Tust Indenturer Trust Agreement Act Section Section - --------------- --------------- Section 310(a)(1)............................................. 8.07 (a)(2)..................................................... 8.07 (a)(3)..................................................... 8.09 (a)(4)..................................................... Not Applicable (b)........................................................ 8.08 Section 311(a)................................................ 8.13 (b)........................................................ 8.13 Section 312(a)................................................ 5.07 (b)........................................................ 5.07 (c)........................................................ 5.07 Section 313(a)................................................ 8.14(a) (a)(4)..................................................... 8.14(b) (b)........................................................ 8.14(b) (c)........................................................ 8.14(a) (d)........................................................ 8.14(a), 8.14(b) Section 314(a)................................................ 8.15 (b)........................................................ Not Applicable (c)(1)..................................................... 8.15, 8.16 (c)(2)..................................................... 8.16 (c)(3)..................................................... 8.16 (d)........................................................ Not Applicable (e)........................................................ 8.16 Section 315(a)................................................ 8.01 (b)........................................................ 8.02, 8.14(b) (c)........................................................ 8.01(a) (d)........................................................ 8.01, 8.03 (e)........................................................ Not Applicable Section 316(a)................................................ Not Applicable (a)(1)(A).................................................. 8.19 (a)(1)(B).................................................. 8.19 (a)(2)..................................................... Not Applicable (b)........................................................ Not Applicable (c)........................................................ Not Applicable Section 317(a)(1)............................................. Not Applicable (a)(2)..................................................... Not Applicable (b)........................................................ 5.09 Section 318(a)................................................ 10.10
- -------- Note: This Cross-Reference Table does not constitute part of the Trust Agreement and shall not affect the interpretation of any of its terms and provisions. TABLE OF CONTENTS
Page ---- ARTICLE I Defined Terms...................................................... 1 Section 1.01 Definitions........................................................ 1 ARTICLE II Establishment of the Trust......................................... 9 Section 2.01 Name............................................................... 9 Section 2.02 Offices of the Trustees; Principal Place of Business............... 9 Section 2.03 Initial Contribution of Trust Property; Organizational Expenses.... 9 Section 2.04 Issuance of the Preferred Securities............................... 9 Section 2.05 Subscription and Purchase of Junior Subordinated Notes; Issuance of the Common Securities.................................. 9 Section 2.06 Declaration of Trust............................................... 10 Section 2.07 Authorization to Enter into Certain Transactions................... 10 Section 2.08 Assets of Trust.................................................... 14 Section 2.09 Title to Trust Property............................................ 14 Section 2.10 Mergers and Consolidations of the Trust............................ 14 ARTICLE III Payment Account.................................................... 15 Section 3.01 Payment Account.................................................... 15 ARTICLE IV Distributions; Redemption.......................................... 15 Section 4.01 Distributions...................................................... 15 Section 4.02 Redemption......................................................... 16 Section 4.03 Subordination of Common Securities................................. 18 Section 4.04 Payment Procedures................................................. 19 Section 4.05 Tax Returns and Reports............................................ 19 ARTICLE V Trust Securities Certificates...................................... 19 Section 5.01 Initial Ownership.................................................. 19 Section 5.02 The Trust Securities Certificates.................................. 19 Section 5.03 Authentication of Trust Securities Certificates.................... 19 Registration of Transfer and Exchange of Preferred Securities Section 5.04 Certificates....................................................... 20 Mutilated, Destroyed, Lost or Stolen Trust Securities Section 5.05 Certificates....................................................... 20 Section 5.06 Persons Deemed Securityholders..................................... 21 Section 5.07 Access to List of Securityholders' Names and Addresses............. 21 Section 5.08 Maintenance of Office or Agency.................................... 21 Section 5.09 Appointment of Paying Agent........................................ 22 Section 5.10 Ownership of Common Securities by Depositor........................ 22 Book-Entry Preferred Securities Certificates; Common Securities Section 5.11 Certificate........................................................ 22 Section 5.12 Notices to Clearing Agency......................................... 23 Section 5.13 Definitive Preferred Securities Certificates....................... 23 Section 5.14 Rights of Securityholders.......................................... 24 ARTICLE VI Acts of Securityholders; Meetings; Voting.......................... 24 Section 6.01 Limitations on Voting Rights....................................... 24 Section 6.02 Notice of Meetings................................................. 25 Section 6.03 Meetings of Preferred Securityholders.............................. 25 Section 6.04 Voting Rights...................................................... 25 Section 6.05 Proxies, etc. ..................................................... 26 Section 6.06 Securityholder Action by Written Consent........................... 26 Section 6.07 Record Date for Voting and Other Purposes.......................... 26 Section 6.08 Acts of Securityholders............................................ 26 Section 6.09 Inspection of Records.............................................. 27
i
Page ---- ARTICLE VII Representations and Warranties of the Property Trustee and Delaware Trustee............................................................ 27 Section 7.01 Representations and Warranties of the Property Trustee and Delaware Trustee............................................................ 27 Section 7.02 Representations and Warranties of Depositor........................ 28 ARTICLE VIII The Trustees....................................................... 28 Section 8.01 Certain Duties and Responsibilities................................ 28 Section 8.02 Notice of Defaults................................................. 29 Section 8.03 Certain Rights of Property Trustee................................. 29 Section 8.04 Not Responsible for Recitals or Issuance of Securities............. 30 Section 8.05 May Hold Securities................................................ 30 Section 8.06 Compensation; Fees; Indemnity...................................... 30 Section 8.07 Trustees Required; Eligibility..................................... 31 Section 8.08 Conflicting Interests.............................................. 31 Section 8.09 Co-Property Trustees and Separate Trustee.......................... 32 Section 8.10 Resignation and Removal; Appointment of Successor.................. 33 Section 8.11 Acceptance of Appointment by Successor............................. 34 Section 8.12 Merger, Conversion, Consolidation or Succession to Business........ 34 Section 8.13 Preferential Collection of Claims Against Depositor or Trust....... 35 Section 8.14 Reports by Property Trustee........................................ 35 Section 8.15 Reports to the Property Trustee.................................... 35 Section 8.16 Evidence of Compliance with Conditions Precedent................... 36 Section 8.17 Number of Trustees................................................. 36 Section 8.18 Delegation of Power................................................ 36 Section 8.19 Enforcement of Rights of Property Trustee by Securityholders....... 36 Section 8.20 Delaware Trustee................................................... 37 ARTICLE IX Termination and Liquidation........................................ 38 Section 9.01 Termination Upon Expiration Date................................... 38 Section 9.02 Early Termination.................................................. 38 Section 9.03 Termination........................................................ 38 Section 9.04 Liquidation........................................................ 38 Section 9.05 Bankruptcy......................................................... 39 ARTICLE X Miscellaneous Provisions........................................... 40 Section 10.01 Guarantee by the Depositor......................................... 40 Section 10.02 Limitation of Rights of Securityholders............................ 40 Section 10.03 Amendment.......................................................... 40 Section 10.04 Separability....................................................... 41 Section 10.05 Governing Law...................................................... 41 Section 10.06 Notice of Deferral of Distribution................................. 41 Section 10.07 Headings........................................................... 41 Section 10.08 Notice and Demand.................................................. 42 Section 10.09 Agreement Not to Petition.......................................... 42 Section 10.10 Conflict with Trust Indenture Act.................................. 42 Section 10.11 Successors......................................................... 43 EXHIBIT A Certificate of Trust EXHIBIT B (Reserved) EXHIBIT C Form of Common Securities Certificate EXHIBIT D Form of Expense Agreement EXHIBIT E Form of Preferred Securities Certificate
ii AMENDED AND RESTATED TRUST AGREEMENT THIS AMENDED AND RESTATED TRUST AGREEMENT is made as of , , by and among (i) Duke Energy Corporation, a North Carolina corporation (the "Depositor" or the "Corporation"), (ii) The Chase Manhattan Bank, a banking corporation duly organized and existing under the laws of the State of New York, as trustee (the "Property Trustee" and, in its separate corporate capacity and not in its capacity as Property Trustee, the "Bank"), (iii) Chase Manhattan Bank Delaware, a banking corporation duly organized under the laws of the State of Delaware, as Delaware trustee (the "Delaware Trustee" and, in its separate corporate capacity and not in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) Robert T. Lucas III, an individual, and S.L. Love, an individual, as administrative trustees (each an "Administrative Trustee" and together the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and the Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. WITNESSETH: WHEREAS, the Depositor and the Delaware Trustee have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into that certain Trust Agreement, dated as of , (the "Original Trust Agreement"), and by the execution and filing by the Delaware Trustee with the Secretary of State of the State of Delaware of the Certificate of Trust, dated , (the "Certificate of Trust") and WHEREAS, the parties hereto desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the addition of the Bank, Robert T. Lucas III and S.L. Love as trustees of the Trust, (ii) the acquisition by the Trust, from the Depositor of all of the right, title and interest in the Junior Subordinated Notes, (iii) the issuance of the Common Securities by the Trust to the Depositor, and (iv) the issuance and sale of the Preferred Securities by the Trust pursuant to the Underwriting Agreement. NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows: ARTICLE I Defined Terms Section 1.01 Definitions. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; 1 (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and (d) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision. "Act" has the meaning specified in Section 6.08. "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, an amount equal to the Additional Interest (as defined in clause (ii) of the definition of "Additional Interest" in the Subordinated Indenture) paid by the Depositor on a Like Amount of Junior Subordinated Notes for such period. "Administrative Trustee" means each of the individuals identified as an "Administrative Trustee" in the preamble to this Trust Agreement solely in their capacities as Administrative Trustees of the Trust formed and continued hereunder and not in their individual capacities, or such trustee's successor(s) in interest in such capacity, or any successor "Administrative Trustee" appointed as herein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Bank" has the meaning specified in the preamble to this Trust Agreement. "Bankruptcy Event" means, with respect to any Person: (i) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of such Person in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of such Person under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (ii) the commencement by such Person of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of such Person in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other 2 similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Corporation or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of any such action by the board of directors of such Person; "Bankruptcy Laws" has the meaning specified in Section 10.09. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Depositor to have been duly adopted by the Depositor's Board of Directors or a duly authorized committee thereof and to be in full force and effect on the date of such certification, and delivered to the Trustees. "Book-Entry Preferred Securities Certificates" means certificates representing Preferred Securities issued in global, fully registered form to the Clearing Agency as described in Section 5.11. "Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office or the Indenture Trustee's principal corporate trust office is closed for business. "Certificate Depository Agreement" means the agreement among the Trust, The Chase Manhattan Bank, as agent, and The Depository Trust Company, as the initial Clearing Agency, dated , relating to the Preferred Securities Certificates as the same may be amended and supplemented from time to time. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. The Depository Trust Company will be the initial Clearing Agency. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Security" means an undivided beneficial ownership interest in the assets of the Trust having a Liquidation Amount of $ and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. 3 "Common Securities Certificate" means a certificate evidencing ownership of a Common Security or Securities, substantially in the form attached as Exhibit C. "Corporate Trust Office" means the office of the Property Trustee located in New York, New York at which its corporate trust business shall be principally administered. "Corporation" means Duke Energy Corporation, its successors and assigns. "Definitive Preferred Securities Certificates" means either or both (as the context requires) of (i) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.11(a) and (ii) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. "Delaware Bank" has the meaning specified in the preamble to this Trust Agreement. "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time. "Delaware Trustee" means the commercial bank or trust company or any other person identified as the "Delaware Trustee" and has the meaning specified in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided. "Depositor" means Duke Energy Corporation, in its capacity as "Depositor" under this Trust Agreement, its successors and assigns. "Distribution Date" has the meaning specified in Section 4.01(a). "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.01. "Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) the occurrence of an Indenture Event of Default; or (ii) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (iii) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (iv) default in the performance, or breach, of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in whose performance or breach is dealt with in clause (ii) or (iii) above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Trustees by 4 the Holders of at least 25% in Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; unless Holders in Liquidation Amount of Outstanding Preferred Securities not less than the Liquidation Amount of Outstanding Preferred Securities the Holders of which gave such notice, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Holders of such Liquidation Amount of Outstanding Preferred Securities shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Trustees within such period and is being diligently pursued; or (v) the occurrence of a Bankruptcy Event with respect to the Trust. "Expense Agreement" means the Agreement as to Expenses and Liabilities between the Corporation and the Trust, substantially in the form attached as Exhibit D, as amended from time to time. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Guarantee" means the Guarantee Agreement executed and delivered by the Corporation and The Chase Manhattan Bank, as Guarantee Trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Preferred Securities, as amended from time to time. "Indenture Event of Default" means an "Event of Default," as defined in the Subordinated Indenture with respect to the Junior Subordinated Notes. "Indenture Redemption Date" means "Redemption Date," as defined in the Subordinated Indenture. "Indenture Trustee" means the trustee under the Subordinated Indenture. "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Issue Date" means the date of the delivery of the Trust Securities. "Junior Subordinated Notes" means the $ aggregate principal amount of the Depositor's Series % Junior Subordinated Notes due , issued pursuant to the Subordinated Indenture. "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "Like Amount" means (i) Trust Securities having a Liquidation Amount equal to the principal amount of Junior Subordinated Notes to be contemporaneously redeemed in accordance with the Subordinated Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities and (ii) Junior Subordinated Notes having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Junior Subordinated Notes are distributed. 5 "Liquidation Amount" means the stated amount of $ per Trust Security. "Liquidation Date" means the date on which Junior Subordinated Notes are to be distributed to Holders of Trust Securities in connection with a liquidation of the Trust pursuant to Section 9.04. "Liquidation Distribution" has the meaning specified in Section 9.05. