Exhibit 4.1
Execution Version
DUKE ENERGY CAROLINAS, LLC
TO
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
Trustee
NINETIETH SUPPLEMENTAL INDENTURE
Dated as of November 19, 2009
CREATING A SERIES OF FIRST AND REFUNDING
MORTGAGE BONDS
$750,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 5.30% SERIES DUE 2040
SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AS OF DECEMBER 1, 1927
Drawn By and Return To Robinson, Bradshaw & Hinson, P.A.
101 N. Tryon Street, Suite 1900, Charlotte, NC 28246
SUPPLEMENTAL INDENTURE, bearing date as of the 19th day of November, 2009, made and entered
into by and between Duke Energy Carolinas, LLC, a limited liability company duly organized and
existing under the laws of the State of North Carolina, hereinafter called the “Company”, party of
the first part, and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of
New York Trust Company, N.A.), a national banking association, having a corporate trust office at
900 Ashwood Parkway, Suite 425, Atlanta, Georgia 30338, hereinafter called the “Trustee”, as
Trustee, party of the second part. The Trustee is the successor to JPMorgan Chase Bank, N.A.
(formerly known as The Chase Manhattan Bank, formerly known as Chemical Bank (successor to Morgan
Guaranty Trust Company of New York)), as Trustee.
WHEREAS the Company’s predecessor is Duke Energy Corporation (formerly known as Duke Power
Company), a corporation organized under the laws of the State of North Carolina, which converted
its form of organization on April 3, 2006 from a North Carolina corporation to a North Carolina
limited liability company named “Duke Power Company LLC,” which changed its name to Duke Energy
Carolinas, LLC on October 1, 2006; and
WHEREAS Duke Power Company, a New Jersey corporation, hereinafter called the “New Jersey
Company”, duly executed and delivered its First and Refunding Mortgage, dated as of December 1,
1927, to Guaranty Trust Company of New York, as Trustee, to secure its First and Refunding Mortgage
Gold Bonds, to be issued from time to time in series as provided in said Mortgage, and has from
time to time duly executed and delivered supplemental indentures, including supplemental indentures
dated as of September 1, 1947 and February 1, 1949, to Guaranty Trust Company of New York (the
corporate name of which has been changed to Morgan Guaranty Trust Company of New York), as Trustee,
and a supplemental indenture dated as of February 1, 1960 to Morgan Guaranty Trust Company of New
York, as Trustee, supplementing and modifying said Mortgage (said Mortgage, as so supplemented and
modified by the supplemental indentures dated as of September 1, 1947, February 1, 1949 and
February 1, 1960, being hereinafter referred to as the “original indenture”); and
WHEREAS bonds of a series known as the “First and Refunding Mortgage Bonds, 2.65% Series Due 1977”
(herein called “bonds of the 2.65% Series”), bonds of a series known as the “First and Refunding
Mortgage Bonds, 2 7/8% Series Due 1979” (herein called “bonds of the 1979 Series”), bonds of a
series known as the “First and Refunding Mortgage Bonds, 6 3/8% Series Due 1998” (herein called
“bonds of the 1998 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds,
Pollution Control Facilities Revenue Refunding Series Due 2014” (herein called “bonds of the 1990
Pollution Control Series”), bonds of a series known as the “First and Refunding Mortgage Bonds,
City of Greensboro Series Due 2027” (herein called “bonds of the 2027 City of Greensboro Series”),
bonds of a series known as the “First and Refunding Mortgage Bonds, Medium-Term Notes Series”
(herein called “bonds of the Medium-Term Notes Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 6 5/8% Series B Due 2003” (herein called “bonds of the 2003 Series B”),
bonds of a series known as the “First and Refunding Mortgage Bonds, 6 3/8% Series Due 2008” (herein
called “bonds of the 2008 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 5 7/8% Series C Due 2003” (herein called “bonds of the 2003 Series C”), bonds of a series
known as the
“First and Refunding Mortgage Bonds, Pollution Control Facilities Revenue Refunding
Series Due 2014” (herein called “bonds of the 1993 Pollution Control Series”), bonds of a series
known as the “First and Refunding Mortgage Bonds, 6 1/4% Series B 2004” (herein called “bonds of
the 2004 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 7% Series
Due 2033” (herein called “bonds of the 2033 Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 6 7/8% Series B Due 2023” (herein called “bonds of the 2023 Series B”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 6 3/4% Series Due 2025” (herein called “bonds of the 2025 Series”), bonds
of a series known as the “First and Refunding Mortgage Bonds, 7 7/8% Series Due 2024” (herein
called “bonds of the 2024 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 7 1/2% Series B Due 2025” (herein called “bonds of the 2025 Series B”), bonds of a series
known as the “First and Refunding Mortgage Bonds, 7 1/2% Series Due 1999” (herein called “bonds of
the 1999 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 7% Series
Due 2000” (herein called “bonds of the 2000 Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 7% Series B Due 2000” (herein called “bonds of the 2000 Series B”), bonds
of a series known as the “First and Refunding Mortgage Bonds, 6.625% Series Due 2003” (herein
called “bonds of the 2003 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 9 5/8% Series Due 2020” (herein called “bonds of the 2020 Series”), bonds of a series known
as the “First and Refunding Mortgage Bonds, 8 3/4% Series Due 2021” (herein called “bonds of the
2021 Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7% Series Due 2005”
(herein called “bonds of the 2005 Series”), bonds of a series known as “First and Refunding
Mortgage Bonds, 3.75% Series A Due 2008” (herein called “bonds of the 3.75% Series A”), bonds of
series known as “First and Refunding Mortgage Bonds, 3.75% Series B Due 2008” (herein called “bonds
of the 3.75% Series B,” and together with the bonds of the 3.75%
Series A, the “bonds of the 3.75%
Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7 3/8% Series Due 2023”
(herein called “bonds of the 7 3/8% Series”), bonds of a series known as “First and Refunding
Mortgage Bonds, 4 1/2% Series Due 2010” (herein called “bonds of the 4 1/2% Series”), bonds of a
series known as “First and Refunding Mortgage Bonds, 5.30% Series Due 2015” (herein called “bonds
of the 5.30% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 5.25% Series
Due 2018” (herein called “bonds of the 5.25% Series”), bonds of a series known as “First and
Refunding Mortgage Bonds, 6.00% Series Due 2038” (herein called “bonds of the 6.00% Series”), bonds
of a series known as “First and Refunding Mortgage Bonds, 2007A Pledge Series Due 2040” (herein
called “bonds of the 2007A Pledge Series”), bonds of a series known as “First and Refunding
Mortgage Bonds, 2007B Pledge Series Due 2040” (herein called “bonds of the 2007B Pledge Series”),
bonds of a series known as “First and Refunding Mortgage Bonds, 5.10% Series B Due 2018” (herein
called “bonds of the 5.10% Series”), bonds of a series known as “First and Refunding Mortgage
Bonds, 6.05% Series B Due 2038” (herein called “bonds of the 6.05% Series”), bonds of a series
known as “First and Refunding Mortgage Bonds, 5.75% Series C Due 2013 (herein called “bonds of the
2013 Series C”), bonds of a series known as “First and Refunding Mortgage Bonds, 7.00% Series C Due
2018 (herein called “bonds of the 2018 Series C”), bonds of a series known as “First and Refunding
Mortgage Bonds, Pollution Control Facilities Revenue Refunding Series Due 2017” (herein called
“bonds of the 2009 Pollution Control Series”), and such other bonds that have been issued have
heretofore been issued and (except for bonds of the 2.65% Series, bonds of the 1979 Series, bonds
of the 1998 Series, bonds of the 1990 Pollution Control Series, bonds of the Medium Term Notes
Series,
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bonds of the 2003 Series B, bonds of the 2008 Series, bonds of the 2003 Series C, bonds of
the 1993 Pollution Control Series, bonds of the 2004 Series B, bonds of the 2033 Series, bonds of
the 2023 Series B, bonds of the 2025 Series, bonds of the 2024 Series, bonds of the 2025 Series B,
bonds of the 1999 Series, bonds of the 2000 Series, bonds of the 2000 Series B, bonds of the 2003
Series, bonds of the 2020 Series, bonds of the 2021 Series, bonds of the 2005 Series, bonds of the
3.75% Series, bonds of the 7 3/8% Series, bonds of the 2007A Pledge Series, bonds of the 2007B
Pledge Series, and other such bonds which have been redeemed or retired in their entirety) are the
only bonds now outstanding under the original indenture as heretofore supplemented; and
WHEREAS the Company has duly executed and delivered a supplemental indenture, dated as of June
15, 1964, to Morgan Guaranty Trust Company of New York, as Trustee, for the purpose of evidencing
the succession by merger of the Company to the New Jersey Company and the assumption by the Company
of the covenants and conditions of the New Jersey Company in the original indenture and to enable the
Company to have and exercise the powers and rights of the New Jersey Company under the original
indenture in accordance with the terms thereof and whereby the Company assumed and agreed to pay
duly and punctually the principal of and interest on the bonds issued under the original indenture
in accordance with the provisions of said bonds and the coupons thereto appertaining and the
original indenture, and agreed to perform and fulfill all the terms, covenants and conditions of
