<PAGE>
As filed with the Securities and Exchange Commission on May 21, 1999
Subject to Amendment
Registration Nos. 333-
333-
333-
333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C>
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)
<CAPTION>
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)
--------------
<S> <C>
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
</TABLE>
(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. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
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)
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<S> <C> <C> <C> <C>
Duke Energy Capital Trust II Trust
Preferred Securities................
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Duke Energy Capital Trust III Trust
Preferred Securities................
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Duke Energy Capital Trust IV Trust
Preferred Securities................
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Duke Energy Corporation Junior
Subordinated Notes .................
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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).............................
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Total................................ $500,000,000 100% $500,000,000 $139,000
</TABLE>
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(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.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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.
----------
<TABLE>
<CAPTION>
Per Preferred Security Total
---------------------- -----
<S> <C> <C>
Initial Public Offering Price......................
Underwriting Discounts and Commissions............. (1) (1)
Proceeds, before expenses, to the Trust............
</TABLE>
- -----
(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 , .
<PAGE>
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
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
S-2
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
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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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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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;
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. 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
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. 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
. 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Number of
Underwriter Preferred Securities
----------- ---------------------
<S> <C>
---------------
Total...............................................
===============
</TABLE>
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
<PAGE>
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
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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."
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
---------------- -----------------------
1999 1998 1998 1997(1) 1996(1)
------ ------ ------- ------- -------
(Millions, except per share data)
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- --------
(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.
<TABLE>
<CAPTION>
Capitalization as of
March 31, 1999
--------------------
(Millions)
<S> <C> <C>
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%
============ ========
</TABLE>
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Three
Months
Ended
March 31, Year ended December 31,
--------- ------------------------------------
1999 1998 1998 1997(1) 1996(1) 1995(1) 1994(1)
---- ---- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges....................... 4.6 5.0 4.7 4.1 4.3 4.0 3.6
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
. 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
. 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
<PAGE>
. 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
<PAGE>
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
<PAGE>
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
<PAGE>
[ ]
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]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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:
<TABLE>
<S> <C>
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
========
</TABLE>
--------
* 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
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
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.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
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.
</TABLE>
- --------
* 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
<PAGE>
(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
<PAGE>
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
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
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
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.
</TABLE>
- --------
* previously filed
<PAGE>
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"),
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<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
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<PAGE>
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
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Preferred
Securities to
Underwriter be Purchased
----------- -------------
<S> <C>
------
Total...........................................................
======
</TABLE>
17
<PAGE>
EXHIBIT 4.2
DUKE ENERGY CORPORATION
TO
THE CHASE MANHATTAN BANK
Trustee
----------------
Supplemental Indenture
Dated as of ,
----------------
$
Series % Junior Subordinated Notes
Due ,
----------------
<PAGE>
TABLE OF CONTENTS (1)
ARTICLE 1
Series % Junior Subordinated Notes
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
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
</TABLE>
- --------
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
"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.
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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.
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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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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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
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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 ,
<TABLE>
<S> <C>
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: ,
</TABLE>
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
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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
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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
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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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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 ,
<PAGE>
DUKE ENERGY CAPITAL TRUST [ ]
Certain Sections of this Trust Agreement relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Tust Indenturer Trust Agreement
Act Section Section
- --------------- ---------------
<S> <C>
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
</TABLE>
- --------
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
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
</TABLE>
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<TABLE>
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Page
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<C> <S> <C>
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
</TABLE>
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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;
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(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
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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.
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"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
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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.
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"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
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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.
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"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.
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"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
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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;
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(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;
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(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;
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(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;
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(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,
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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
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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;
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(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.
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(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
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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
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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,
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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.
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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.
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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
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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
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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.
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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
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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
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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
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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
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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);
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(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
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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
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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
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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
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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.
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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
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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.
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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
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(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.
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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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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:
<PAGE>
EXHIBIT B
[RESERVED]
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT AS PROVIDED IN THE TRUST
AGREEMENT REFERRED TO HEREIN
Certificate Number Number of Common Securities
<TABLE>
<S> <C>
C-
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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)
<PAGE>
EXHIBIT 4.8
GUARANTEE AGREEMENT
between
DUKE ENERGY CORPORATION
(as Guarantor)
and
THE CHASE MANHATTAN BANK
(as Trustee)
Dated as of ,
<PAGE>
CROSS-REFERENCE TABLE/1/
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
------------------- ----------
<S> <C>
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)
</TABLE>
- --------
/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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
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
</TABLE>
ii
<PAGE>
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.
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"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;
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(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
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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.
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(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
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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
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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
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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.
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(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
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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
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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.
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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
<PAGE>
(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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Exhibit 12
DUKE ENERGY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended March 31 Ended December 31,
----------------- --------------------------------------------
1999 1998 1998 1997(a) 1996(a) 1995(a) 1994(a)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- --------
(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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
/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
<PAGE>
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;
<PAGE>
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)
--------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
---------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
-----------------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
---------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
---------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
---------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
<PAGE>
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)
---------------------------------------------------------------
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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 -
<PAGE>
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-