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate to be delivered by the Depositor pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. An Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in the Officers' Certificate are based; (c) a statement that, in the opinion of each such officer, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "OID" means "original issue discount" as that term is defined in the Internal Revenue Code of 1986, as amended. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Trustees or the Depositor, but not an employee of the Trust or the Trustees, and who shall be reasonably acceptable to the Property Trustee. Any Opinion of Counsel pertaining to federal income tax matters may rely on published rulings of the Internal Revenue Service. "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. "Outstanding," when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore authenticated and delivered under this Trust Agreement, except: (i) Preferred Securities theretofore cancelled by the Administrative Trustees or delivered to the Administrative Trustees for cancellation; (ii) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement or provision therefor satisfactory to the Property Trustee has been made; and (iii) Preferred Securities in exchange for or in lieu of which other Preferred Securities have been authenticated and delivered pursuant to this Trust Agreement; provided, however, that in 6 determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned, whether of record or beneficially, by the Depositor, the Holder of the Common Securities, any Administrative Trustee or any Affiliate of the Depositor or any Administrative Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities which such Trustee knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the outstanding Preferred Securities are owned by the Depositor, the Holder of the Common Securities, one or more Administrative Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor or any Affiliate of the Depositor. "Owner" means each Person who is the beneficial owner of a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an account with such Clearing Agency (directly or indirectly, in accordance with the rules of such Clearing Agency). "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.09 and shall initially be the Property Trustee. "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Securityholders in which all amounts paid in respect of the Junior Subordinated Notes will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Section 4.01. "Person" means an individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Security" means an undivided beneficial ownership interest in the assets of the Trust having a Liquidation Amount of $ and having rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Preferred Securities Certificate" means a certificate evidencing ownership of a Preferred Security or Securities, substantially in the form attached as Exhibit E. "Property Trustee" means the commercial bank or trust company identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor "Property Trustee" as herein provided. "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Indenture Redemption Date shall be a Redemption Date for a Like Amount of Trust Securities. 7 "Redemption Price" means, with respect to any date fixed for redemption of any Trust Security, the Liquidation Amount of such Trust Security, plus accrued and unpaid Distributions to such date. "Relevant Trustee" has the meaning specified in Section 8.10. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Security Register" and "Security Registrar" are described in Section 5.04. "Securityholder" or "Holder" means a Person in whose name a Trust Security or Securities is registered in the Security Register; any such Person is a beneficial owner within the meaning of the Delaware Business Trust Act. "Subordinated Indenture" means the Subordinated Indenture, dated as of December 1, 1997, between the Depositor and the Indenture Trustee, as supplemented by the Supplemental Indenture. "Supplemental Indenture" means the Supplemental Indenture, dated as of , , by and between the Depositor and the Indenture Trustee. "Trust" means the Delaware business trust continued hereby and identified on the cover page to this Trust Agreement. "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Amended and Restated Trust Agreement and any modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Amended and Restated Trust Agreement and any such modification, amendment or supplement, respectively. "Trustees" means the Persons identified as "Trustees" in the preamble to this Trust Agreement solely in their capacities as Trustees of the Trust formed hereunder and not in their individual capacities, or any successor in interest in such capacity, or any successor trustee appointed as herein provided. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Property" means (i) the Junior Subordinated Notes, (ii) any cash on deposit in, or owing to, the Payment Account, and (iii) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to this Trust Agreement. "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. 8 "Trust Security" means any one of the Common Securities or the Preferred Securities. "Underwriting Agreement" means the Underwriting Agreement, dated as of , , among the Trust, the Depositor and the underwriters named herein. ARTICLE II Establishment of the Trust Section 2.01 Name. The Trust continued hereby shall be known as "Duke Energy Capital Trust [ ]," in which name the Trustees may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. The Administrative Trustees may change the name of the Trust from time to time following written notice to the Holders. Section 2.02 Offices of the Trustees; Principal Place of Business. The address of the Property Trustee is The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001, or at such other address in New York as the Property Trustee may designate by written notice to the Securityholders and the Depositor. The principal place of business of the Delaware Trustee is 1201 Market Street, Wilmington, Delaware 19801, or at such other address in Delaware as the Delaware Trustee may designate by notice to the Depositor. The address of the Administrative Trustees is c/o Duke Energy Corporation, 526 South Church Street, Charlotte, North Carolina 28202, Attention: Corporate Secretary. The principal place of business of the Trust is c/o Duke Energy Corporation, 526 South Church Street, Charlotte, North Carolina 28202. The Depositor may change the principal place of business of the Trust at any time by giving notice thereof to the Trustees. Section 2.03 Initial Contribution of Trust Property; Organizational Expenses. The Delaware Trustee acknowledges receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of the Trustees, promptly reimburse the Trustees for any such expenses paid by the Trustees. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. Section 2.04 Issuance of the Preferred Securities. Contemporaneously with the execution and delivery of this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall execute and deliver to the underwriters named in the Underwriting Agreement Preferred Securities Certificates, registered in the name of the nominee of the initial Clearing Agency, in an aggregate amount of Preferred Securities having an aggregated Liquidation Amount of $ (the "Preferred Securities") against receipt of the aggregate purchase price of such Preferred Securities of $ , which amount the Administrative Trustees shall promptly deliver to the Property Trustee. Section 2.05 Subscription and Purchase of Junior Subordinated Notes; Issuance of the Common Securities. Contemporaneously with the execution and delivery of this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, in an aggregate amount of Common Securities having an aggregate Liquidation Amount of $ against 9 payment by the Depositor of such amount. Contemporaneously therewith, the Administrator Trustees, on behalf of the Trust, shall subscribe to and purchase from the Depositor Junior Subordinated Notes, registered in the name of Property Trustee, on behalf of the Trust and the Holders, and having an aggregate principal amount equal to $ and, in satisfaction of the purchase price for such Junior Subordinated Notes, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $ . Section 2.06 Declaration of Trust. The exclusive purposes and functions of the Trust are (i) to issue and sell the Trust Securities and use the proceeds from such sale to acquire the Junior Subordinated Notes, and (ii) to engage in only those other activities necessary, incidental, appropriate or convenient thereto. The Depositor hereby appoints each of the Bank, the Delaware Bank, Robert T. Lucas III, and S.L. Love as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Trust and the Securityholders. The Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. The Delaware Trustee, as the trustee under the Original Trust Agreement, has filed the Certificate of Trust of the Trust with the office of the Secretary of State of the State of Delaware, a copy of which is attached hereto as Exhibit A, and such filing is hereby confirmed and ratified. Section 2.07 Authorization to Enter into Certain Transactions. The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (C) of this Section, and in accordance with the following paragraphs (A) and (B), the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express (in the case of the Property Trustee) or implied, otherwise granted to the Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: (A) As among the Trustees, the Administrative Trustees, acting singly or jointly, shall have the exclusive power, duty and authority to act on behalf of the Trust with respect to the following matters: (i) to acquire the Junior Subordinated Notes with the proceeds of the sale of the Trust Securities; provided, however, the Administrative Trustees shall cause legal title to all of the Junior Subordinated Notes to be vested in, and the Junior Subordinated Notes to be held of record in the name of, the Property Trustee for the benefit of the Trust and the Holders of the Trust Securities; (ii) to give the Depositor and the Property Trustee prompt written notice of the occurrence of any Special Event (as defined in the Supplemental Indenture) and to take any ministerial actions in connection therewith; provided that the Administrative Trustees shall consult with the Depositor and the Property Trustee before taking or refraining to take any ministerial action in relation to a Special Event; 10 (iii) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including for the purposes of Section 316(c) of the Trust Indenture Act and with respect to Distributions, voting rights, redemptions, and exchanges, and to issue relevant notices to Holders of the Trust Securities as to such actions and applicable record dates; (iv) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 2.07(B)(v), the Property Trustee has the power to bring such Legal Action; (v) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (vi) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (vii) to give the certificate to the Property Trustee required by Section 314(a)(4) of the Trust Indenture Act, which certificate may be executed by any Administrative Trustee; (viii) to take all actions and perform such duties as may be required of the Administrative Trustees pursuant to the terms of this Trust Agreement; (ix) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Trust Securities or to enable the Trust to effect the purposes for which the Trust has been created; (x) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Administrative Trustees, on behalf of the Trust; (xi) to issue and sell the Trust Securities; (xii) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and such other agreements as may be necessary or desirable in connection with the consummation hereof; (xiii) to assist in the registration of the Preferred Securities under the Securities Act and under state securities or blue sky laws, and the qualification of the Trust Agreement as a trust indenture under the Trust Indenture Act; (xiv) to assist in the listing of the Preferred Securities upon such securities exchange or exchanges as shall be determined by the Depositor and, if required, the registration of the Preferred Securities under the Exchange Act, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (xv) to send notices (other than notices of default) and other information regarding the Trust Securities and the Junior Subordinated Notes to the Securityholders in accordance with this Trust Agreement; (xvi) to appoint a Paying Agent (subject to Section 5.09), authenticating agent and Security Registrar in accordance with this Trust Agreement; (xvii) to register transfers of the Trust Securities in accordance with this Trust Agreement; 11 (xviii) to assist in, to the extent provided in this Trust Agreement, the winding-up of the affairs of and termination of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; and (xix) to take any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary, appropriate, convenient or advisable to protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). (B) As among the Trustees, the Property Trustee shall have the exclusive power, duty and authority to act on behalf of the Trust with respect to the following matters: (i) engage in such ministerial activities as shall be necessary or appropriate to effect promptly the redemption of the Trust Securities to the extent the Junior Subordinated Notes are redeemed or mature; (ii) upon notice of distribution issued by the Administrative Trustees in accordance with the terms of this Trust Agreement, engage in such ministerial activities as shall be necessary or appropriate to effect promptly the distribution pursuant to the terms of this Trust Agreement of Junior Subordinated Notes to Holders of Trust Securities; (iii) subject to the terms hereof, exercise all of the rights, powers and privileges of a holder of the Junior Subordinated Notes under the Subordinated Indenture and, if an Event of Default occurs and is continuing, enforce for the benefit of, and subject to the rights of, the Holders of the Trust Securities, its rights as holder of the Junior Subordinated Notes under the Subordinated Indenture; (iv) take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of this Trust Agreement; (v) take any Legal Action which arises out of or in connection with an Event of Default or the Property Trustee's duties and obligations under this Trust Agreement, the Delaware Business Trust Act or the Trust Indenture Act; (vi) the establishment and maintenance of the Payment Account; (vii) the receipt of and holding of legal title to the Junior Subordinated Notes as described herein; (viii) the collection of interest, principal and any other payments made in respect of the Junior Subordinated Notes in the Payment Account; (ix) the distribution of amounts received in the Payment Account and owed to the Securityholders in respect of the Trust Securities; (x) the sending of notices of default and other information regarding the Trust Securities and the Junior Subordinated Notes to the Securityholders in accordance with this Trust Agreement; (xi) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; 12 (xii) as provided in this Trust Agreement, the winding-up of the affairs of and termination of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of Delaware; and (xiii) the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary, appropriate, convenient or advisable to protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). (C) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activity or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a grantor trust for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money, (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (vi) issue any securities other than the Trust Securities, or (vii) have any power to, or agree to any action by the Depositor that would, vary the investment (within the meaning of Treasury Regulation Section 301.7701-4(c)) of the Trust or of the Securityholders. The Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (D) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects): (i) to prepare for filing by the Trust with the Commission a registration statement on Form S-3 under the Securities Act in relation to the Preferred Securities, including any amendments thereto; (ii) to determine the states in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states; (iii) to prepare for filing by the Trust an application to the New York Stock Exchange or any other national stock exchange or the NASDAQ National Market for listing upon notice of issuance of any Preferred Securities; (iv) to prepare for filing by the Trust with the Commission a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) of the Exchange Act, including any amendments thereto; (v) to negotiate terms of the Underwriting Agreement providing for the sale of the Preferred Securities and to execute, deliver and perform the Underwriting Agreement on behalf of the Trust; 13 (vi) to negotiate the terms of the Certificate Depository Agreement relating to the Preferred Securities and to execute, deliver and perform the Certificate Depository Agreement on behalf of the Trust; and (vii) any other actions necessary, incidental, appropriate or convenient to carry out any of the foregoing activities. (E) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act, or taxed as other than a grantor trust for United States federal income tax purposes and so that the Junior Subordinated Notes will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in its discretion to be necessary or desirable for such purposes, as long as such action does not materially and adversely affect the interests of the Holders of the Preferred Securities. Section 2.08 Assets of Trust. The assets of the Trust shall consist of the Trust Property. Section 2.09 Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders and the Trust in accordance with this Trust Agreement. The right, title and interest of the Property Trustee to the Junior Subordinated Notes shall vest automatically in each Person who may thereafter be appointed as Property Trustee in accordance with the terms hereof. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. Section 2.10 Mergers and Consolidations of the Trust. The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity, except as described below. The Trust may at the request of the Corporation, with the consent of the Administrative Trustees and without the consent of the Holders of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state; provided that (i) such successor entity either (x) expressly assumes all of the obligations of the Trust with respect to the Trust Securities or (y) substitutes for the Preferred Securities and the Common Securities other securities having substantially the same terms as the Trust Securities (herein referred to as the "Successor Securities") so long as the Successor Securities rank the same as the Trust Securities rank in priority with respect to Distributions and payments upon liquidation, redemption and otherwise, (ii) the Corporation expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of legal title to the Junior Subordinated Notes, (iii) the Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed, (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such consolidation, 14 amalgamation, merger or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Trust Securities (including any Successor Securities) in any material respect, (vi) such successor entity has a purpose substantially identical to that of the Trust, (vii) prior to such consolidation, amalgamation, merger or replacement, the Corporation and the Property Trustee have received an Opinion of Counsel experienced in such matters to the effect that (A) such consolidation, amalgamation, merger or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Trust Securities (including any Successor Securities) in any material respect, and (B) following such consolidation, amalgamation, merger or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the Investment Company Act, and (viii) the Corporation owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. ARTICLE III Payment Account Section 3.01 Payment Account. (a) On or prior to the Issue Date, the Property Trustee shall establish the Payment Account. The Property Trustee and an agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal or interest on, and any other payments or proceeds with respect to, the Junior Subordinated Notes. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof. ARTICLE IV Distributions; Redemption Section 4.01 Distributions. (a) Distributions on the Trust Securities shall be cumulative and accrue from the Issue Date and, except in the event that the Depositor exercises its right to extend the interest payment period for the Junior Subordinated Notes pursuant to Section 104 of the Supplemental Indenture, shall be 15 payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on , . If any date on which Distributions are otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each such date, a "Distribution Date"). (b) Distributions payable on the Trust Securities shall be fixed at a rate of % per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full quarterly period shall be computed on the basis of twelve 30-day months and a 360-day year. If the interest payment period for the Junior Subordinated Notes is extended pursuant to Section 104 of the Supplemental Indenture (an "Extension Period"), then the rate per annum at which Distributions on the Trust Securities accumulate shall be increased by an amount such that the aggregate amount of Distributions that accumulate on all Trust Securities during any such Extension Period is equal to the aggregate amount of interest (including interest payable on unpaid interest at the percentage rate per annum set forth above, compounded quarterly, to the extent permitted by applicable law) that accrues during any such Extension Period on the Junior Subordinated Notes. The payment of such deferred interest, together with interest thereon, will be distributed, if funds are legally available therefor, to the Holders of the Trust Securities (as they appear on the books and records of the Trust on the record date (as specified in Section 4.01(d)) next following the termination of such Extension Period) as received at the end of any Extension Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (c) Distributions on the Trust Securities shall be made and shall be deemed payable on each Distribution Date only to the extent that the Trust has legally and immediately available funds in the Payment Account for the payment of such Distributions. (d) Distributions (including Additional Amounts, if any) on the Trust Securities on each Distribution Date shall be payable to the Holders thereof as they appear on the Security Register for the Trust Securities on the relevant record date, which shall be the close of business on the fifteenth calendar day prior to the relevant Distribution Date. Each Trust Security upon registration of transfer of or in exchange for or in lieu of any other Trust Security shall carry the rights of Distributions accrued (including Additional Amounts, if any) and unpaid, and to accrue (including Additional Amounts, if any), which were carried by such other Trust Security. Section 4.02 Redemption. (a) On each Redemption Date with respect to the Junior Subordinated Notes, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. (b) Notice of redemption shall be given by the Property Trustee by first- class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption shall state: (i) the Redemption Date; 16 (ii) the Redemption Price; (iii) the CUSIP number; (iv) if less than all the Outstanding Trust Securities are to be redeemed, the total Liquidation Amount of the Trust Securities to be redeemed; and (v) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and the Distributions thereon will cease to accrue on and after such date. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Junior Subordinated Notes. Redemptions of the Trust Securities shall be made and the Redemption Price shall be deemed payable on each Redemption Date only to the extent that the Trust has funds legally and immediately available in the Payment Account for the payment of such Redemption Price. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 2:00 P.M. New York City time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee will, so long as the Preferred Securities are in book-entry only form, irrevocably deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price. If the Preferred Securities are not in book-entry only form, the Property Trustee, subject to Section 4.02(c), shall irrevocably deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Security Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price, but without interest, and such Securities will cease to be outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Redemption Price shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of Trust Securities is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accrue at the then applicable rate, from such Redemption Date originally established by the Trust for such Preferred Securities to the date such Redemption Price is actually paid. (e) Payment of the Redemption Price on the Trust Securities shall be made to the recordholders thereof as they appear on the Security Register for the Trust Securities on the relevant record date, which shall be the close of business on the fifteenth calendar day prior to the Redemption Date. 17 (f) If less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated 3% to the Common Securities and 97% to the Preferred Securities, with such adjustments that each amount so allocated shall be divisible by $ . The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $ or integral multiples thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $ ; provided, however, that before undertaking redemption of the Preferred Securities on other than a pro rata basis, the Property Trustee shall have received an Opinion of Counsel that the status of the Trust as a grantor trust for United States federal income tax purposes would not be adversely affected. The Property Trustee shall promptly notify the Security Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed. (g) Subject to the foregoing provisions of Section 4.02 and to applicable law (including, without limitation, United States federal securities laws), the Corporation or its Affiliates may, at any time and from time to time, purchase outstanding Preferred Securities by tender, in the open market or by private agreement. Section 4.03 Subordination of Common Securities. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made pro rata based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date an Indenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Preferred Securities then due and payable. (b) In the case of the occurrence of any Indenture Event of Default, the Holder of Common Securities will be deemed to have waived any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until any such Events of Default under this Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the 18 Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. Section 4.04 Payment Procedures. Payments in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable distribution dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities. Section 4.05 Tax Returns and Reports. The Administrative Trustee(s) shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. The Administrative Trustee(s) shall provide or cause to be provided on a timely basis to each Holder any Internal Revenue Service form required to be so provided in respect of the Trust Securities. ARTICLE V Trust Securities Certificates Section 5.01 Initial Ownership. Upon the formation of the Trust by the contribution by the Depositor pursuant to Section 2.03 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust. Section 5.02 The Trust Securities Certificates. Each of the Preferred and Common Securities Certificates shall be issued in minimum denominations of $ and integral multiples in excess thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Trust Securities Certificates or did not hold such offices at the date of authentication and delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Section 5.04. Section 5.03 Authentication of Trust Securities Certificates. On the Issue Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Depositor signed by its Chairman of the Board, its President or any Vice President, without further corporate action by the Depositor, in authorized denominations. No Trust Securities Certificate shall entitle its Holder to any benefit under this Trust 19 Agreement, or shall be valid for any purpose, unless there shall appear on such Trust Securities Certificate a certificate of authentication substantially in the form set forth in Exhibit E or Exhibit C, as applicable, executed by at least one Administrative Trustee by manual signature; such authentication shall constitute conclusive evidence that such Trust Securities Certificate shall have been duly authenticated and delivered hereunder. All Trust Securities Certificates shall be dated the date of their authentication. Section 5.04 Registration of Transfer and Exchange of Preferred Securities Certificates. The Security Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.08, a Security Register in which, subject to such reasonable regulations as it may prescribe, the Security Registrar shall provide for the registration of Preferred Securities Certificates and the Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Property Trustee shall be the initial Security Registrar. Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.08, the Administrative Trustees shall execute, authenticate and deliver in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount dated the date of authentication by the Administrative Trustee or Trustees. The Security Registrar shall not be required to register the transfer of any Preferred Securities that have been called for redemption. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.08. Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Administrative Trustees and the Security Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be cancelled and subsequently disposed of by the Security Registrar in accordance with its customary practice. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Security Registrar or the Administrative Trustees may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. Section 5.05 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Security Registrar, or if the Security Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Security Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees or any one of them on behalf of the Trust shall execute and authenticate and make available for delivery, in exchange for or in lieu of any such mutilated, 20 destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Security Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. Section 5.06 Persons Deemed Securityholders. Prior to due presentation of a Trust Securities Certificate for registration of transfer, the Trustees or the Security Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Security Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions (subject to Section 4.01(d)) and for all other purposes whatsoever, and neither the Trustees nor the Security Registrar shall be bound by any notice to the contrary. Section 5.07 Access to List of Securityholders' Names and Addresses. The Administrative Trustees shall furnish or cause to be furnished to (i) the Depositor and the Property Trustee semi-annually, not later than June 1 and December 1 in each year and (ii) the Depositor or the Property Trustee, as the case may be, within 30 days after receipt by any Administrative Trustee of a request therefor from the Depositor or the Property Trustee, as the case may be, in writing, a list, in such form as the Depositor or the Property Trustee, as the case may be, may reasonably require, of the names and addresses of the Securityholders as of a date not more than 15 days prior to the time such list is furnished; provided that the Administrative Trustees shall not be obligated to provide such list at any time such list does not differ from the most recent list given to the Depositor and the Property Trustee by the Administrative Trustees or at any time the Property Trustee is the Security Registrar. If three or more Securityholders or one or more Holders of Trust Securities Certificates evidencing not less than 25% of the outstanding Liquidation Amount apply in writing to the Administrative Trustees, and such application states that the applicants desire to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Administrative Trustees shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Securityholders. Each Holder, by receiving and holding a Trust Securities Certificate, shall be deemed to have agreed not to hold either the Depositor or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. Section 5.08 Maintenance of Office or Agency. The Administrative Trustees shall maintain in the Borough of Manhattan, New York, an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001 as the principal agency for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor and to the Securityholders of any change in the location of the Security Register or any such office or agency. 21 Section 5.09 Appointment of Paying Agent. The Paying Agent shall make Distributions and other payments provided hereby to Securityholders from the Payment Account and shall report the amounts of such Distributions and payments to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions and payments provided hereby. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent shall initially be the Property Trustee, and it may choose any co-paying agent that is acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees and the Depositor. In the event that a Paying Agent shall resign or be removed, the Administrative Trustees shall appoint a successor that is acceptable to the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. Section 5.10 Ownership of Common Securities by Depositor. On the Issue Date, the Depositor shall acquire, and thereafter retain, beneficial and record ownership of the Common Securities. Any attempted transfer of the Common Securities, except for transfers by operation of law or to an Affiliate of the Depositor or a permitted successor under Section 801 of the Subordinated Indenture, shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor and its permitted transferees to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST AGREEMENT REFERRED TO HEREIN." Section 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate. (a) The Preferred Securities Certificates, upon original issuance, will be issued in the form of a typewritten Preferred Securities Certificate or Certificates representing Book-Entry Preferred Securities Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities Certificate or Certificates shall initially be registered on the Security Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Owner will receive a definitive Preferred Securities Certificate representing such beneficial owner's interest in such Preferred Securities, except as provided in Section 5.13. 22 Unless and until Definitive Preferred Securities Certificates have been issued to Owners pursuant to Section 5.13: (i) the provisions of this Section 5.11(a) shall be in full force and effect; (ii) the Security Registrar and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement relating to the Book-Entry Preferred Securities Certificates (including the payment of principal of and interest on the Book-Entry Preferred Securities and the giving of instructions or directions to Owners of Book-Entry Preferred Securities) as the sole Holder of Book-Entry Preferred Securities and shall have no obligations to the Owners thereof; (iii) to the extent that the provisions of this Section conflict with any other provisions of this Trust Agreement, the provisions of this Section shall control; (iv) the rights of the Owners of the Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Certificate Depository Agreement, unless and until Definitive Preferred Securities Certificates are issued pursuant to Section 5.13, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments on the Preferred Securities to such Clearing Agency Participants; and (v) whenever this Trust Agreement requires or permits actions to be taken based upon instructions or directions of Holders of Trust Securities Certificates evidencing a specified percentage of the aggregate Liquidation Amount, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the applicable class of Trust Securities Certificates and has delivered such instructions to the Trustees. (b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate. Section 5.12 Notices to Clearing Agency. To the extent a notice or other communication to the Owners is required under this Trust Agreement, unless and until Definitive Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners. Section 5.13 Definitive Preferred Securities Certificates. If (i) the Depositor advises the Trustees in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor within 90 days of receipt by the Depositor of such written advice, or (ii) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, then the Administrative Trustees shall notify the Clearing Agency and Holders of the Preferred Securities. Upon surrender to the Administrative Trustees of the typewritten Preferred Securities Certificate or Certificates representing the Book-Entry Preferred Securities Certificates by the Clearing Agency, accompanied by registration instructions, the 23 Administrative Trustees or any one of them shall execute and authenticate the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency. Neither the Security Registrar nor the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Securityholders. The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidence by the execution thereof by the Administrative Trustees or any one of them. Section 5.14 Rights of Securityholders. The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.09, and the Securityholders shall not have any right or title therein other than the undivided beneficial ownership interest in the assets of the Trust conferred by their Trust Securities, and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or other similar rights and when issued and delivered to Securityholders against payment of the purchase price therefor will be fully paid and nonassessable by the Trust. Except as otherwise provided in the Expense Agreement and Section 10.01 hereof with respect to the Depositor, the Holders of the Trust Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. ARTICLE VI Acts of Securityholders; Meetings; Voting Section 6.01 Limitations on Voting Rights. (a) Except as provided in this Section, in Section 8.10 or Section 10.03 of this Trust Agreement, in the Subordinated Indenture, and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Junior Subordinated Notes are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or executing any trust or power conferred on the Indenture Trustee with respect to such Junior Subordinated Notes, (ii) consent to waive any past default which is waivable under Section 513 of the Subordinated Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Notes shall be due and payable or (iv) consent to any amendment, modification or termination of the Subordinated Indenture or the Junior Subordinated Notes, where such consent shall be required, or to any other action, as holder of the Junior Subordinated Notes, under the Subordinated Indenture, without, in each case, obtaining the prior approval of the Holders of at least 66 2/3% in Liquidation Amount of the Outstanding Preferred 24 Securities; provided, however, that where a consent under the Subordinated Indenture would require the consent of each holder of Junior Subordinated Notes affected thereby, no such consent shall be given by the Trustees without the prior written consent of each Holder of Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of Preferred Securities, except pursuant to a subsequent vote of the Holders of Preferred Securities. The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received from the Indenture Trustee with respect to the Junior Subordinated Notes. (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to this Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least 66 2/3% in Liquidation Amount of the Outstanding Preferred Securities. Section 6.02 Notice of Meetings. Notice of all meetings of the Preferred Securityholders, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.08 to each Preferred Securityholder of record, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. Any and all notice to which any Preferred Securityholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Preferred Securityholder of record at his last known address as recorded on the Security Register. Section 6.03 Meetings of Preferred Securityholders. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Preferred Securityholders of record of 25% of the Preferred Securities (based upon their Liquidation Amount), and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Preferred Securityholders to vote on any matters as to which Preferred Securityholders are entitled to vote. Preferred Securityholders of record of 50% of the Preferred Securities (based upon their Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders. If a quorum is present at a meeting, an affirmative vote by the Preferred Securityholders of record present, in person or by proxy, holding more than 66 2/3% of the Preferred Securities (based upon their Liquidation Amount) held by the Preferred Securityholders of record present, either in person or by proxy, at such meeting shall constitute the action of the Securityholders, unless this Trust Agreement requires a greater proportion of affirmative votes. Section 6.04 Voting Rights. Securityholders shall be entitled to one vote for each $25 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. 25 Section 6.05 Proxies, etc. At any meeting of Securityholders, any Securityholder entitled to vote may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of the Property Trustee, proxies may be solicited in the name of the Property Trustee or one or more officers of the Property Trustee. Only Securityholders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. Section 6.06 Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding at least 66 2/3% of all outstanding Trust Securities entitled to vote in respect of such action (or such other proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing (based upon their Liquidation Amount). Section 6.07 Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of any Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. Section 6.08 Acts of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by an agent appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Administrative Trustees. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.01) conclusive in favor of the Trustees, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also 26 constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustees deem sufficient. The ownership of Preferred Securities shall be proved by the Security Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount. If any dispute shall arise between the Holders of Trust Securities and the Administrative Trustees or among such Securityholders or Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, consent, waiver or other Act of such Securityholder or Trustee under this Article VI, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter. Section 6.09 Inspection of Records. Upon reasonable notice to the Trustees, the records of the Trust shall be open to inspection by a Securityholder during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE VII Representations and Warranties of the Property Trustee and Delaware Trustee Section 7.01 Representations and Warranties of the Property Trustee and Delaware Trustee. The Bank, the Delaware Bank, the Property Trustee and the Delaware Trustee, each on behalf of and as to itself, hereby represents and warrants for the benefit of the Depositor and the Securityholders that: (a) the Bank is a banking corporation or trust company duly organized, validly existing and in good standing under the laws of the State of New York, and the Delaware Trustee is a banking corporation or trust company duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) each of the Bank and the Delaware Bank has full corporate power, authority and legal right to execute, deliver and perform their obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by each of the Bank and the Delaware Bank and constitutes the valid and legally binding agreement of each of 27 the Bank and the Delaware Bank, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (d) the execution, delivery and performance by each of the Bank and the Delaware Bank of this Trust Agreement have been duly authorized by all necessary corporate action on the part of the Bank, Property Trustee, the Delaware Bank and the Delaware Trustee and do not require any approval of stockholders of the Bank or the Delaware Bank and such execution, delivery and performance will not (i) violate the Bank's or the Delaware Bank's charter or by-laws, or (ii) violate any law, governmental rule or regulation of the United States or the State of New York or Delaware, as the case may be, governing the banking or trust powers of the Bank and the Property Trustee or the Delaware Bank and the Delaware Trustee, or any order, judgment or decree applicable to the Bank, the Property Trustee, the Delaware Bank or the Delaware Trustee; and (e) neither the authorization, execution or delivery by the Bank or the Delaware Bank of this Trust Agreement, nor the consummation of any of the transactions by the Bank, the Property Trustee, the Delaware Bank or the Delaware Trustee (as appropriate in context) contemplated herein or therein, nor the issuance of the Trust Securities Certificates pursuant to this Trust Agreement require the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing federal, New York or Delaware law governing the banking or trust powers of the Bank or the Delaware Bank. Section 7.02 Representations and Warranties of Depositor. The Depositor hereby represents and warrants for the benefit of the Securityholders that: (a) the Trust Securities Certificates being issued on behalf of the Trust have been duly authorized and will have been, duly and validly executed, issued and delivered by the Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders will be, as of the date of issuance, entitled to the benefits of this Trust Agreement; and (b) there no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Property Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement. ARTICLE VIII The Trustees Section 8.01 Certain Duties and Responsibilities. (a) The rights, duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and the Delaware Business Trust Act (except that the immunities and standard of care of the Property Trustee shall be governed by New York law) and, in the case of the Property Trustee, the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the 28 performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to them. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. (b) All payments made by the Property Trustee in respect of the Trust Securities shall be made only from the income and proceeds from the Trust Property and only to the extent that there shall be sufficient income or proceeds from the Trust Property to enable the Property Trustee to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.01(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. Section 8.02 Notice of Defaults. Within 90 days after the occurrence of any default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.08, notice of any such default known to the Property Trustee to the Securityholders, the Administrative Trustees and the Depositor, unless such default shall have been cured or waived. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 8.03 Certain Rights of Property Trustee. Subject to the provisions of Section 8.01 and except as provided by law: (i) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) if (A) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action, or (B) in construing any of the provisions in this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein, or (C) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Preferred Securityholders are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken. The Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take 29 or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (iii) the Property Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (iv) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement as the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (v) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other document, unless requested in writing to do so by one or more Securityholders; and (vi) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder. Section 8.04 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Trust of the proceeds of the Trust Securities in accordance with Section 2.05. The Property Trustee may conclusively assume that any funds held by it hereunder are legally available unless an officer of the Property Trustee assigned to its Corporate Trustee Administrative Department shall have received written notice from the Corporation, any Holder or any other Trustee that such funds are not legally available. Section 8.05 May Hold Securities. Except as provided in the definition of the term "Outstanding" in Article I, any Trustee or any other agent of the Trustees or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. Section 8.06 Compensation; Fees; Indemnity. The Depositor agrees: (1) to pay to the Trustees from time to time reasonable compensation for all services rendered by the Trustees hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 30 (2) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to their negligence, willful misconduct or bad faith; and (3) to indemnify the Trustees for, and to hold the Trustees harmless against, any and all loss, damage, claims, liability or expense incurred without negligence, willful misconduct or bad faith on their part, arising out of or in connection with the acceptance or administration of this Trust Agreement, including the costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 8.06 shall survive the termination of this Trust Agreement. Section 8.07 Trustees Required; Eligibility. (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind such entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity authorized to conduct a trust business and with its principal place of business in the State of Delaware that shall act through one or more persons authorized to bind such entity. Section 8.08 Conflicting Interests. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. To the extent permitted by the Trust Indenture Act, the Property Trustee shall not be deemed to have a conflicting interest by virtue of being trustee under the Guarantee, the Guarantee Agreement dated as of December 8, 1997, between the Depositor, as guarantor, and The Chase Manhattan Bank, as trustee, and the Amended and Restated Trust Agreement dated as of December 31 8, 1997, among the Depositor, as depositor, Chase Manhattan Bank Delaware, as Delaware trustee, Robert T. Lucas III and S.L. Love, as administrative trustees, and The Chase Manhattan Bank, as property trustee. Section 8.09 Co-Property Trustees and Separate Trustee. At any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Holder of the Common Securities and the Property Trustee shall have power to appoint, and upon the written request of the Property Trustee, the Depositor shall for such purpose join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-property trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to act as separate trustee of any such Trust Property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Indenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-property trustee or separate trustee appointed pursuant to this Section shall satisfy the requirements of Section 8.07. Should any written instrument from the Depositor be required by any co- property trustee or separate trustee so appointed for more fully confirming to such co-property trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor. Every co-property trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (i) The Trust Securities shall be executed, authenticated and delivered and all rights, powers, duties, and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees hereunder, shall be exercised, solely by the Trustees. (ii) The rights, powers, duties, and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co- property trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-property trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties, and obligations shall be exercised and performed by such co-property trustee or separate trustee. (iii) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-property trustee or separate trustee appointed under this Section, and, in case an Indenture Event of Default has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-property trustee or separate trustee without the 32 concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery, and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-property trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section. (iv) No co-property trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee, or any other such trustee hereunder. (v) The Trustees shall not be liable by reason of any act of a co- property trustee or separate trustee. (vi) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-property trustee and separate trustee. Section 8.10 Resignation and Removal; Appointment of Successor. No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.11. Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time by giving written notice thereof to the Holders. If the instrument of acceptance by the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the resigning Relevant Trustee may petition, at the expense of the Trust, any court of competent jurisdiction for the appointment of a successor Relevant Trustee. Unless an Indenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Holder of the Common Securities. If an Indenture Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed at such time by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Holder of the Common Securities at any time. In no event will the Holders of the Preferred Securities have a right to vote to appoint, remove or replace the Administrative Trustees. If any Trustee shall resign, be removed or become incapable of continuing to act as Trustee, or if a vacancy shall occur in the office of any Trustee for any reason, at a time when no Indenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities, shall promptly appoint a successor Trustee or successor Trustees, and the retiring Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, or a vacancy shall occur in the office of any such Trustee for any reason, at a time when an Indenture Event of Default shall have occurred and be continuing, the Holders of Preferred Securities, by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities then Outstanding, shall promptly appoint a successor Relevant Trustee or Relevant Trustees and such successor Relevant Trustee or Relevant Trustees shall comply with the applicable requirements of Section 8.11. If an 33 Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, or a vacancy shall occur in the office of any such Trustee for any reason, at a time when an Indenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities, shall promptly appoint a successor Administrative Trustee or Administrative Trustees and such successor Administrative Trustee or Administrative Trustees shall comply with the applicable requirements of Section 8.11. If no successor Relevant Trustee shall have been so appointed in accordance with this Section 8.10 and accepted appointment in the manner required by Section 8.11, any Holder who has been a Holder of Trust Securities for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Relevant Trustee. The Property Trustee shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 10.08 and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Property Trustee. Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (i) the act of the remaining Administrative Trustee or (ii) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirements for an Administrative Trustee or a Delaware Trustee, as the case may be, set forth in Section 8.07). Section 8.11 Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Relevant Trustee, every such successor Relevant Trustee so appointed shall execute, acknowledge and deliver to the Trust and to the retiring Relevant Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Relevant Trustee shall become effective and such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on the request of the Depositor or the successor Relevant Trustee, such retiring Relevant Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Relevant Trustee all the rights, powers and trusts of the retiring Relevant Trustee and shall duly assign, transfer and deliver to such successor Relevant Trustee all property and money held by such retiring Relevant Trustee hereunder. Upon request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the preceding paragraph. No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article. Section 8.12 Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee, Delaware Trustee or any Administrative Trustee which is not a natural person may be merged or converted or with which it may be consolidated, or any Person resulting 34 from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Section 8.13 Preferential Collection of Claims Against Depositor or Trust. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Junior Subordinated Notes or the Trust Securities), the Property Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). For purposes of Sections 311(b)(4) and (6) of the Trust Indenture Act: (a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and (b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Depositor or the Trust (or any such obligor) for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Property Trustee simultaneously with the creation of the creditor relationship with the Depositor or the Trust (or any such obligor) arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. Section 8.14 Reports by Property Trustee. (a) Within 60 days after October 1 of each year commencing with October 1, , if required by Section 313(a) of the Trust Indenture Act, the Property Trustee shall transmit a brief report dated as of such October 1 with respect to any of the events specified in such Section 313(a) that may have occurred since the later of the date of this Trust Agreement or the preceding October 1. (b) The Property Trustee shall transmit to Securityholders the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein. (c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and (d) of the Trust Indenture Act. Section 8.15 Reports to the Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and, within 120 days after the end of each fiscal year of the Depositor, the compliance certificate required by Section 314(a)(4) of the Trust Indenture Act in the form and in the manner required by Section 314 of the Trust Indenture Act. 35 Section 8.16 Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given pursuant to Section 314(c)(1) of the Trust Indenture Act shall comply with Section 314(e) of the Trust Indenture Act. Section 8.17 Number of Trustees. (a) The number of Trustees shall initially be four, provided that the Depositor by written instrument may increase or decrease the number of Administrative Trustees. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Trust Agreement), shall have all powers granted to the Administrative Trustees and shall discharge the duties imposed upon the Administrative Trustees by this Trust Agreement. Section 8.18 Delegation of Power. (a) Any Administrative Trustee, may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.07(A), including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and (b) The Administrative Trustees shall have power to delegate from time to time to such of their number the doing of such things and the execution of such instruments either in name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section 8.19 Enforcement of Rights of Property Trustee by Securityholders. If an Indenture Event of Default occurs and is continuing, then (i) the Holders of Preferred Securities will rely on the enforcement by the Property Trustee of its rights against the Corporation as the holder of the Junior Subordinated Notes and (ii) the Holders of a majority in aggregate Liquidation Amount of the Preferred Securities will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under this Trust Agreement, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Junior Subordinated Notes, provided that such direction shall not be in conflict with any rule of law or with this Trust 36 Agreement, and could not involve the Property Trustee in personal liability in circumstances where reasonable indemnity would not be adequate. If the Property Trustee fails to enforce its rights under the Junior Subordinated Notes, a Holder of Preferred Securities may, to the extent permitted by applicable law, institute a legal proceeding against the Corporation to enforce its rights under this Trust Agreement without first instituting any legal proceeding against the Property Trustee or any other Person, including the Trust; it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Notwithstanding the foregoing, a Holder of Preferred Securities may institute a legal proceeding directly against the Corporation without first instituting a legal proceeding against or requesting or directing that action be taken by the Property Trustee or any other Person, for enforcement of payment to such Holder of principal of or interest on the Junior Subordinated Notes having a principal amount equal to the aggregate stated Liquidation Amount of the Preferred Securities of such Holder on or after the due dates therefor specified or provided for in the Junior Subordinated Notes. The Corporation shall be subrogated to all rights of the Holders of Preferred Securities in respect of any amounts paid to such Holders by the Corporation pursuant to this Section. Section 8.20 Delaware Trustee. (a) Notwithstanding any other provision of this Trust Agreement, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Administrative Trustees or the Property Trustee described in this Trust Agreement. The Delaware Trustee shall be a trustee for the sole and limited purpose of fulfilling the requirements of (S)3807 of the Delaware Business Trust Act. (b) It is expressly understood and agreed by the parties hereto that in fulfilling its obligations as Delaware Trustee hereunder on behalf of the Trust (i) any agreements or instruments executed and delivered by Chase Manhattan Bank Delaware are executed and delivered not in its individual capacity but solely as Delaware Trustee under this Trust Agreement in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of the Trust is made and intended not as representations, warranties, covenants, undertakings and agreements by Chase Manhattan Bank Delaware in its individual capacity but is made and intended for the purpose of binding only the Trust, and (iii) under no circumstances shall Chase Manhattan Bank Delaware in its individual capacity be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Trust Agreement, except if such breach or failure is due to any gross negligence or willful misconduct of Chase Manhattan Bank Delaware as the Delaware Trustee. 37 ARTICLE IX Termination and Liquidation Section 9.01 Termination Upon Expiration Date. The Trust shall automatically terminate on , (the "Expiration Date") or earlier pursuant to Section 9.02. Section 9.02 Early Termination. Upon the first to occur of any of the following events (such first occurrence, an "Early Termination Event"), the Trust shall be dissolved and terminated in accordance with the terms hereof: (i) the occurrence of a Bankruptcy Event in respect of the Depositor, dissolution or liquidation of the Depositor, or the dissolution of the Trust pursuant to judicial decree; (ii) the delivery of written direction to the Property Trustee by the Depositor at any time (which direction is optional and wholly within the discretion of the Depositor) to terminate the Trust and distribute the Junior Subordinated Notes to Securityholders as provided in Section 9.04; and (iii) the payment at maturity or redemption of all of the Junior Subordinated Notes, and the consequent payment of the Trust Securities. Section 9.03 Termination. The respective obligations and responsibilities of the Trust and the Trustees created hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.04, or upon the redemption of all of the Trust Securities pursuant to Section 4.02, of all amounts or instruments required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders. Section 9.04 Liquidation. (a) If any Early Termination Event specified in clause (ii) of Section 9.02 occurs, the Trust shall be liquidated and the Property Trustee shall distribute the Junior Subordinated Notes to the Securityholders as provided in this Section 9.04. (b) In connection with a distribution of the Junior Subordinated Notes, each Holder of Trust Securities shall be entitled to receive, after the satisfaction of liabilities to creditors of the Trust (as evidenced by a certificate of the Administrative Trustees), a Like Amount of Junior Subordinated Notes. Notice of liquidation shall be given by the Trustees by first-class mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Security Register. All notices of liquidation shall: (i) state the Liquidation Date; (ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Notes; and 38 (iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Junior Subordinated Notes as the Administrative Trustees or the Property Trustee shall deem appropriate. (c) In order to effect the liquidation of the Trust and distribution of the Junior Subordinated Notes to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Junior Subordinated Notes in exchange for the Outstanding Trust Securities Certificates. (d) After the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates representing a Like Amount of Junior Subordinated Notes will be issued to Holders of Trust Securities Certificates, upon surrender of such certificates to the Administrative Trustees or their agent for exchange, (iii) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Notes, accruing interest at the rate provided for in the Junior Subordinated Notes from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to Holders of Trust Securities Certificates with respect to such Junior Subordinated Notes) and (iv) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Junior Subordinated Notes upon surrender of Trust Securities Certificates. (e) The Depositor will use its best efforts to have the Junior Subordinated Notes that are distributed in exchange for the Preferred Securities to be listed on such securities exchange as the Preferred Securities are then listed. The Depositor may elect to have the Junior Subordinated Notes issued in book- entry form to the Clearing Agency or its nominee pursuant to the Certificate Depository Agreement. Section 9.05 Bankruptcy. If an Early Termination Event specified in clause (i) of Section 9.02 has occurred, the Trust shall be liquidated. The Property Trustee shall distribute the Junior Subordinated Notes to the Securityholders as provided in Section 9.04, unless such distribution is determined by the Administrative Trustees not to be practical, in which event the Holders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors, an amount equal to the Liquidation Amount per Trust Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If such Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, winding-up or termination pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if an Indenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. 39 ARTICLE X Miscellaneous Provisions Section 10.01 Guarantee by the Depositor. Subject to the terms and conditions hereof, the Depositor irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than obligations of the Trust to pay to Holders of any Preferred Securities or other similar interests in the Trust the amounts due such Holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. Such guarantee is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 10.02 Limitation of Rights of Securityholders. The death or incapacity of any Person having an interest, beneficial or otherwise, in a Trust Security shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person or any Securityholder for such Person, to claim an accounting, take any action or bring any proceeding in and for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. Section 10.03 Amendment. (a) This Trust Agreement may be amended from time to time by the Trustees and the Depositor, without the consent of any Securityholders, (i) to cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement, provided, however, that any such amendment shall not adversely affect in any material respect the interests of any Securityholder, (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes at any time that any Trust Securities are outstanding; provided, however, that, in the case of clause (i), any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders or (iii) to provide the Property Trustee with the authority to authenticate on behalf of the Administrative Trustees Definitive Preferred Securities Certificates. (b) Except as provided in Section 10.03(c) hereof, any provision in this Trust Agreement may be amended by the Trust or the Trustees with (i) the consent of Securityholders representing not less than 66 2/3% (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status of an "investment company" under the Investment Company Act. (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.03 40 or 6.06 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution (or payment upon redemption) on the Trust Securities or otherwise adversely affect the amount of any Distribution (or payment upon redemption) required to be made in respect of the Trust Securities as of a specified date, (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date, (iii) change the purpose of the Trust, (iv) authorize the issuance of any additional beneficial interests in the Trust, or (v) change the consent required pursuant to this Section 10.03. (d) Notwithstanding any other provisions of this Trust Agreement, the Trustees shall not enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the Investment Company Act of 1940, as amended, afforded by Rule 3a-5 thereunder. (e) Without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. In executing any amendment permitted by this Trust Agreement, the Trustees shall be entitled to receive, and (subject to Section 8.01) shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Trust Agreement. Any Trustee may, but shall not be obligated to, enter into any such amendment which affects such Trustee's own rights, duties, immunities or liabilities under this Trust Agreement or otherwise. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. Section 10.04 Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 10.05. Governing Law. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE; PROVIDED THAT THE IMMUNITIES AND STANDARD OF CARE OF THE PROPERTY TRUSTEE SHALL BE GOVERNED BY NEW YORK LAW. Section 10.06 Notice of Deferral of Distribution. In the event that the Depositor exercises its right to extend an interest payment period in respect of the Junior Subordinated Notes pursuant to Section 104 of the Supplement Indenture and notice of such extension has been provided by the Depositor to the Property Trustee, the Property Trustee shall give written notice of such extension and of the deferral of the related Distribution on the Trust Securities, by first-class mail, postage prepaid, mailed not later than ten days prior to the Distribution Date upon which such Distribution would otherwise be payable, to each Holder of Preferred Securities at such Holder's address appearing in the Security Register. Section 10.07 Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement. 41 Section 10.08 Notice and Demand. Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (i) in the case of a Preferred Securityholder, to such Preferred Securityholder as such Securityholder's name and address appear on the Security Register and (ii) in the case of the Common Securityholder or the Depositor, to Duke Energy Corporation, 526 South Church Street, Charlotte, North Carolina 28202, Attention: Treasurer, Facsimile No. (704) 382-4964, with a copy to Corporate Secretary, Facsimile No. (704) 382-8137. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust or the Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (i) with respect to the Property Trustee and the Delaware Trustee, The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001, Attention: Capital Markets Fiduciary Services; Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust Department, as the case may be; and (ii) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked Attention: Administrative Trustees of Duke Energy Capital Trust [ ] c/o Corporate Secretary. Such notice, demand or other communication to or upon the Trust or the Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the applicable Trustee. Section 10.09. Agreement Not to Petition. Each of the Trustees and the Depositor agrees for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, it shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, reorganization, arrangement, insolvency, liquidation or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.09, the Property Trustee agrees, for the benefit of Securityholders, that it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom and such other defenses, if any, as counsel for the Trustees or the Trust may assert. The provisions of this Section 10.09 shall survive the termination of this Trust Agreement. Section 10.10 Conflict with Trust Indenture Act. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act. 42 (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control. (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE SUBORDINATED INDENTURE AND THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. Section 10.11 Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to both the Trust and the Trustees, including any successor by operation of law. 43 IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement or have caused this Trust Agreement to be executed on their behalf, all as of the day and year first above written. Duke Energy Corporation By: _________________________________ Title: ______________________________ The Chase Manhattan Bank, as Property Trustee By: _________________________________ Title: ______________________________ Chase Manhattan Bank Delaware, as Delaware Trustee By: _________________________________ Title: ______________________________ _____________________________________ as Administrative Trustee _____________________________________ as Administrative Trustee 44 EXHIBIT A CERTIFICATE OF TRUST OF DUKE ENERGY CAPITAL TRUST [ ] THIS Certificate of Trust of Duke Energy Capital Trust [ ] (the "Trust"), dated as of , , is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. (S)3801. et seq.). 1. Name. The name of the business trust formed hereby is Duke Energy Capital Trust [ ]. 2. Delaware Trustee. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware are Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. 3. Effective Date. This Certificate of Trust shall be effective upon filing. IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. Chase Manhattan Bank Delaware, not in its individual capacity but solely as trustee of the Trust By: _________________________________ Name: Title: EXHIBIT B [RESERVED] EXHIBIT C THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST AGREEMENT REFERRED TO HEREIN Certificate Number Number of Common Securities C-