the original indenture binding upon the New Jersey Company, and
WHEREAS Morgan Guaranty Trust Company of New York resigned as Trustee under the original
indenture as heretofore supplemented and Chemical Bank was appointed successor Trustee, said
resignation and appointment having taken effect on August 30, 1994 pursuant to an Instrument of
Resignation, Appointment and Acceptance dated as of August 30, 1994 among the Company, Morgan
Guaranty Trust Company of New York, as Trustee, and Chemical Bank (now known as JPMorgan Chase
Bank, N.A.), as successor Trustee; and
WHEREAS JPMorgan Chase Bank, N.A. resigned as Trustee and The Bank of New York Mellon Trust
Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.) was appointed successor
Trustee, said resignation and appointment having taken effect on September 24, 2007 pursuant to an
Instrument of Resignation, Appointment and Acceptance dated as of September 24, 2007 among the
Company, JPMorgan Chase Bank, N.A., as Trustee, and The Bank of New York Mellon Trust Company,
N.A., as successor Trustee; and
WHEREAS the Company desires to create under the original indenture, as heretofore supplemented
and as to be supplemented by this supplemental indenture, a new series of bonds, to be known as its
“First and Refunding Mortgage Bonds, 5.30% Series due 2040”, and to determine the terms and
provisions and the form of the bonds of such series; and
WHEREAS for the purposes hereinabove recited, and pursuant to due limited liability company
action, the Company has duly determined to execute and deliver to the Trustee a supplemental
indenture in the form hereof supplementing the original indenture (the original indenture, as
previously supplemented by supplemental indentures and as hereby supplemented, being sometimes
hereinafter referred to as the “Indenture”); and
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WHEREAS all conditions and requirements necessary to make this supplemental indenture a valid,
legal and binding instrument in accordance with its terms have been done and performed, and the
execution and delivery hereof have been in all respects duly authorized:
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in consideration of the premises and of the sum of one dollar duly paid by the Company to
the Trustee at or before the execution and delivery of these presents, the receipt whereof is
hereby acknowledged, the Company hereby covenants and agrees with the Trustee and its successors in
the trust under the Indenture as follows:
PART ONE.
BONDS OF THE 2040 SERIES
SECTION 1.
The Company hereby creates a new series of bonds to be issued under and secured by
the Indenture and known as its First and Refunding Mortgage Bonds, 5.30% Series due 2040 (herein
called “bonds of the 2040 Series”) and the Company hereby establishes, determines and fixes the
terms and provisions of the bonds of the 2040 Series as hereinafter in this Part One set forth.
Each bond of the 2040 Series shall be dated the date of its authentication (except that if any
such bond shall be authenticated on any interest payment date, it shall be dated the following day)
and interest shall be payable on the principal represented thereby commencing August 15, 2010, from
the February 15 or August 15, as the case may be, next preceding the date thereof to which interest
has been paid, unless such date of authentication is prior to August 15, 2010, in which case
interest shall be payable from November 19, 2009;
provided
,
however
, that interest
shall be payable on each bond of the 2040 Series authenticated after the record date (as defined in
the next succeeding paragraph of this Section 1) with respect to any interest payment date and
prior to such interest payment date, only from such interest payment date.
Interest on any bond of the 2040 Series shall be paid to the person who, according to the bond
register of the Company, is the registered holder of such bond of the 2040 Series at the close of
business on the applicable record date, and such interest payments shall be made by check mailed to
such registered holder at his last address shown on such bond register or, at the option of the
Company, 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
of payment by the Person entitled thereto (
provided
, that if the bonds of the 2040 Series
are represented by Global Securities held by the Depositary, payment may be made pursuant to the
procedures of the Depositary);
provided
,
however
, that, if the Company shall
default in the payment of the interest due on any interest payment date on any bond of the 2040
Series, such defaulted interest shall be paid to the registered holder of such bond (or any bond or
bonds of the 2040 Series issued upon transfer,
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exchange or substitution thereof) on the date of subsequent payment of such defaulted interest or, at the election of the Company, to the person in
whose name such bond (or any bond or bonds of the 2040 Series issued upon transfer, exchange or
substitution thereof) is registered on a subsequent record date established by notice given by mail
by or on behalf of the Company to the holders of all bonds of the 2040 Series not less than ten
(10) days preceding such subsequent record date. The term “record date” as used in this Section 1
shall mean, with respect to any semi-annual interest payment date, the close of business on the
February 1 or August 1, whether or not a business day, next preceding such interest payment date
or, in the case of a payment of defaulted interest, the close of business on any subsequent record
date established as provided above.
SECTION 2.
All bonds of the 2040 Series shall mature as to principal on February 15, 2040 and
shall bear interest at a rate of 5.30% per annum, payable semi-annually on the fifteenth day of
February and August in each year, commencing on the fifteenth day of August, 2010. Interest on the
bonds of the 2040 Series will be computed on the basis of a 360-day year consisting of twelve
30-day months.
SECTION 3.
The bonds of the 2040 Series shall be fully registered bonds, without coupons, in
denominations of two thousand dollars ($2,000) and integral multiples of one thousand dollars
($1,000) in excess thereof, all such bonds to be numbered, and shall be transferable and
exchangeable as provided in the form of bond set forth as Exhibit A to this supplemental indenture.
The provisions of §1.19 and any other provision in the Indenture in respect of coupon bonds or reservation of coupon bond numbers
shall be inapplicable to the bonds of the 2040 Series.
SECTION 4.
The bonds of the 2040 Series may be redeemed at the option of the Company, in whole
or in part at any time and from time to time, at a redemption price equal to the greater of (1)
100% of the principal amount of the bonds of the 2040 Series to be redeemed and (2) the sum of the
present values of the remaining scheduled payments of principal and interest on such bonds of the
2040 Series being redeemed (exclusive of interest accrued to the redemption date) discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 20 basis points, plus, in either case, accrued and unpaid interest on the
principal amount being redeemed to such redemption date. The Company shall notify the Trustee of
the redemption price with respect to any redemption pursuant to this paragraph promptly after the
calculation thereof. The Trustee shall not be responsible for calculating said redemption price.
The bonds of the 2040 Series are also subject to redemption through the operation of the
Replacement Fund provided in Part Two of this supplemental indenture or through the application of
moneys paid to the Trustee pursuant to the provisions of §5.05 of the Indenture, at any time or
from time to time prior to maturity, upon prior notice as hereinafter provided, at the redemption
prices specified in the fourth paragraph of the reverse side of the form of bond set forth as
Exhibit A to this supplemental indenture, together with interest accrued thereon to the date fixed
for redemption thereof.
In the event that any redemption date is not a Business Day, the Company shall pay the
redemption price on the next Business Day without any interest or other payment due to the delay.
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All such redemptions of bonds of the 2040 Series shall be effected as provided in Article 3 of
the Indenture except that, in case a part only of the bonds of the 2040 Series is to be paid and
redeemed, the particular bonds or part thereof shall be selected by the Trustee in such manner as
the Trustee in its uncontrolled discretion shall determine to be fair and in any case where several
bonds are registered in the same name, the Trustee may treat the aggregate principal amount so
registered as if it were represented by one bond and except that when bonds are redeemed in part
only the notice given to any particular holder need state only the principal amount of the bonds of
that holder which is to be redeemed and except that notice to the holders of bonds to be redeemed
shall be given by mailing to such holders a notice of such redemption, first class mail postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth day, before the date
fixed for redemption, at their last addresses as they shall appear upon the bond register of the
Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice; and failure duly to give such
notice by mail, or any defect in such notice, to the holder of any bond designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the redemption of any
other bond. No publication of notice of such redemption shall be required.
SECTION 5.