Certificate Evidencing Common Securities of Duke Energy Capital Trust [ ] Common Securities (Liquidation Amount $ per Common Security) Duke Energy Capital Trust [ ], a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Duke Energy Corporation (the "Holder") is the registered owner of ( ) common securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Common Securities (Liquidation Amount $ per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below) the Common Securities are not transferable, except by operation of law or to an Affiliate of the Holder or a permitted successor under Section 801 of the Subordinated Indenture, dated as of December 1, 1997, between the Holder and The Chase Manhattan Bank, as trustee, and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of , , as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of the Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this certificate this day of , . Duke Energy Capital Trust [ ] By: _________________________________ Robert T. Lucas III, as Administrative Trustee By: _________________________________ S.L. Love, as Administrative Trustee CERTIFICATE OF AUTHENTICATION This is one of the Common Securities referred to in the within-mentioned Trust Agreement. _____________________________________ as Administrative Trustee EXHIBIT D AGREEMENT AS TO EXPENSES AND LIABILITIES THIS AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") is made as of , between Duke Energy Corporation, a North Carolina corporation (the "Corporation"), and Duke Energy Capital Trust [ ], a Delaware business trust (the "Trust"). WHEREAS, the Trust intends to issue its Common Securities (the "Common Securities") to and receive Series % Junior Subordinated Notes due , (the "Junior Subordinated Notes") from the Corporation and to issue and sell Duke Energy Capital Trust [ ] % Trust Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of , as the same may be amended from time to time (the "Trust Agreement"); and WHEREAS, the Corporation is the issuer of the Junior Subordinated Notes. NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase the Corporation hereby agrees shall benefit the Corporation and which purchase the Corporation acknowledges will be made in reliance upon the execution and delivery of this Agreement, the Corporation and the Trust hereby agree as follows: ARTICLE I Section 1.01. Guarantee by the Corporation. Subject to the terms and conditions hereof, the Corporation hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.02. Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Guarantee Agreement dated the date hereof by the Corporation and The Chase Manhattan Bank, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. Section 1.03. Waiver of Notice. The Corporation hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and the Corporation hereby 1 waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 1.04. No Impairment. The obligations, covenants, agreements and duties of the Corporation under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, the Corporation with respect to the happening of any of the foregoing. Section 1.05. Enforcement. A Beneficiary may enforce this Agreement directly against the Corporation and the Corporation waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Corporation. ARTICLE II Section 2.01. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Corporation and shall inure to the benefit of the Beneficiaries. Section 2.02. Amendment. So long as there remains any Beneficiary or any Preferred Securities are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. Section 2.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail), or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed), to wit: Duke Energy Capital Trust [ ] c/o The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Facsimile No.: (212) 946-8159 Attention: Capital Markets Fiduciary Services 2 Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Facsimile No.: (704) 382-8137 Attention: Corporate Secretary Section 2.04. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT is executed as of the date and year first above written. Duke Energy Corporation By: _________________________________ Name: Title: Duke Energy Capital Trust [ ] By: _________________________________ , as Administrative Trustee By: _________________________________ , as Administrative Trustee 3 EXHIBIT E Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to Duke Energy Capital Trust [ ] or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge, or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner thereof, Cede & Co., has an interest herein. Certificate Number Number of Preferred Securities P- CUSIP No. Certificate Evidencing Preferred Securities of Duke Energy Capital Trust [ ] % Trust Preferred Securities (Liquidation Amount $ per Preferred Security) Duke Energy Capital Trust [ ], a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of ( ) Preferred Securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Duke Energy Capital Trust [ ] % Trust Preferred Securities (Liquidation Amount $ per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.04 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of , , as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Preferred Securities as set forth therein. The holder of this certificate is entitled to the benefits of a guarantee by Duke Energy Corporation, a North Carolina corporation (the "Corporation"), pursuant to a Guarantee Agreement between the Corporation and The Chase Manhattan Bank, as guarantee trustee, dated as of , , as the same may be amended from time to time (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the holder of this certificate without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the holder of this certificate is bound by the Trust Agreement and is entitled to the benefits thereunder. 1 IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this certificate this day of , . Duke Energy Capital Trust [ ] By: _________________________________ , as Administrative Trustee By: _________________________________ , as Administrative Trustee CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Trust Agreement. _____________________________________ as Administrative Trustee 2 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Securities Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: _______________________________ Signature: __________________________ (Sign exactly as your name appears on the other side of this Preferred Securities Certificate) EX-4.8 9 FORM OF GUARANTEE AGREEMENT EXHIBIT 4.8 GUARANTEE AGREEMENT between DUKE ENERGY CORPORATION (as Guarantor) and THE CHASE MANHATTAN BANK (as Trustee) Dated as of , CROSS-REFERENCE TABLE/1/
Section of Section of Trust Indenture Act Guarantee of 1939, as amended Agreement ------------------- ---------- 310(a)...................................................... 4.01(a) 310(b)...................................................... 4.01(c), 2.08 310(c)...................................................... Inapplicable 311(a)...................................................... 2.02(b) 311(b)...................................................... 2.02(b) 311(c)...................................................... Inapplicable 312(a)...................................................... 2.02(a) 312(b)...................................................... 2.02(b) 313......................................................... 2.03 314(a)...................................................... 2.04 314(b)...................................................... Inapplicable 314(c)...................................................... 2.05 314(d)...................................................... Inapplicable 314(e)...................................................... 1.01, 2.05, 3.02 314(f)...................................................... 2.01, 3.02 315(a)...................................................... 3.01(d) 315(b)...................................................... 2.07 315(c)...................................................... 3.01 315(d)...................................................... 3.01(d) 315(e)...................................................... Inapplicable 316(a)...................................................... 5.04(i), 2.06 316(b)...................................................... 5.03 316(c)...................................................... 2.02 317(a)...................................................... Inapplicable 317(b)...................................................... Inapplicable 318(a)...................................................... 2.01(b) 318(b)...................................................... 2.01 318(c)...................................................... 2.01(a)
- -------- /1/ This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. i TABLE OF CONTENTS
Page ARTICLE I Definitions........................................................ 1 Section 1.01. Definitions........................................................ 1 ARTICLE II Trust Indenture Act................................................ 3 Section 2.01. Trust Indenture Act; Application................................... 3 Section 2.02. Lists of Holders of Securities..................................... 3 Section 2.03. Reports by the Trustee............................................. 4 Section 2.04. Periodic Reports to Trustee........................................ 4 Section 2.05. Evidence of Compliance with Conditions Precedent................... 4 Section 2.06. Events of Default; Waiver.......................................... 4 Section 2.07. Event of Default; Notice........................................... 4 Section 2.08. Conflicting Interests.............................................. 5 ARTICLE III Powers, Duties and Rights of Trustee............................... 5 Section 3.01. Powers and Duties of the Trustee................................... 5 Section 3.02. Certain Rights of Trustee.......................................... 6 Section 3.03. Compensation; Fees; Indemnity...................................... 7 ARTICLE IV Trustee............................................................ 8 Section 4.01. Trustee; Eligibility............................................... 8 Section 4.02. Appointment, Removal and Resignation of Trustee.................... 8 ARTICLE V Guarantee.......................................................... 9 Section 5.01. Guarantee.......................................................... 9 Section 5.02. Waiver of Notice and Demand........................................ 9 Section 5.03. Obligations Not Affected........................................... 9 Section 5.04. Rights of Holders.................................................. 10 Section 5.05. Guarantee of Payment............................................... 10 Section 5.06. Subrogation........................................................ 10 Section 5.07. Independent Obligations............................................ 11 ARTICLE VI Subordination...................................................... 11 Section 6.01. Subordination...................................................... 11 ARTICLE VII Termination........................................................ 11 Section 7.01. Termination........................................................ 11 ARTICLE VIII Miscellaneous...................................................... 11 Section 8.01. Successors and Assigns............................................. 11 Section 8.02. Amendments......................................................... 11 Section 8.03. Notices............................................................ 12 Section 8.04. Benefit............................................................ 12 Section 8.05. Interpretation..................................................... 12 Section 8.06. Governing Law...................................................... 13
ii GUARANTEE AGREEMENT This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of , is executed and delivered by DUKE ENERGY CORPORATION, a North Carolina corporation (the "Guarantor"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as trustee (the "Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of DUKE ENERGY CAPITAL TRUST [ ], a Delaware statutory business trust (the "Trust"). WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of , , among the Trustee, the other Trustees named therein, and Duke Energy Corporation, as Depositor, and the holders of undivided beneficial interests in the assets of the Trust, the Trust is issuing as of the date hereof $ aggregate liquidation amount of its % Trust Preferred Securities (the "Preferred Securities") representing preferred undivided beneficial interests in the assets of the Trust and having the terms set forth in the Trust Agreement; WHEREAS, the Preferred Securities will be issued by the Trust and the proceeds thereof will be used to purchase Junior Subordinated Notes (as defined in the Trust Agreement) of the Guarantor, which will be held by the Trust as trust assets; and WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the payment for Preferred Securities by each Holder thereof, which payment the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Preferred Securities. ARTICLE I Definitions Section 1.01. Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 1 "Common Securities" means the securities representing common undivided beneficial interests in the assets of the Trust. "Event of Default" means a failure by the Guarantor to perform any of its payment obligations under this Guarantee Agreement. "Guarantee Payments" shall mean the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Trust: (i) any accrued and unpaid distributions that are required to be paid on such Preferred Securities but if and only if and to the extent the Trust has funds legally and immediately available therefor to make such payment; (ii) the redemption price, including all accrued and unpaid distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Trust but if and only if and to the extent that the Trust has funds legally and immediately available therefor sufficient to make such payment; and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Junior Subordinated Notes to the holders of Trust Securities or the redemption of all of the Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities to the date of payment, to the extent the Trust has funds legally and immediately available therefor, and (b) the amount of assets of the Trust remaining available for distribution to Holders in liquidation of the Trust (in either case, the "Liquidation Distribution"). "Holder" shall mean any holder, as registered on the books and records of the Trust, of any Preferred Securities; provided, however, that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indenture" means the Subordinated Indenture, dated as of December 1, 1997, among the Guarantor, as issuer, and The Chase Manhattan Bank, as trustee, as supplemented to the date hereof, including by the Supplemental Indenture dated as of , , by and between the Guarantor and The Chase Manhattan Bank, as trustee. "Majority in liquidation amount of Preferred Securities" means a vote by Holder(s) of Preferred Securities, voting separately as a class, of more than 50% of the liquidation amount of all Preferred Securities outstanding at the time of determination. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and delivered to the Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in the Officers' Certificate are based; 2 (c) a statement that, in the opinion of each such officer, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Responsible Officer" means, with respect to the Trustee, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any senior trust officer, trust officer or assistant trust officer or any other officer of the Corporate Trust Department of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Trustee" means a successor Trustee possessing the qualifications to act as Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trust Securities" means the Preferred Securities and the Common Securities. "Trustee" means The Chase Manhattan Bank until a Successor Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Trustee. ARTICLE II Trust Indenture Act Section 2.01. Trust Indenture Act: Application. (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions; and (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 2.02. Lists of Holders of Securities. (a) The Guarantor shall furnish or cause to be furnished to the Trustee (a) semiannually, not later than June 1 and December 1 in each year, a list, in such form as the Trustee may reasonably 3 require, of the names and addresses of the Holders ("List of Holders") as of a date not more than 15 days prior to the time such list is furnished, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a List of Holders as of a date not more than 15 days prior to the time such list is furnished; provided that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Trustee by the Guarantor or at any time the Trustee is the Securities Registrar under the Trust Agreement. The Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. Section 2.03. Reports by the Trustee. Within 60 days after October 1 of each year, the Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act. Section 2.04. Periodic Reports to Trustee. The Guarantor shall provide to the Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act, if any, in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act, and shall provide, within 120 days after the end of each fiscal year of the Guarantor, the compliance certificate required by Section 314(a)(4) of the Trust Indenture Act in the form and in the manner required by such Section. Section 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.06. Events of Default; Waiver. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of all of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured and not to have existed, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 2.07. Event of Default; Notice. (a) The Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default known to the Trustee, unless such defaults have been cured before the giving of such notice, provided that the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. 4 (b) The Trustee shall not be deemed to have knowledge of any Event of Default unless the Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Trust Agreement shall have obtained written notice, of such Event of Default. Section 2.08. Conflicting Interests. The Trust Agreement, the Guarantee Agreement dated as of December 8, 1997, between the Guarantor, as guarantor, and The Chase Manhattan Bank, as trustee, and the Amended and Restated Trust Agreement dated as of December 8, 1997, among the Guarantor, as depositor, Chase Manhattan Bank Delaware, as Delaware trustee, Robert T. Lucas III and S.L. Love, as administrative trustees, and The Chase Manhattan Bank, as property trustee, shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III Powers, Duties and Rights of Trustee Section 3.01. Powers and Duties of the Trustee. (a) This Guarantee Agreement shall be held by the Trustee for the benefit of the Holders, and the Trustee shall not transfer this Guarantee Agreement to any Person unless the Trustee shall assign rights hereunder to a Holder to the extent such assignment is necessary to exercise such Holder's rights pursuant to Section 5.04 or to a Successor Trustee upon acceptance by such Successor Trustee of its appointment to act as Successor Trustee. The right, title and interest of the Trustee shall automatically vest in any Successor Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Trustee. (b) If an Event of Default has occurred and is continuing, the Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Trustee shall not be liable except for the 5 performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. Section 3.02. Certain Rights of Trustee. (a) Subject to the provisions of Section 3.01: (i) the Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (ii) any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever, in the administration of this Guarantee Agreement, the Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor; (iv) the Trustee may consult with counsel of its choice, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion; such counsel may be counsel to the Guarantor or any 6 of its Affiliates and may include any of its employees; the Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Trustee; provided that nothing contained in this Section 3.02(a)(v) shall be taken to relieve the Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (viii) whenever in the administration of this Guarantee Agreement the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Trustee (i) may request instructions from the Holders, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Trustee shall be construed to be a duty. Section 3.03. Compensation; Fees; Indemnity. The Guarantor agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Guarantee Agreement (including the reasonable 7 compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify the Trustee for, and to hold the Trustee harmless against, any and all loss, damage, claims, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 3.03 shall survive the termination of this Guarantee Agreement. ARTICLE IV Trustee Section 4.01. Trustee; Eligibility. (a) There shall at all times be a Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.01(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Trustee shall cease to be eligible to so act under Section 4.01(a), the Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c). (c) If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, subject to the rights of the Trustee under the penultimate paragraph thereof. Section 4.02. Appointment, Removal and Resignation of Trustee. (a) Subject to Section 4.02(b), the Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Trustee shall not be removed until a Successor Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Trustee and delivered to the Guarantor. 