The limit upon the aggregate principal amount of the bonds of the 2040 Series which
may be authenticated and delivered pursuant to this Ninetieth Supplemental Indenture shall be
$750,000,000.
SECTION 6.
The place or places of payment (as to principal and premium, if any, and interest),
redemption, transfer, exchange and registration of the bonds of the 2040 Series shall be the office
or offices or the agency or agencies of the Company in the Borough of Manhattan, The City of New
York, designated from time to time by the Board of Directors of the Company (
provided
, that
if the bonds of the 2040 Series are represented by Global Securities held by or on behalf of the Depositary, the procedures of the
Depositary may be followed for any action under this Section 6 of Part One).
SECTION 7.
The form of the bonds of the 2040 Series and the certificate of the Trustee to be
endorsed on such bonds, respectively, shall be in substantially the form set forth in Exhibit A
hereto.
PART TWO.
REPLACEMENT FUND.
SECTION 1.
So long as any of the bonds of the 2040 Series are outstanding, the Company will
continue to maintain the Replacement Fund set forth in, and in accordance with the applicable terms
and conditions now contained in, Part Two of the supplemental indenture dated as of February 1,
1949, and the covenants on the part of the Company contained in such Part Two shall continue and
remain in full force and effect, whether or not bonds of the 1979 Series are outstanding and to the
same extent as though the words “or any bonds of the 2040 Series” were inserted after the word
“Series” appearing in the second line of Section 1 and the
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second line of Section 4 of said Part Two of said supplemental indenture dated as of February 1, 1949.
SECTION 2.
If at any time (a) any of the bonds of the 2040 Series are outstanding and (b) no
Outstanding Mortgage Bonds (as defined in Section 1 of Part Three of this supplemental indenture)
entitled to the benefit of the Replacement Fund are outstanding and (c) cash which shall have been
deposited with the Trustee pursuant to such Replacement Fund shall not within five years from the
date of deposit thereof have been paid out, or used or set aside by the Trustee for the payment,
purchase or redemption of bonds, pursuant to such Replacement Fund, such cash shall, if in excess
of fifty thousand dollars ($50,000), be applied to the redemption of bonds of the 2040 Series in an
aggregate principal amount sufficient to exhaust as nearly as possible the full amount of such
cash. Anything in Section 5 of Part Two of the aforesaid supplemental indenture dated as of
February 1, 1949, in Section 3 of Part Two of the supplemental indentures dated as of May 1, 1993,
July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994, February 25, 2003, March 21, 2003 and
September 23, 2003, in Section 3 of Part Three of the supplemental indenture dated as of March 1,
1990 and in Section 5 of Part Four of the supplemental indenture dated as of March 1, 1993 to the
contrary notwithstanding, no cash shall be paid over to the Company thereunder if at the time any
bonds of the 2040 Series are then outstanding, and such cash shall in such event be applied as in
this Part Two set forth.
SECTION 3.
Whenever all of the bonds of the 2040 Series and all of the Outstanding Mortgage
Bonds entitled to the benefit of the Replacement Fund shall have been paid, purchased or redeemed,
the Trustee shall, upon application of the Company, pay to or upon the order of the Company all
cash theretofore deposited with the Trustee pursuant to the provisions of the Replacement Fund and
not previously disposed of pursuant to the provisions of the Replacement Fund, and shall deliver to
the Company any bonds which shall theretofore have been deposited with the Trustee pursuant to the
provisions of the Replacement Fund or paid, purchased or redeemed pursuant to the provisions of the
Replacement Fund.
PART THREE.
ADDITIONAL COVENANTS OF THE COMPANY
SECTION 1.
Whether or not the covenants on the part of the Company contained in Part Three of
the supplemental indenture dated as of February 1, 1949 are modified with the consent of the
holders of bonds of the 2027 City of Greensboro Series, the 4 1/2% Series, the 5.30% Series, the
5.25% Series, the 6.00% Series, the 5.10% Series, the 6.05% Series, the 2013 Series C, the 2018
Series C or the 2009 Pollution Control Series (collectively, the “Outstanding Mortgage Bonds”),
such covenants on the part of the Company contained in said Part Three shall continue and remain in
full force and effect so long as any of the bonds of the 2040 Series are outstanding and to the
same extent as though the words “or so long as any bonds of the 2040 Series are outstanding” were
inserted after the words “so long as any of the bonds of the 1979 Series or any bonds of the 2.65%
Series are outstanding” wherever such words appear in said Part Three of the supplemental indenture
dated as of February 1, 1949.
8
SECTION 2.
Whether or not the second sentence of paragraph (a) of §2.08 of the original
indenture (making certain provisions for the definition of the term “net amount” applicable while
bonds of the 2.65% Series were outstanding and which was originally set forth in Section 4 of
Article One of the supplemental indenture dated as of September 1, 1947 and which is corrected and
clarified by Section 2 of Part Four of the supplemental indenture dated as of February 1, 1968) is
modified with the consent of the holders of any of the Outstanding Mortgage Bonds, said sentence
shall continue and remain in full force and effect so long as any bonds of the 2040 Series are
outstanding, and with the same force and effect as though said sentence had stated that such
provisions were to be applicable so long as any of the bonds of the 2040 Series are outstanding.
PART FOUR.
GLOBAL SECURITIES; TRANSFER AND EXCHANGE
SECTION 1.
The bonds of the 2040 Series shall initially be issued in the form of one or more
Global Securities registered in the name of the Depositary (which initially shall be The Depository
Trust Company) or its nominee. Except under the limited circumstances described below, bonds of the
2040 Series represented by such Global Security or Global Securities shall not be exchangeable for,
and shall not otherwise be issuable as, bonds of the 2040 Series in definitive form. The Global
Securities described in this Part Four 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.
None of the Company, the Trustee nor any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for bonds of the 2040 Series registered in the names
of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company
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 Company within 90 days of receipt by the
Company 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 Company within 90 days after it becomes aware of such cessation, (ii) an Event of Default
has occurred and is continuing with respect to the 2040 Series or (iii) the Company in its sole
discretion, and subject to the procedures of the Depositary, determines that such Global Security
shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for bonds of the 2040 Series registered in such names as the
Depositary shall direct.
SECTION 2.
Depository Legend
. Each of the Global Securities shall bear the following
legend (the “Depository Legend”) on the face thereof:
9
“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.”
SECTION 3.
Transfer and Exchange
.
(a) Every bond of the 2040 Series presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the Trustee duly
executed, by the Holder thereof or his attorney duly authorized in writing.
(b) No service charge shall be made for any registration of transfer or exchange of bonds of
the 2040 Series, but the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or transfer or exchange
of bonds of the 2040 Series.
SECTION 4.
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 Indenture.
“Business day” means any day other than a day on which banks in New York City are required or
authorized to be closed.
“Comparable Treasury Issue” means the United States Treasury security or securities selected
by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining
term of the bonds of the 2040 Series to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new issues of corporate
debt securities of a comparable maturity to the remaining term of such bonds of the 2040 Series.
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“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such quotations.
“Depositary” means a clearing agency registered under the Exchange Act that is designated to
act as Depositary for the bonds of the 2040 Series, which Depositary shall initially be The
Depository Trust Company.
“Depository Legend” means a legend set forth in Section 2 of this Part Four.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Global Security” means a bond of the 2040 Series in global form.
“Holder” means a Person in whose name a bond of the 2040 Series is registered in the
registration books maintained by the Trustee.
“Person” means any individual, corporation, partnership, limited liability company or
corporation, joint venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.
“Reference Treasury Dealer” means each of Banc of America Securities LLC, Citigroup Global
Markets Inc. and Morgan Stanley & Co. Incorporated and a Primary Treasury Dealer (as defined
herein) selected by Wells Fargo Securities, LLC, plus one other financial institution appointed by
the Company at the time of any redemption or their respective affiliates or successors which are
primary U.S. Government securities dealers; provided, however, that if any of the foregoing or
their affiliates or successors shall cease to be a primary U.S. Government securities dealer in the
United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary
Treasury Dealer.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the
semi-annual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such redemption date.
11
PART FIVE.
MISCELLANEOUS.
SECTION 1.
(a) For the purposes of §2.10 of the Indenture and for the purposes of any modification of the
provisions of the Replacement Fund referred to in Part Two of this supplemental indenture, the
covenants and provisions on the part of the Company which are set forth or incorporated in Part Two
of this supplemental indenture shall be for the benefit only of the holders of the bonds of the
2040 Series. Such covenants and provisions shall remain in force and be applicable only so long as
any bonds of the 2040 Series shall be outstanding, and, subject to the provisions of paragraph (2)
of subdivision (c) of §10.01 of the Indenture, any such covenants and provisions may be modified
with respect to the bonds of the 2040 Series with the consent, in writing or by vote at a
bondholders’ meeting of the holders of sixty-six and two-thirds per cent (66 2/3%) of the principal
amount of the bonds of the 2040 Series, as the case may be, at the time outstanding and without the
consent of the holders of any other bonds then outstanding under the Indenture;
provided
that no such consent shall be effective to waive any past default under such covenants and
provisions, and its consequences, unless the consent of the holders of at least a majority in
principal amount of all bonds then outstanding under the Indenture is obtained. Such covenants
shall be deemed to be additional covenants and none of them shall affect or derogate from, or
relieve the Company from, its obligation to comply with any of the other covenants, conditions,
requirements or provisions of the Indenture or any other supplemental indenture.
(b) For the purposes of §2.10 of the Indenture and for the purposes of any modification of the
provisions of Part Three of this supplemental indenture, the covenants and provisions on the part
of the Company which are set forth or incorporated in said Part Three shall be for the benefit only
of the holders of the bonds of the 2040 Series. Such covenants and provisions shall remain in force
and be applicable only so long as any bonds of the 2040 Series shall be outstanding, and, subject
to the provisions of paragraph (2) of subdivision (c) of §10.01 of the Indenture, any such
covenants and provisions may be modified with respect to the bonds of the 2040 Series with the
consent, in writing or by vote at a bondholders’ meeting of the holders of sixty-six and two-thirds
per cent (66 2/3 %) of the principal amount of the bonds of the 2040 Series, at the time
outstanding and without the consent of the holders of any other bonds then outstanding under the
Indenture;
provided
that no such consent shall be effective to waive any past default under
such covenants and provisions, and its consequences, unless the consent of the holders of at least
a majority in principal amount of all bonds then outstanding under the Indenture is obtained. Such
covenants shall be deemed to be additional covenants and none of them shall affect or derogate
from, or relieve the Company from, its obligation to comply with any of the other covenants,
conditions, requirements or provisions of the Indenture or any other supplemental indenture.
SECTION 2.
All terms contained in this supplemental indenture shall, except as specifically
provided herein or except as the context may otherwise require, have the meanings given to such
terms in the Indenture.
12
SECTION 3.
In case any one or more of the provisions contained in this supplemental indenture
should be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision contained in this supplemental indenture,
and, to the extent, but only to the extent, that such provision is invalid, illegal or
unenforceable, this supplemental indenture shall be construed as if such provision had never been
contained herein.
SECTION 4.
The Trustee hereby accepts the trusts herein declared and provided upon the terms
and conditions in the Indenture set forth.
SECTION 5.
This supplemental indenture may be executed in several counterparts, each of which
shall be an original, and all collectively but one instrument.
SECTION 6.
In addition to the amendment provisions of the Indenture, the terms and conditions
of this supplemental indenture and the bonds of the 2040 Series may be modified, amended or
supplemented by the Company and the Trustee, without the consent of the holders of the bonds of the
2040 Series, and if not inconsistent with the Indenture, to cure ambiguities in this supplemental
indenture or the bonds of the 2040 Series, or correct defects or inconsistencies in the provisions
of this supplemental indenture or the bonds of the 2040 Series or to provide for such appropriate
additional provisions in this supplemental indenture or the bonds of the 2040 Series as are
necessary for certificated bonds to be issued in lieu of Global Securities or to reflect additional
provisions related to the issuance of Global Securities (including changes in the procedures of the
Depositary).
13
IN WITNESS WHEREOF, Duke Energy Carolinas, LLC, the party of the first part hereto, has caused
this supplemental indenture to be signed in its name by one of its Vice Presidents and its company
seal to be hereunto affixed, and the same to be attested by one of its Assistant Secretaries, and
The Bank of New York Mellon Trust Company, N.A., the party of the second part hereto, in token of
its acceptance of the trust hereby created, has caused this supplemental indenture to be signed in
its name by one of its Vice Presidents and its corporate seal to be hereunto affixed, and the same
to be attested by one of Vice Presidents, all as of the day and year first above written.
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DUKE ENERGY CAROLINAS, LLC
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By:
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/s/ David S. Maltz
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Name:
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David S. Maltz
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Title:
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Vice President and Secretary
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ATTEST:
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/s/ Robert T. Lucas III
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Name:
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Robert T. Lucas III
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Title:
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Assistant Secretary
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Signed, sealed, executed, acknowledged
and delivered by Duke Energy
Carolinas, LLC, in the presence of:
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/s/ Delcia S. Dunlap
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Delcia S. Dunlap
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/s/ Jennie M. Raine
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Jennie M. Raine
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The Bank of New York Mellon Trust Company, N.A., as Trustee
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By:
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/s/ Van K. Brown
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Name:
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Van K. Brown
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Title:
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Vice President
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ATTEST:
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/s/ Karen Z. Kelly
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Name:
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Karen Z. Kelly
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Title:
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Vice President
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Signed, sealed, executed, acknowledged
and delivered by The Bank of New York
Mellon Trust Company, N.A.,
in the presence of:
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/s/ Sabrina Jones
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Sabrina Jones
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/s/ Daya Jayaraj
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Daya Jayaraj
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15
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State of Georgia
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)
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ss.:
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County of Dekalb
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)
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Personally appeared before me, Sabrina Jones, and made oath that she saw Van K. Brown, a Vice
President, and Karen Z. Kelly, a Vice President, respectively, of The Bank of New York Mellon Trust
Company, N.A., sign, attest and affix hereto the corporate seal of said The Bank of New York Mellon
Trust Company, N.A., and, as the act and deed of said corporation, deliver the within written and
foregoing deed, and that she, with Daya Jayaraj, witnessed the execution thereof.
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/s/ Sabrina Jones
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Sabrina Jones
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Sworn and subscribed before me
this 19th day of November, 2009.
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/s/ David Dawes
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[SEAL]
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David Dawes
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Notary Public
Commission Expires August 22, 2010
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State of Georgia
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)
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)
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ss.:
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County of Dekalb
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)
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I, David
Dawes, a Notary Public in and for the State and County aforesaid, certify that Karen Z. Kelly personally came before me this day and acknowledged that she is a Vice President of The Bank
of New York Mellon Trust Company, N.A., a national banking association, and that, by authority duly
given and as the act of the corporation, the foregoing instrument was signed in its name by one of
its Vice Presidents, sealed with its corporate seal, and attested by herself as one of its Vice
Presidents.
Witness may hand and official seal, this 19th day of November, 2009.
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/s/ David Dawes
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[SEAL]
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David Dawes
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Notary Public
Commission Expires August 22, 2010
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16
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State of North Carolina
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)
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ss.:
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County of Mecklenburg
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)
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I, Patricia C. Ross, a notary public of Mecklenburg County, North Carolina, certify that Delcia S.
Dunlap personally appeared before me this day, and being duly sworn, stated that in her presence
David S. Maltz executed the foregoing instrument, and that she, with Jennie M. Raine, witnessed the
execution thereof.
Witness my hand and official seal, this the 19
th
day of November, 2009.
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/s/ Delcia S. Dunlap
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Delcia S. Dunlap
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[SEAL]
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/s/ Patricia C. Ross
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Name:
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Patricia C. Ross
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Notary Public
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My Commission Expires 10-17-2014
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State of North Carolina
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)
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)
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ss.:
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County of Mecklenburg
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)
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I, Patricia C. Ross, a Notary Public in and for the State and County aforesaid, certify that Robert
T. Lucas III personally came before me this day and acknowledged that he is an Assistant Secretary
of Duke Energy Carolinas, LLC, a North Carolina limited liability company, and that, by authority
duly given and as the act of the company, the foregoing instrument was signed in its name by one of
its Vice Presidents, sealed with its seal, and attested by himself as one of its Assistant
Secretaries.
Witness my hand and official seal, this the 19th day of November, 2009.