8 (c) The Trustee appointed to office shall hold office until a Successor Trustee shall have been appointed or until its removal or a resignation. The Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Trustee and delivered to the Guarantor and the resigning Trustee. (d) If no Successor Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Trustee may petition any court of competent jurisdiction for appointment of a Successor Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Trustee. ARTICLE V Guarantee Section 5.01. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Guarantor may have or assert against any person. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders. Section 5.02. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 5.03. Obligations Not Affected. The obligation of the Guarantor to make the Guarantee Payments under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Trust; (b) the extension of time for the payment by the Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Junior Subordinated Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the 9 terms of the Preferred Securities, or any action on the part of the Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. Section 5.04. Rights of Holders. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Trustee to be held for the benefit of the Holders; (ii) the Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee in respect of this Guarantee Agreement or to direct the exercise of any trust or power conferred upon the Trustee under this Guarantee Agreement, provided that such direction shall not be in conflict with any rule of law or with this Guarantee Agreement, and could not involve the Trustee in personal liability in circumstances where reasonable indemnity would not be adequate; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against or requesting or directing that action be taken by the Trustee or any other person; it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Guarantee Agreement to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Guarantee Agreement, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. Section 5.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication) or upon the distribution of Junior Subordinated Notes to the Holders in exchange for all of the Preferred Securities. Section 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts of Guarantee Payments are due and unpaid under this Guarantee Agreement. If any amount shall be 10 paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 5.07. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof. ARTICLE VI Subordination Section 6.01. Subordination. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Junior Subordinated Notes, except those obligations or liabilities made pari passu or subordinate by their terms, (ii) pari passu with the preferred stock or preferred stock A now or hereafter issued by the Guarantor, and (iii) senior to all common stock of the Guarantor. This Guarantee Agreement ranks pari passu with each other substantially similar guarantee agreement entered into by the Guarantor in respect of trust or other preferred securities issued by an Affiliate of the Guarantor. ARTICLE VII Termination Section 7.01. Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon: (i) full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of Junior Subordinated Notes to the Holders in exchange for all of the Preferred Securities, or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or under this Guarantee Agreement. ARTICLE VIII Miscellaneous Section 8.01. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders then outstanding. Except in connection with a consolidation, merger, conveyance, transfer, or lease involving the Guarantor that is permitted under Article Eight of the Indenture, the Guarantor shall not assign its obligations hereunder. Section 8.02. Amendments. Except with respect to any changes which do not materially and adversely affect the rights of Holders (in which case no consent of Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than 66 2/3% in liquidation amount of all the outstanding Preferred Securities. The provisions of Article Six of the Trust Agreement concerning meetings of Holders shall apply to the giving of such approval. 11 Section 8.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Trustee and the Holders: Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Attn: Corporate Secretary (b) if given to the Trust, in care of the Trustee, or to the Trustee at the Trust's (and the Trustee's) address set forth below or such other address as the Trustee on behalf of the Trust may give notice to the Holders: Duke Energy Capital Trust [ ] c/o The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Attn: Capital Markets Fiduciary Services with a copy, in the case of a notice to the Trust (other than a notice from the Guarantor), to the Guarantor. (c) if given to any Holder, at the address set forth on the books and records of the Trust. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. Section 8.04. Benefit. This Guarantee Agreement is solely for the benefit of the Holders and, subject to Section 3.01(a), is not separately transferable from the Preferred Securities. Section 8.05. Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.01; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; 12 (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. Section 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. Duke Energy Corporation By: _________________________________ Name: Title: The Chase Manhattan Bank, as Trustee By: _________________________________ Name: Title: 13 EX-5.1-A 10 OPINION OF DEWEY BALLANTINE, TRUST II Exhibit 5.1-A Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 May 21, 1999 Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Registration Statement on Form S-3 Gentlemen: We are acting as counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust II (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. We are of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). In rendering the foregoing opinion, we have relied on the opinion of Ellen T. Ruff, Esq. attached hereto as Annex I with respect to matters of North Carolina law. The foregoing opinion is limited solely to the laws of the State of New York and the Federal laws of the United States of America. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the statements with respect to our firm under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Dewey Ballantine LLP 2 Exhibit 5.1-A--Annex I ELLEN T. RUFF, ESQ. Attorney-at-Law May 21, 1999 Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 Re: Registration Statement on Form S-3 Gentlemen: I am acting as North Carolina counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust II (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. I am of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). I am a member of the bar of the State of North Carolina and the foregoing opinion is limited solely to the laws of that State. This opinion is furnished solely for your benefit in connection with your rendering an opinion to Duke to be filed as Exhibit 5.1-A to the Registration Statement and I hereby consent to your attaching this opinion as an annex to such opinion and to the reference to me under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. This opinion may not be relied upon by you for any other purpose, or quoted to or relied upon by any other person, firm or entity for any purpose, without my prior written consent. Very truly yours, /s/ Ellen T. Ruff Ellen T. Ruff 2 EX-5.1-B 11 OPINION OF DEWEY BALLANTINE, TRUST III Exhibit 5.1-B Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 May 21, 1999 Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Registration Statement on Form S-3 Gentlemen: We are acting as counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust III (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. We are of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). In rendering the foregoing opinion, we have relied on the opinion of Ellen T. Ruff, Esq. attached hereto as Annex I with respect to matters of North Carolina law. The foregoing opinion is limited solely to the laws of the State of New York and the Federal laws of the United States of America. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the statements with respect to our firm under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Dewey Ballantine LLP 2 Exhibit 5.1-B--Annex I ELLEN T. RUFF, ESQ. Attorney-at-Law May 21, 1999 Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 Re: Registration Statement on Form S-3 Gentlemen: I am acting as North Carolina counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust III (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. I am of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). I am a member of the bar of the State of North Carolina and the foregoing opinion is limited solely to the laws of that State. This opinion is furnished solely for your benefit in connection with your rendering an opinion to Duke to be filed as Exhibit 5.1-B to the Registration Statement and I hereby consent to your attaching this opinion as an annex to such opinion and to the reference to me under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. This opinion may not be relied upon by you for any other purpose, or quoted to or relied upon by any other person, firm or entity for any purpose, without my prior written consent. Very truly yours, /s/ Ellen T. Ruff Ellen T. Ruff 2 EX-5.1-C 12 OPINION OF DEWEY BALLANTINE, TRUST IV Exhibit 5.1-C Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 May 21, 1999 Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Registration Statement on Form S-3 Gentlemen: We are acting as counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust IV (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. We are of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). In rendering the foregoing opinion, we have relied on the opinion of Ellen T. Ruff, Esq. attached hereto as Annex I with respect to matters of North Carolina law. The foregoing opinion is limited solely to the laws of the State of New York and the Federal laws of the United States of America. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the statements with respect to our firm under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Dewey Ballantine LLP 2 Exhibit 5.1-C--Annex I ELLEN T. RUFF, ESQ. Attorney-at-Law May 21, 1999 Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 Re: Registration Statement on Form S-3 Gentlemen: I am acting as North Carolina counsel to Duke Energy Corporation ("Duke") in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), including a preliminary prospectus and a preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to Duke Energy Capital Trust IV (the "Trust"), (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trust and (3) Duke's Guarantee (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, dated as of December 1, 1997, as supplemented, between Duke and the trustee named therein (the "Subordinated Indenture") and the Guarantee will be issued pursuant to a guarantee agreement between Duke and the trustee named therein (the "Guarantee Agreement"), in the form filed as an exhibit to the Registration Statement. I am of the opinion that, upon compliance with the pertinent provisions of the Act and the Trust Indenture Act of 1939, as amended, upon receipt of appropriate authorizations from the North Carolina Utilities Commission and The Public Service Commission of South Carolina, upon compliance with applicable securities or blue sky laws of various jurisdictions and upon the adoption of appropriate resolutions by the Board of Directors of Duke or a duly authorized committee thereof, when an indenture supplemental to the Subordinated Indenture and the Guarantee Agreement have been duly executed and delivered by the proper officers of Duke and the trustees named therein, and when the Junior Subordinated Notes and the Guarantee have been executed, authenticated and delivered in accordance with the terms of such supplemental indenture and the Guarantee Agreement, as the case may be, the Junior Subordinated Notes and the Guarantee will be valid, binding and legal obligations of Duke (subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and to general principles of equity, whether considered in a proceeding at law or in equity). I am a member of the bar of the State of North Carolina and the foregoing opinion is limited solely to the laws of that State. This opinion is furnished solely for your benefit in connection with your rendering an opinion to Duke to be filed as Exhibit 5.1-C to the Registration Statement and I hereby consent to your attaching this opinion as an annex to such opinion and to the reference to me under the caption "Validity of the Securities" in the preliminary prospectus and "Validity of the Securities" in the preliminary prospectus supplement included in the Registration Statement. This opinion may not be relied upon by you for any other purpose, or quoted to or relied upon by any other person, firm or entity for any purpose, without my prior written consent. Very truly yours, /s/ Ellen T. Ruff Ellen T. Ruff 2 EX-5.2-A 13 OPINION OF RICHARDS, LAYTON & FINGER, P.A. Exhibit 5.2-A RICHARDS, LAYTON & FINGER, P.A. One Rodney Square Wilmington, Delaware 19899 May 21, 1999 Duke Energy Capital Trust II c/o Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Duke Energy Capital Trust II Ladies and Gentlemen: We have acted as special Delaware counsel for Duke Energy Corporation, a North Carolina corporation (the "Company"), and Duke Energy Capital Trust II, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated November 14, 1997 as filed with the office of the Secretary of State of the State of Delaware (the "Secretary of State") on November 14, 1997; (b) The Trust Agreement of the Trust, dated as of November 14, 1997 between the Company, as Depositor, and the trustee of the Trust named therein; (c) The Registration Statement (the "Registration Statement") on Form S-3, including a preliminary prospectus (the "Prospectus") and a preliminary prospectus supplement (the "Prospectus Supplement"), relating to the % Trust Preferred Securities of the Trust representing preferred undivided beneficial interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), filed by the Company, the Trust and others as set forth therein with the Securities and Exchange Commission on May 21, 1999; (d) A form of Amended and Restated Trust Agreement for the Trust, to be entered into between the Company, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust (including Exhibits C and E thereto) (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated May 21, 1999, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement and the Certificate of Trust are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for such Preferred Security, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act. 2 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Validity of the Securities" in the Prospectus and "Validity of the Securities" in the Prospectus Supplement. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person for any purpose. Very truly yours, /s/ Richards, Layton & Finger 3 EX-5.2-B 14 OPINION OF RICHARDS, LAYTON & FINGER, P.A. Exhibit 5.2-B RICHARDS, LAYTON & FINGER, P.A. One Rodney Square Wilmington, Delaware 19899 May 21, 1999 Duke Energy Capital Trust III c/o Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Duke Energy Capital Trust III Ladies and Gentlemen: We have acted as special Delaware counsel for Duke Energy Corporation, a North Carolina corporation (the "Company"), and Duke Energy Capital Trust III, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated May 13, 1999 as filed with the office of the Secretary of State of the State of Delaware (the "Secretary of State") on May 13, 1999; (b) The Trust Agreement of the Trust, dated as of May 13, 1999 between the Company, as Depositor, and the trustee of the Trust named therein; (c) The Registration Statement (the "Registration Statement") on Form S-3, including a preliminary prospectus (the "Prospectus") and a preliminary prospectus supplement (the "Prospectus Supplement"), relating to the % Trust Preferred Securities of the Trust representing preferred undivided beneficial interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), filed by the Company, the Trust and others as set forth therein with the Securities and Exchange Commission on May 21, 1999; (d) A form of Amended and Restated Trust Agreement for the Trust, to be entered into between the Company, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust (including Exhibits C and E thereto) (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated May 21, 1999, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement and the Certificate of Trust are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for such Preferred Security, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act. 2 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Validity of the Securities" in the Prospectus and "Validity of the Securities" in the Prospectus Supplement. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person for any purpose. Very truly yours, /s/ Richards, Layton & Finger 3 EX-5.2-C 15 OPINION OF RICHARDS, LAYTON & FINGER, P.A. Exhibit 5.2-C RICHARDS, LAYTON & FINGER, P.A. One Rodney Square Wilmington, Delaware 19899 May 21, 1999 Duke Energy Capital Trust IV c/o Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Duke Energy Capital Trust IV Ladies and Gentlemen: We have acted as special Delaware counsel for Duke Energy Corporation, a North Carolina corporation (the "Company"), and Duke Energy Capital Trust IV, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated May 13, 1999 as filed with the office of the Secretary of State of the State of Delaware (the "Secretary of State") on May 13, 1999; (b) The Trust Agreement of the Trust, dated as of May 13, 1999 between the Company, as Depositor, and the trustee of the Trust named therein; (c) The Registration Statement (the "Registration Statement") on Form S-3, including a preliminary prospectus (the "Prospectus") and a preliminary prospectus supplement (the "Prospectus Supplement"), relating to the % Trust Preferred Securities of the Trust representing preferred undivided beneficial interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), filed by the Company, the Trust and others as set forth therein with the Securities and Exchange Commission on May 21, 1999; (d) A form of Amended and Restated Trust Agreement for the Trust, to be entered into between the Company, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust (including Exhibits C and E thereto) (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated May 21, 1999, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement and the Certificate of Trust are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the payment for such Preferred Security, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act. 2 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Validity of the Securities" in the Prospectus and "Validity of the Securities" in the Prospectus Supplement. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person for any purpose. Very truly yours, /s/ Richards, Layton & Finger 3 EX-8 16 TAX OPINION OF DEWEY BALLANTINE LLP. EXHIBIT 8 Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 May 21, 1999 Duke Energy Corporation 526 South Church Street Charlotte, North Carolina 28202 Re: Registration Statement on Form S-3 Gentlemen: We have acted as counsel to Duke Energy Corporation ("Duke"), Duke Energy Capital Trust II, Duke Energy Capital Trust III and Duke Energy Capital Trust IV (the "Trusts") in connection with the preparation of a Registration Statement on Form S-3, including a preliminary prospectus and preliminary prospectus supplement, being filed today with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933 (the "Securities Act"), of (1) Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by Duke to the Trusts, (2) Trust Preferred Securities (liquidation amount $ per Preferred Security) to be issued by the Trusts and (3) Duke's Guarantees (as defined in the Registration Statement) with respect to such Trust Preferred Securities. The Trusts will be organized pursuant to an amended and restated trust agreement between Duke and the trustees named therein. The Junior Subordinated Notes will be issued pursuant to the Subordinated Indenture, as supplemented, dated as of December 1, 1997, between Duke and the trustee named therein and the Guarantees will be issued pursuant to guarantee agreements between Duke and the trustee named therein, in the form filed as an exhibit to the Registration Statement. On the basis and subject to the accuracy of the statements contained in the materials referred to above, and our consideration of such other matters as we have deemed necessary, it is our opinion that under current law the material federal income tax consequences to holders of Trust Preferred Securities issued by the Trusts will be as described under the heading "Material Federal Income Tax Considerations" in the preliminary prospectus supplement constituting part of the Registration Statement. You have not requested, and we do not express, an opinion concerning any other tax consequences of the issuance by the Trusts of the Trust Preferred Securities. This opinion is not to be used, circulated, quoted or otherwise referred to for any purpose without our express written permission. We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the statements with respect to our firm in the section captioned "Material Federal Income Tax Considerations" in the preliminary prospectus supplement constituting part of the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Dewey Ballantine LLP 2 EX-12 17 COMPUTATION OF RATIO OF EARNING TO FIXED CHARGES Exhibit 12 DUKE ENERGY CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Twelve Months Ended March 31 Ended December 31, ----------------- -------------------------------------------- 1999 1998 1998 1997(a) 1996(a) 1995(a) 1994(a) -------- -------- -------- -------- -------- -------- -------- Earnings Before Income Taxes..... $ 516 $ 539 $2,037 $1,613 $1,789 $1,682 $1,422 Fixed Charges.................... 142 135 555 520 540 556 538 -------- -------- ------ ------ ------ ------ ------ Total........................ $ 658 $ 674 $2,592 $2,133 $2,329 $2,238 $1,960 ======== ======== ====== ====== ====== ====== ====== Fixed Charges Interest on debt............... $ 136 $ 128 $ 533 $ 497 $ 514 $ 536 $ 520 Interest component of rentals.. 6 7 22 23 26 20 18 -------- -------- ------ -------- ------ ------ ------ Fixed Charges................ $ 142 $ 135 $ 555 $ 520 $ 540 $ 556 $ 538 ======== ======== ====== ====== ====== ====== ====== Ratio of Earnings to Fixed Charges......................... 4.6 5.0 4.7 4.1 4.3 4.0 3.6
- -------- (a) Financial information reflects accounting for the combination with PanEnergy Corp on June 18, 1997 as a pooling of interests. As a result, the financial information gives effect to the combination as if it had occurred on January 1, 1994. EX-23.1 18 CONSENT OF DELOITTE & TOUCHE LLP Exhibit 23.1 CONSENT OF DELOITTE & TOUCHE LLP We consent to the incorporation by reference in this Registration Statement on Form S-3 of Duke Energy Corporation of our report dated February 12, 1999 appearing in the annual report on Form 10-K of Duke Energy Corporation for the year ended December 31, 1998 filed with the Securities and Exchange Commission, and to the reference to us under the heading "Experts" in the Prospectus which is a part of this Registration Statement. /s/ Deloitte & Touche LLP - ------------------------- Deloitte & Touche LLP Charlotte, North Carolina May 21, 1999 EX-23.2 19 CONSENT OF KPMG LLP Exhibit 23.2 CONSENT OF KPMG LLP We consent to the incorporation by reference in this Registration Statement on Form S-3 of Duke Energy Corporation of our report dated January 16, 1997 on the consolidated balance sheet of PanEnergy Corp as of December 31, 1996 and the related consolidated statements of income, common stockholders' equity and cash flows for the year ended December 31, 1996 appearing in the annual report on Form 10-K of PanEnergy Corp for the year ended December 31, 1996 and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG LLP - --------------- KPMG LLP Houston, Texas May 21, 1999 EX-24.1 20 POWER OF ATTORNEY OF CERTAIN OFFICERS EXHIBIT 24.1 DUKE ENERGY CORPORATION POWER OF ATTORNEY ----------------- A maximum of $500,000,000 aggregate liquidation preference of preferred securities of one or more direct or indirect subsidiary statutory business trusts holding Junior Subordinated Notes of Duke Energy Corporation as assets (Preferred Securities) The undersigned DUKE ENERGY CORPORATION, a North Carolina corporation, and certain of its officers and/or directors, do each hereby constitute and appoint Richard B. Priory, Richard J. Osborne, David L. Hauser and Ellen T. Ruff, and each of them, to act as attorneys-in-fact for and in the respective names, places and stead of the undersigned, to execute, seal, sign and file with the Securities and Exchange Commission a Registration Statement of said Duke Energy Corporation on Form S-3 and any and all amendments thereto for the purpose of registering under the Securities Act of 1933 the Preferred Securities, hereby granting to said attorneys-in-fact, and each of them, full power and authority to do and perform all and every act and thing whatsoever requisite, necessary or proper to be done in and about the premises, as fully to all intents and purposes as the undersigned, or any of them, might or could do if personally present, hereby ratifying and approving the acts of said attorneys-in-fact. Executed the 15th day of April, 1999. DUKE ENERGY CORPORATION By /s/ R. B. Priory ---------------------------- Chairman, President and Chief Executive Officer (Corporate Seal) ATTEST: /s/ Robert T. Lucas III - ----------------------- Assistant Secretary /s/ R. B. PRIORY Chairman, President and Chief Executive Officer ------------------------ (Principal Executive Officer and Director) R. B. Priory /s/ R. J. OSBORNE Executive Vice President and Chief Financial ------------------------ Officer (Principal Financial Officer) Richard J. Osborne /s/ J. L. BOYER Vice President and Corporate Controller ------------------------ (Principal Accounting Officer) Jeffrey L. Boyer /s/ G. ALEX BERNHARDT (Director) ------------------------ G. Alex Bernhardt /s/ ROBERT J. BROWN (Director) ------------------------ Robert J. Brown /s/ WILLIAM A. COLEY (Director) ------------------------ William A. Coley /s/ WILLIAM T. ESREY (Director) ------------------------ William T. Esrey /s/ ANN M. GRAY (Director) ------------------------ Ann M. Gray /s/ DENNIS R. HENDRIX (Director) ------------------------ Dennis R. Hendrix /s/ HAROLD S. HOOK (Director) ------------------------ Harold S. Hook /s/ GEORGE DEAN JOHNSON, JR. (Director) ------------------------ George Dean Johnson, Jr. /s/ MAX LENNON (Director) ------------------------ Max Lennon /s/ LEO E. LINBECK, JR. (Director) ------------------------ Leo E. Linbeck, Jr. /s/ JAMES G. MARTIN (Director) ------------------------ James G. Martin /s/ RUSSELL M. ROBINSON, II (Director) ------------------------ Russell M. Robinson, II EX-24.2 21 RESOLUTION OF DUKE ENERGY CORPORATION EXHIBIT 24.2 DUKE ENERGY CORPORATION CERTIFICATE The undersigned officer of DUKE ENERGY CORPORATION, a North Carolina corporation (the "Corporation"), does hereby certify that attached hereto is a true and complete copy of a resolution adopted by the Board of Directors of the Corporation with respect to the Registration Statement, which resolution is presently in full force and effect. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the seal of the Corporation this 21st day of May, 1999. /s/ Robert T. Lucas III ---------------------------- Robert T. Lucas III Assistant Secretary (Corporate Seal) FURTHER RESOLVED, that each officer and director who may be required to execute such Registration Statement or any amendments thereto (whether on behalf of the Corporation or as an officer or director thereof or by attesting the seal of the Corporation or otherwise) be and hereby is authorized to execute a power of attorney appointing Richard B. Priory, Richard J. Osborne, David L. Hauser and Ellen T. Ruff, and each of them, as true and lawful attorneys and agents to execute in his or her name, place and stead (in any such capacity) such Registration Statement and any and all amendments thereto and all instruments necessary or advisable in connection therewith, to attest the seal of the Corporation thereon and to file the same with the Securities and Exchange Commission, each of said attorneys and agents to have power to act with or without the others and to have full power and authority to do and perform in the name and on behalf of each of such officers and directors, or both, as the case may be, every act whatsoever necessary or advisable to be done in the premises as fully and to all intents and purposes as any such officer or director might or could do in person; EX-25.1 22 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) -------- ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) -------------------------------------------- Duke Energy Corporation (Exact name of obligor as specified in its charter) North Carolina 56-0205520 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ----------------------------------------------- Junior Subordinated Notes (Title of the indenture securities) -------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly ---------------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve.... 0 -------- Loans and leases, net of unearned income, allowance, and reserve......................... 128,384 Trading assets..................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.2-A 23 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.2-A ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------- ----------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ----------------------------------------------------------- Duke Energy Capital Trust II (Exact name of obligor as specified in its charter) North Carolina 52-6883048 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ---------------------------------------------- Trust Preferred Securities (Title of the indenture securities) --------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly ------------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve......................... 128,384 Trading assets..................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.2-B 24 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.2-B - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------- ---------------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ------------------------------------------------------- Duke Energy Capital Trust III (Exact name of obligor as specified in its charter) North Carolina Applied For (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ------------------------------------------------------- Trust Preferred Securities (Title of the indenture securities) ----------------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly --------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve......................... 128,384 Trading assets..................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.2-C 25 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.2-C ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------- ------------------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ----------------------------------------------- Duke Energy Capital Trust IV (Exact name of obligor as specified in its charter) North Carolina Applied For (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ---------------------------------------------- Trust Preferred Securities (Title of the indenture securities) --------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly ------------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve......................... 128,384 Trading assets..................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................. 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.3-A 26 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.3-A - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) --------- ------------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ----------------------------------------------- Duke Energy Corporation (Exact name of obligor as specified in its charter) North Carolina 56-0205520 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ---------------------------------------------- Guarantee Duke Energy Capital Trust II Trust Preferred Securities (Title of the indenture securities) --------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly ------------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve......................... 128,384 Trading assets..................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.3-B 27 STATEMENT OF ELIGIBILITY UNDER THE TRUSTEE. EXHIBIT 25.3-B - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------- ---------------------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ---------------------------------------------------- Duke Energy Corporation (Exact name of obligor as specified in its charter) North Carolina 56-0205520 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ---------------------------------------------- Guarantee Duke Energy Capital Trust III Trust Preferred Securities (Title of the indenture securities) --------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly ------------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................... $ 13,915 Interest-bearing balances....................... 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve........................... 128,384 Trading assets....................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- EX-25.3-C 28 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. EXHIBIT 25.3-C ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------- ------------------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification no.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ----------------------------------------------- Duke Energy Corporation (Exact name of obligor as specified in its charter) North Carolina 56-0205520 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 526 South Church Street Charlotte, North Carolina 28242 (Address of principal executive offices) (Zip Code) ---------------------------------------------- Guarantee Duke Energy Capital Trust IV Trust Preferred Securities (Title of the indenture securities) --------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 6th day of May, 1999. THE CHASE MANHATTAN BANK By /s/ P. Kelly --------------------- P. Kelly Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................ $ 13,915 Interest-bearing balances........................ 7,805 Securities: Held to maturity securities........................ 1,429 Available for sale securities...................... 56,327 Federal funds sold and securities purchased under agreements to resell............................. 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income $131,095 Less: Allowance for loan and lease losses 2,711 Less: Allocated transfer risk reserve... 0 -------- Loans and leases, net of unearned income, allowance, and reserve........................... 128,384 Trading assets....................................... 48,949 Premises and fixed assets (including capitalized leases).......................................... 3,095 Other real estate owned............................ 239 Investments in unconsolidated subsidiaries and associated companies............................. 199 Customers' liability to this bank on acceptances outstanding...................................... 1,209 Intangible assets.................................. 2,081 Other assets....................................... 11,352 -------- TOTAL ASSETS....................................... $296,717 ======== - 4 - LIABILITIES Deposits: In domestic offices................................ $105,879 Noninterest-bearing...................... $39,175 Interest-bearing......................... 66,704 ------ In foreign offices, Edge and Agreement, subsidiaries and IBF's............................. 79,294 Noninterest-bearing ..................... $ 4,082 Interest-bearing...........................75,212 Federal funds purchased and securities sold under agreements to repurchase............................ 32,546 Demand notes issued to the U.S. Treasury............. 629 Trading liabilities.................................. 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less...... 4,478 With a remaining maturity of more than one year through three years........................... 213 With a remaining maturity of more than three years. 115 Bank's liability on acceptances executed and outstanding 1,209 Subordinated notes and debentures.................... 5,408 Other liabilities.................................... 10,855 TOTAL LIABILITIES.................................... 277,433 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock......................................... 1,211 Surplus (exclude all surplus related to preferred stock)............................................. 11,016 Undivided profits and capital reserves............... 6,762 Net unrealized holding gains (losses) on available-for-sale securities................... 279 Cumulative foreign currency translation adjustments.. 16 TOTAL EQUITY CAPITAL................................. 19,284 ------ TOTAL LIABILITIES AND EQUITY CAPITAL................. $296,717 ======= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- -----END PRIVACY-ENHANCED MESSAGE-----