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/s/ Patricia C. Ross
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Name:
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Patricia C. Ross
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Notary Public
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[SEAL]
My Commission Expires 10-17-2014
17
EXHIBIT A
FORM OF DUKE ENERGY CAROLINAS, LLC
FIRST AND REFUNDING MORTGAGE BOND, 5.30% SERIES DUE 2040
[FACE SIDE OF BOND]
[DEPOSITORY LEGEND, IF APPLICABLE]
DUKE ENERGY CAROLINAS, LLC
FIRST AND REFUNDING MORTGAGE BOND,
5.30% SERIES DUE 2040
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No.
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$
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CUSIP No.
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26442CAH7
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ISIN
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US26442CAH79
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Duke Energy Carolinas, LLC, a North Carolina limited liability company (hereinafter called the
“Company”), for value received, hereby promises to pay to
or registered assigns,
the principal sum of
Dollars on February 15, 2040 in any coin or currency of the
United States of America which at the time of payment shall be legal tender for the payment of
public and private debts, at the office or agency of the Company in the Borough of Manhattan, The
City of New York, and to pay interest thereon at said office or agency from the interest payment
date next preceding the date hereof to which interest on outstanding bonds of this series has been
paid (unless the date hereof is prior to August 15, 2010, in which case from November 19, 2009, and
unless the date hereof is subsequent to a record date (as defined below) and prior to the next
succeeding February 15 or August 15, in which case from the next succeeding February 15 or August
15, as the case may be), at the rate of 5.30% per annum, in like coin or currency, semi-annually on
February 15 and August 15 in each year, commencing August 15, 2010, until the principal hereof
shall become due and payable. Such interest payments shall be made to the person in whose name this
bond is registered at the close of business on the February 1 or August 1, whether or not a
business day, preceding each semi-annual interest payment date (a “record date”) (subject to
certain exceptions provided in the Indenture hereinafter mentioned), at his last address as it
shall appear upon the bond register of the Company.
The provisions of this bond are continued on the reverse hereof and such continued provisions
shall for all purposes have the same effect as though fully set forth in this place.
This bond shall not become or be valid or obligatory for any purpose until the Trustee shall
have signed the form of certificate endorsed hereon.
A-1
IN WITNESS WHEREOF, the Company has caused this instrument to be signed in its name by its
President or one of its Vice Presidents, manually or by facsimile signature, and its company seal
to be hereto affixed, or a facsimile thereof to be hereon engraved, lithographed or printed, and to
be attested by the manual or facsimile signature of its Secretary or one of its Assistant
Secretaries.
Dated:
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DUKE ENERGY CAROLINAS, LLC
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By:
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Name:
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Title:
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CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds, of the series designated therein, described in the
within-mentioned Indenture.
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The Bank of New York Mellon Trust Company,
N.A., as Trustee
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By:
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Authorized Signatory
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A-2
[REVERSE SIDE OF BOND]
This bond is one of the bonds of a series, designated specially as First and Refunding
Mortgage Bonds, 5.30% Series due 2040, of an authorized issue of bonds of the Company, without
limit as to aggregate principal amount, designated generally as First and Refunding Mortgage Bonds,
all issued and to be issued under and equally and ratably secured by a First and Refunding Mortgage
dated as of December 1, 1927, duly executed by Duke Power Company, a New Jersey corporation
(hereinafter called the “New Jersey Company”), to Guaranty Trust Company of New York, as Trustee
(The Bank of New York Mellon Trust Company, N.A., as successor trustee), as supplemented and
modified by indentures supplemental thereto, including a supplemental indenture dated November 19,
2009 providing for said series (said First and Refunding Mortgage as so supplemented and modified
being hereinafter referred to as the “Indenture”), to which Indenture reference is made for a
description of the property mortgaged, the nature and extent of the security, the rights of the
holders of the bonds in respect thereof, the terms and conditions upon which the bonds are secured
and the restrictions subject to which additional bonds secured thereby may be issued. To the extent
permitted by, and as provided in, the Indenture, modifications or alterations of the Indenture, or
of any indenture supplemental thereto, and of the rights and obligations of the Company and of the
holders of the bonds, may be made with the consent of the Company by the affirmative vote, or with
the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds then
outstanding, and by the affirmative vote, or with the written consent, of the holders of not less
than 66 2/3% in principal amount of the bonds of any series then outstanding and affected by such
modification or alteration, in case one or more but less than all of the series of bonds then
outstanding under the Indenture are so affected, evidenced, in each case, as provided in the
Indenture;
provided
that any supplemental indenture may be modified in accordance with the
provisions contained therein for its modification; and provided, further, that no such modification
or alteration shall be made which will affect the terms of payment of the principal of, or interest
or premium on, this bond, or the right of any bondholder to institute suit for the enforcement of
any such payment on or after the respective due dates expressed in this bond, or reduce the
percentage required for the taking of any such action. Any such affirmative vote of, or written
consent given by, any holder of this bond is binding upon all subsequent holders hereof as provided
in the Indenture.
In case an event of default as defined in the Indenture shall occur, the principal of all the
bonds outstanding thereunder may become or be declared due and payable at the time, in the manner
and with the effect provided in the Indenture.
The bonds of this series may be redeemed at the option of the Company, in whole or in part at
any time and from time to time, at a redemption price equal to the greater of (1) 100% of the
principal amount of the bonds of this series to be redeemed and (2) the sum of the present values
of the remaining scheduled payments of principal and interest on such bonds (exclusive of interest
accrued to the redemption date), discounted to the redemption date on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points, plus,
in either case, accrued and unpaid interest on the principal amount being redeemed to such
redemption date.
“Business day” means any day other than a day on which banks in New York City are required or
authorized to be closed.
A-3
“Comparable Treasury Issue” means the United States Treasury security or securities selected
by the Quotation Agent as having an actual or interpolated maturity comparable to the
remaining term of the bonds of this series to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a
comparable maturity to the remaining term of such bonds.
“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of
the Reference Treasury Dealer Quotations for such redemption date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent
obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such
quotations.
“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.
“Reference Treasury Dealer” means each of Banc of America Securities LLC, Citigroup Global
Markets Inc. and Morgan Stanley & Co. Incorporated and a Primary Treasury Dealer (as defined
herein) selected by Wells Fargo Securities, LLC, plus one other financial institution
appointed by the Company at the time of any redemption or their respective affiliates or
successors which are primary U.S. Government securities dealers; provided, however, that if
any of the foregoing or their affiliates or successors shall cease to be a primary U.S.
Government securities dealer in the United States (a “Primary Treasury Dealer”), the Company
shall substitute therefor another Primary Treasury Dealer.
“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Quotation Agent, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer
at 5:00 p.m., New York City time, on the third business day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the
semi-annual equivalent yield to maturity or interpolated (on a day count basis) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such
redemption date.
The bonds of this series are also subject to redemption for the Replacement Fund for bonds of
this series provided for in the supplemental indenture dated as of November 19, 2009, providing for
this series, or upon application of moneys arising from a taking of any of the mortgaged property
by eminent domain or similar action, at any time or from time to time prior to maturity, at 100% of
their principal amount, in each case together with accrued interest up to, but not including, the
date fixed for redemption.
A-4
Redemption is in every case to be effected at the office or agency of the Company in the
Borough of Manhattan, The City of New York, upon at least thirty, but not more than sixty, days’
prior notice, given by mail as more fully provided in the Indenture.
If this bond or any portion hereof ($2,000 and integral multiples of $1,000 in excess thereof)
is called for redemption and payment is duly provided, this bond or such portion thereof shall
cease to bear interest from and after the date fixed for such redemption.
This bond is transferable, as provided in the Indenture, by the registered owner hereof in
person or by duly authorized attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, upon surrender and cancellation of this bond, and thereupon a new
bond of the same series and of like aggregate principal amount will be issued to the transferee in
exchange herefor as provided in the Indenture; or the registered owner of this bond, at his option,
may surrender the same for cancellation at said office or agency of the Company and receive in exchange herefor the same aggregate principal amount
of bonds of the same series of authorized denominations; all subject to the terms of the Indenture
but without payment of any charges other than a sum sufficient to reimburse the Company for any
stamp taxes or other governmental charges incident thereto.
This bond is a company obligation only and no recourse whatsoever, either directly or through
the Company or any trustee, receiver, assignee or any other person, shall be had for the payment of
the principal of or premium, if any, or interest on this bond, or for the enforcement of any claim
based hereon, or otherwise in respect hereof or of the Indenture, against any promoter, subscriber
to the capital stock, incorporator, or any past, present or future stockholder, member, officer or
director of the Company as such, or of any successor or predecessor corporation or entity, whether
by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any
assessment, penalty, subscription or otherwise, any and all such liability of promoters,
subscribers, incorporators, stockholders, members, officers and directors being waived and released
by each successive holder hereof by the acceptance of this bond, and as a part of the consideration
for the issue hereof, and being likewise waived and released by the terms of the Indenture.
[END OF BOND FORM]
A-5
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:
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TEN COM—as tenants in common
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UNIF GIFT MIN ACT-___Custodian ___
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(Cust)
(Minor)
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TEN ENT —as tenants by the entireties
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JT TEN—as joint tenants with rights of
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under Uniform Gifts to
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survivorship and not as tenants in common
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Minors Act
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(State)
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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 bond and all rights thereunder, hereby irrevocably constituting and appointing
agent to transfer said bond on the books of the Company, 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.
Signature Guarantee:
SIGNATURE GUARANTEE
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Trustee, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-7
Exhibit 99.1
Execution Copy
DUKE ENERGY CAROLINAS, LLC
FIRST AND REFUNDING MORTGAGE BONDS,
$750,000,000 5.30% SERIES DUE 2040
UNDERWRITING AGREEMENT
November 16, 2009
Banc of America Securities LLC
One Bryant Park
New York, NY 10036
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
and
Wells Fargo Securities, LLC
301 S. College Street
Charlotte, NC 28288
As Representatives of the several Underwriters
Ladies and Gentlemen:
1.
Introductory
. DUKE ENERGY CAROLINAS, LLC, a North Carolina limited liability company (the
“Company”), proposes, subject to the terms and conditions stated herein, to issue and sell
$750,000,000 aggregate principal amount of First and Refunding Mortgage Bonds, 5.30% Series due
2040 (the “Bonds”), to be issued under and secured by a First and Refunding Mortgage, dated as of
December 1, 1927 (the “Original Mortgage”), between the Company and The Bank of New York Mellon
Trust Company, N.A., as successor trustee (the “Trustee”), as amended and supplemented by various
supplemental indentures, including the Ninetieth Supplemental Indenture, to be dated as of November
19, 2009 (the Original Mortgage, as so amended and supplemented, being hereinafter called the
“Mortgage”). Banc of America Securities LLC, Citigroup Global Markets Inc., Morgan Stanley & Co.
Incorporated and Wells Fargo Securities, LLC (the “Representatives”) are acting as representatives
of the several underwriters named in Schedule A hereto (together with the Representatives, the
“Underwriters”). The Company understands that the several Underwriters propose to offer the Bonds
for sale upon the terms and conditions contemplated by (i) this Agreement and (ii) the
Base Prospectus, the Preliminary Prospectus and any Permitted Free Writing Prospectus (each as
defined below) issued at or prior to the Applicable Time (as defined below) (the documents referred
to in the foregoing subclause (ii) are referred to herein as the “Pricing Disclosure Package”).
2.
Representations and Warranties of the Company.
As of the date hereof, as of the Applicable
Time (as defined below) and as of the Closing Date the Company represents and warrants to, and
agrees with, the several Underwriters that:
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(a)
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Registration statement (No. 333-146483-03), including a prospectus, relating to
the Bonds and certain other securities 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, became effective upon filing with the Commission
pursuant to Rule 462 of the rules and regulations of the Commission under the 1933 Act
(the “1933 Act Regulations”), and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose or pursuant
to Section 8A of the 1933 Act has been initiated or threatened by the Commission (if
prepared, any preliminary prospectus supplement specifically relating to the Bonds
immediately prior to the Applicable Time included in such registration statement or
filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations being
hereinafter called a “Preliminary Prospectus”); the term “Registration Statement” means
the registration statement as deemed revised pursuant to Rule 430B(f)(1) of the 1933
Act Regulations on the date of such registration statement’s effectiveness for purposes
of Section 11 of the 1933 Act, as such section applies to the Company and the
Underwriters for the Bonds pursuant to Rule 430B(f)(2) of the 1933 Act Regulations (the
“Effective Date”), 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; the term “Base
Prospectus” means the prospectus filed with the Commission on the date hereof by the
Company; and the term “Prospectus” means the Base Prospectus together with the
prospectus supplement specifically relating to the Bonds prepared in accordance with
the provisions of Rule 430B and promptly filed after execution and delivery of this
Agreement pursuant to Rule 430B or Rule 424(b) of the 1933 Act Regulations; any
information included in such Prospectus that was omitted from the Registration
Statement at the time it became effective but that is deemed to be a part of and
included in such registration statement pursuant to Rule 430B is referred to as “Rule
430B Information;” and any reference herein to any Registration Statement, Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein, prior to the date hereof; 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;
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and any reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company 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). For
purposes of this Agreement, the term “Applicable Time” means 4:00 p.m. (New York
City Time) on the date hereof.
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(b)
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The Registration Statement, the Permitted Free Writing Prospectus specified on
Schedule B hereto, the Preliminary Prospectus and the Prospectus conform, and any
amendments or supplements thereto will conform, in all material respects to the
requirements of the 1933 Act and the 1933 Act Regulations; and (A) the Registration
Statement, as of its original effective date and at each deemed effective date with
respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations,
and at the Closing Date (as defined herein), did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (B) (i) the
Pricing Disclosure Package, as of the Applicable Time, did not, (ii) the Prospectus and
any amendment or supplement thereto, as of their dates, will not, and (iii) the
Prospectus as of the Closing Date will not, include any 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, except that
the Company 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 Company by the Representatives on behalf of the
Underwriters specifically for use in the Registration Statement, the Permitted Free
Writing Prospectus, the Preliminary Prospectus or the Prospectus.
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(c)
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Any Permitted Free Writing Prospectus specified on Schedule B hereto as of its
issue date and at all subsequent times through the completion of the public offer and
sale of the Bonds or until any earlier date that the Company notified or notifies the
Underwriters as described in Section 5(f) did not, does not and will not include any
information that conflicts with the information (not superseded or modified as of the
Effective Date) contained in the Registration Statement, any Preliminary Prospectus or
the Prospectus.
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(d)
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At the earliest time the Company or another offering participant made a bona
fide offer (within the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the
Bonds, the Company was not an “ineligible issuer” as defined in Rule 405 of the 1933
Act Regulations. The Company is, and was at the time of the initial filing of the
Registration Statement, eligible to use Form S-3 under the 1933 Act.
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(e)
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The documents incorporated or deemed to be incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, at the time
they were filed or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the “1934 Act Regulations”),
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and, when read together with the other information in the Prospectus, (a) at the
time the Registration Statement became effective, (b) at the Applicable Time and (c)
on the Closing Date did not, 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 were
made, not misleading.
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(f)
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The Company’s Annual Report filed on Form 10-K meets the conditions specified
in General Instruction I(1) of the General Instructions for Form 10-K, and the
Company’s most recent Quarterly Report filed on Form 10-Q meets the conditions
specified in General Instruction H(1) of the General Instructions for Form 10-Q.
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(g)
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The compliance by the Company with all of the provisions of this Agreement has
been duly authorized by all necessary limited liability company action 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 Company is a party or by which it is bound or to which any of
its property or assets is subject that would have a material adverse effect on the
business, financial condition or results of operations of the Company, nor will such
action result in any violation of the provisions of the Articles of Organization, the
Limited Liability Company Operating Agreement or other governing document of the
Company or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its property that would
have a material adverse effect on the business, financial condition or results of
operations of the Company; 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 Company of the transactions contemplated by this Agreement,
except for authorization by the North Carolina Utilities Commission and The Public
Service Commission of South Carolina and the registration under the 1933 Act of the
Bonds, qualification under the Trust Indenture Act of 1939 (the “1939 Act”) 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 Bonds by the Underwriters.
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(h)
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This Agreement has been duly authorized, executed and delivered by the Company.
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(i)
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The Original Mortgage has been duly authorized, executed and delivered by the
Company and duly qualified under the 1939 Act and the Ninetieth Supplemental Indenture,
to be dated as of November 19, 2009 has been duly authorized and when executed and
delivered by the Company and, assuming the due authorization, execution and delivery
thereof by the Trustee, the Mortgage constitutes a valid and legally binding instrument
of the Company enforceable against the Company in accordance with its terms, subject to
the qualifications
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that the enforceability of the Company’s obligations under the Mortgage may be
limited by (x) the laws of the States of North Carolina and South Carolina (in which
states all physical property of the Company subject to the Mortgage is located
except for certain interconnection lines) with respect to or affecting the remedies
to enforce the security provided by the Mortgage, which laws do not make inadequate
the remedies necessary for the realization of the benefits of such security, and 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), and (y) that the provisions of the Mortgage subjecting to the lien
thereof the revenues and income from the mortgaged property may not be effective
prior to the delivery or taking of possession of such revenues or income or of the
mortgaged property by or on behalf of the Trustee.
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(j)
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The Bonds have been duly authorized and when executed by the Company, and when
authenticated by the Trustee, in the manner provided in the Mortgage and delivered
against payment therefor, will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and are entitled to the benefits and security afforded
by the Mortgage in accordance with the terms of the Mortgage and the Bonds, except as
set forth in paragraph (i) above.
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(k)
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Any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument set forth on Annex A hereto or filed or incorporated by reference as an
exhibit to the Registration Statement or the Annual Report on Form 10-K of the Company
for the fiscal year ended December 31, 2008 are all indentures, mortgages, deeds of
trust, loan agreements or other agreements or instruments that are material to the
Company and its subsidiaries taken as a whole.
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(l)
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The Company has no “significant subsidiaries” within the meaning of Rule 405 of
the 1933 Act Regulations.
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3.
Purchase, Sale and Delivery of Bonds.
On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Company, at a purchase price of 98.698% of the principal amount of the Bonds plus
accrued interest from November 19, 2009 (and in the manner set forth below), the respective
principal amount of Bonds set forth opposite the name of each Underwriter on Schedule A hereto plus
the respective principal amount of additional Bonds which each such Underwriter may become
obligated to purchase pursuant to the provisions of Section 8 hereof. The Underwriters hereby
agree to reimburse the Company in an aggregate amount equal to $937,500, including in respect of
expenses incurred by the Company in connection with the offering of the Bonds.
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Payment of the purchase price for the Bonds to be purchased by the Underwriters and the
reimbursement shall be made at the offices of Robinson, Bradshaw & Hinson, P.A., 101 North Tryon
Street, Suite 1900, Charlotte, North Carolina 28246, or at such other place as shall be mutually
agreed upon by the Representatives and the Company, at 10:00 a.m., New York City time, on November
19, 2009 or such other time and date as shall be agreed upon in writing by the Company and the
Representatives (the “Closing Date”). All other documents referred to herein that are to be
delivered at the Closing Date shall be delivered at that time at the offices of Sidley Austin LLP,
787 Seventh Avenue, New York, NY 10019. Payment shall be made to the Company by wire transfer in
immediately available funds, payable to the order of the Company against delivery of the Bonds, in
fully registered form, to you or upon your order. The Bonds shall be delivered in the form of one
or more global certificates in aggregate denomination equal to the aggregate principal amount of
the Bonds upon original issuance, and registered in the name of Cede & Co., as nominee for The
Depository Trust Company (“DTC”).
4.
Offering by the Underwriters.
It is understood that the several Underwriters propose to
offer the Bonds for sale to the public as set forth in the Pricing Disclosure Package and the
Prospectus.
5.
Covenants of the Company.
The Company covenants and agrees with the several Underwriters
that:
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(a)
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The Company will cause any Preliminary Prospectus and the Prospectus to be
filed pursuant to, and in compliance with, Rule 424(b) of the 1933 Act Regulations, and
advise the Underwriters promptly of the filing of any amendment or supplement to the
Registration Statement, any Preliminary Prospectus or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement, and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
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(b)
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If at any time when a prospectus relating to the Bonds (or the notice referred
to in Rule 173(a) of the 1933 Act Regulations) is required to be delivered under the
1933 Act any event occurs as a result of which the Pricing Disclosure Package or 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 Pricing Disclosure Package or the
Prospectus to comply with the 1933 Act, the Company 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.
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(c)
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The Company, during the period when a prospectus relating to the Bonds is
required to be delivered under the 1933 Act, will timely file all documents required to
be filed with the Commission pursuant to Section 13 or 14 of the 1934 Act.
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(d)
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Without the prior consent of the Underwriters, the Company has not made and
will not make any offer relating to the Bonds that would constitute a “free writing
prospectus” as defined in Rule 405 of the 1933 Act Regulations, other than a Permitted
Free Writing Prospectus; each Underwriter, severally and not jointly, represents and
agrees that, without the prior consent of the Company, it has not made and will not
make any offer relating to the Bonds that would constitute a “free writing prospectus”
as defined in Rule 405 of the 1933 Act Regulations, other than a Permitted Free Writing
Prospectus or a free writing prospectus that is not required to be filed by the Company
pursuant to Rule 433 of the 1933 Act Regulations; any such free writing prospectus
(which shall include the pricing term sheet discussed in Section 5(e) below), the use
of which has been consented to by the Company and the Underwriters, is listed on
Schedule B and herein is called a “Permitted Free Writing Prospectus.” The Company
represents that it has treated or agrees that it will treat each Permitted Free Writing
Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has
complied and will comply with the requirements of Rule 433 applicable to any Permitted
Free Writing Prospectus, including timely filing with the Commission where required,
legending and record keeping.
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(e)
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The Company agrees to prepare a pricing term sheet specifying the terms of the
Bonds not contained in any Preliminary Prospectus, substantially in the form of
Schedule C hereto and approved by the Representatives on behalf of the Underwriters,
and to file such pricing term sheet as an “issuer free writing prospectus” pursuant to
Rule 433 of the 1933 Act Regulations prior to the close of business two business days
after the date hereof.
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(f)
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The Company agrees that if at any time following the issuance of a Permitted
Free Writing Prospectus any event occurs as a result of which such Permitted Free
Writing Prospectus would conflict with the information (not superseded or modified as
of the Effective Date) in the Registration Statement, the Pricing Disclosure Package or
the Prospectus or would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in light of the
circumstances then prevailing, not misleading, the Company will give prompt notice
thereof to the Underwriters and, if requested by the Underwriters, will prepare and
furnish without charge to each Underwriter a free writing prospectus or other document,
the use of which has been consented to by the Underwriters, which will correct such
conflict, statement or omission.
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(g)
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The Company 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 Rule 158 under
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 Company’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 Company’s fiscal quarter next following the date of this Agreement.
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(h)
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The Company will furnish to you, without charge, copies of the Registration
Statement (three of which will include all exhibits other than those incorporated by
reference), the Pricing Disclosure Package and 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.
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(i)
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The Company will arrange or cooperate in arrangements for the qualification of
the Bonds 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 the Company shall not be required to qualify as a foreign
limited liability company or to file any general consents to service of process under
the laws of any state where it is not now so subject.
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(j)
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The Company will pay all expenses incident to the performance of its
obligations under this Agreement including (i) the printing and filing of the
Registration Statement and the printing of this Agreement and any Blue Sky Survey, (ii)
the preparation and printing of certificates for the Bonds, (iii) the issuance and
delivery of the Bonds as specified herein, (iv) the fees and disbursements of counsel
for the Underwriters in connection with the qualification of the Bonds under the
securities laws of any jurisdiction in accordance with the provisions of Section 5(i)
and in connection with the preparation of the Blue Sky Survey, such fees not to exceed
$5,000, (v) the printing and delivery to the Underwriters, in quantities as hereinabove
referred to, of copies of the Registration Statement and any amendments thereto, of any
Preliminary Prospectus, of the Prospectus, of any Permitted Free Writing Prospectus and
any amendments or supplements thereto, (vi) any fees charged by independent rating
agencies for rating the Bonds, (vii) any fees and expenses in connection with the
listing of the Bonds on the New York Stock Exchange, (viii) any filing fee required by
the Financial Industry Regulatory Authority (ix) the costs of any depository
arrangements for the Bonds with DTC or any successor depositary and (x) the costs and
expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Bonds, including,
without limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging expenses of
the Underwriters and officers of the Company and any such consultants, and the cost of
any aircraft chartered in connection with the road show; provided, however, the
Underwriters shall reimburse a portion of the costs and expenses referred to in this
clause (x).
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6.
Conditions of the Obligations of the Underwriters.
The obligations of the several
Underwriters to purchase and pay for the Bonds will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the accuracy of the statements
of officers of the Company made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions precedent:
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(a)
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The Prospectus shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for filing by the 1933 Act
Regulations and in accordance herewith and each Permitted Free Writing Prospectus shall
have been filed by the Company with the Commission within the applicable time periods
prescribed for such filings by, and otherwise in compliance with, Rule 433 of the 1933
Act Regulations.
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(b)
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On or after the Applicable Time and 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 or pursuant to Section 8A of the 1933 Act shall have
been instituted or, to the knowledge of the Company or you, shall be threatened by the
Commission.
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(c)
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On or after the Applicable Time and prior to the Closing Date, the rating
assigned by Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services to
any debt securities or preferred stock of the Company as of the date of this Agreement
shall not have been lowered.
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(d)
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Since the respective most recent dates as of which information is given in the
Pricing Disclosure Package and the Prospectus and up to the Closing Date, there shall
not have been any material adverse change in the condition of the Company, 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 Company other than transactions contemplated by the Pricing
Disclosure Package and the Prospectus and transactions in the ordinary course of
business, the effect of which in your reasonable judgment is so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Bonds on the terms and in the manner contemplated by the Pricing
Disclosure Package and the Prospectus.
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(e)
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You shall have received an opinion of Robert T. Lucas III, Esq., Associate
General Counsel of the Company, dated the Closing Date, to the effect that:
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(i)
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The Company has been duly organized and is validly existing as
a limited liability company in good standing under the law of the State of
North Carolina, with power and authority (limited liability company and other)
to own its properties and conduct its business as described in the Pricing
Disclosure Package and the Prospectus and to enter into and perform its
obligations under this Agreement.
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(ii)
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The Company 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 condition or results of
operations of the Company.
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(iii)
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The Registration Statement became effective upon filing with
the Commission pursuant to Rule 462 of the 1933 Act Regulations, and, to the
best of such counsel’s knowledge, 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.
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(iv)
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The descriptions in the Registration Statement, the Pricing
Disclosure Package and the Prospectus of any legal or governmental proceedings
are accurate and fairly present the information required to be shown, and such
counsel does not know of any litigation or any legal or governmental proceeding
instituted or threatened against the Company or any of its properties that
would be required to be disclosed in the Registration Statement, the Pricing
Disclosure Package or the Prospectus and is not so disclosed.
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(v)
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This Agreement has been duly authorized, executed and delivered
by the Company.
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(vi)
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The issue and sale of the Bonds by the Company, the execution,
delivery and performance by the Company of this Agreement and the execution and
delivery of the Mortgage by the Company will not breach or result in a default
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument filed or incorporated by reference as an exhibit to the Annual
Report on Form 10-K of the Company for the fiscal year ended December 31, 2008
or identified on Annex A hereto furnished to such counsel by the Company, which
the Company has represented lists all indentures, mortgages, deeds of trust,
loan agreements or other agreements or instruments that are material to the
Company, nor will such action violate the Articles of Organization or the
Limited Liability Company Operating Agreement of the Company or any federal
statute or any rule or regulation that has been issued pursuant to any federal
statute or any order known to such counsel issued pursuant to any federal
statute, by any court or governmental agency or body having jurisdiction over
the Company or any of its properties.
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(vii)
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The North Carolina Utilities Commission and The Public Service
Commission of South Carolina have issued appropriate orders with respect to the
issuance and sale of the Bonds in accordance with this Agreement, and, to the
best of such counsel’s knowledge, such orders are still in effect; the issuance
and sale of the Bonds to the Underwriters are in conformity with the terms of
such orders.
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(viii)
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The Mortgage has been duly authorized, executed and delivered by the Company
and qualified under the 1939 Act, and, assuming the due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and legally
binding instrument of the Company, enforceable against
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the Company in accordance with its terms, except (x) as the same may be
limited by the laws of the States of North Carolina and South Carolina (in
which States such counsel is advised all physical property of the Company
subject to the Mortgage is located except for certain interconnection lines)
with respect to or affecting the remedies to enforce the security provided
by the Mortgage, which laws do not, in the opinion of such counsel, make
inadequate the remedies necessary for the realization of the benefits of
such security, and (y) that the provisions of the Mortgage subjecting to the
lien thereof the revenues and income from the mortgaged property may not be
effective prior to the delivery or taking of possession of such revenues or
income or of the mortgaged property by or on behalf of the Trustee.
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(ix)
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The Bonds have been duly authorized, executed and issued by the
Company and, when the same have been authenticated by the Trustee as specified
in the Mortgage and delivered against payment therefor, will constitute valid
and legally binding obligations of the Company enforceable against the Company
in accordance with their terms, and are entitled to the benefits and security
afforded by the Mortgage in accordance with the terms of the Mortgage and the
Bonds, except as set forth in paragraph (viii) above.
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(x)
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The Company has good title to all properties owned by it,
subject only (a) to the lien of the Mortgage, (b) to permitted encumbrances as
defined in the Mortgage, (c) to minor exceptions and defects which do not, in
the aggregate, in the opinion of such counsel, materially interfere with the
use by the Company of such properties for the purposes for which they are held,
materially detract from the value of said properties or in any material way
impair the security afforded by the Mortgage, and (d) in the case of the
Company’s existing hydroelectric plants, to provisions of licenses issued by
the Federal Power Commission or the Federal Energy Regulatory Commission and to
the provisions of the Federal Power Act.
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(xi)
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The Mortgage complies as to form with all applicable laws of
the states wherein the properties subjected or intended to be subjected to the
lien of the Mortgage are located, including all applicable recording laws, and
constitutes a valid, direct first mortgage lien on all properties and
franchises purported to be owned by the Company, except such property as is
specifically excepted from the lien thereof, subject only to the liens, charges
and encumbrances stated in paragraph (x) above; all fixed electric properties
hereafter acquired by the Company will, upon such acquisition, become subject
to the lien of the Mortgage, subject, however, to liens or charges of the
character permitted to exist by the Mortgage, and to liens, if any, existing or
placed on such property at the time of the acquisition thereof by the Company,
and the description of such property and franchises in the Mortgage is adequate
to constitute a lien on such property and franchises of the Company except as
aforesaid.
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(xii)
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The Original Mortgage and the supplemental indentures thereto,
other than the Ninetieth Supplemental Indenture to be dated as of November 19,
2009 have been duly recorded or filed for recordation in all such offices as
are necessary to perfect and to preserve and protect the lien of the Mortgage
upon the property intended to be subjected to the lien thereof, and upon the
filing and recording of the Ninetieth Supplemental Indenture to be dated as of
November 19, 2009 no other recording or any periodic or other refiling or
rerecording of the Mortgage is or will be required in order to perfect and to
preserve and protect the lien of the Mortgage upon such property, and there are
no mortgage, recording or other taxes required to be paid in connection with
such filing and recording or in connection with the issuance of the Bonds other
than customary filing and recording fees.
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(xiii)
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No consent, approval, authorization, order, registration or qualification of
or with any federal, North Carolina or South Carolina governmental agency or
body or, to such counsel’s knowledge, any federal or North Carolina court is
required for the issue and sale of the Bonds by the Company and the compliance
by the Company with all of the provisions of this Agreement, except for the
registration under the 1933 Act of the Bonds, 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 Bonds by the Underwriters.
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Such counsel may state that his opinions in paragraphs (viii) and (ix) are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally, and by general principles of
equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and
to an implied covenant of good faith and fair dealing. Such counsel may also state that his
opinion in paragraph (x) is based upon the Company’s title insurance. Such counsel shall state
that nothing has come to his attention that has caused him to believe that each document
incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, when filed, was not, on its face, appropriately responsive, in all material respects,
to the requirements of the 1934 Act and the 1934 Act Regulations. Such counsel shall also state
that nothing has come to his attention that has caused him to believe that (i) the Registration
Statement, including the Rule 430B Information, as of its effective date and at each deemed
effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act
Regulations, 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, (ii) the
Pricing Disclosure Package at the Applicable Time contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or (iii) that the Prospectus
or any amendment or supplement thereto, 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 any 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
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opinion, he does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in or incorporated by reference into the Registration Statement, the
Pricing Disclosure Package or the Prospectus and does not express any opinion or belief as to (i)
the financial statements or other financial data contained or incorporated by reference therein,
(ii) the statement of the eligibility and qualification of the Trustee included in the Registration
Statement (the “Form T-1”) or (iii) the information in the Prospectus under the caption “Book-Entry
System.”
In rendering the foregoing opinion, such counsel may state that he does not express any
opinion concerning any law other than the law of the State of North Carolina and may rely as to all
matters of the law of the State of South Carolina on the opinion of Karol P. Mack, Esq., Associate
General Counsel of the Corporation, and Robinson, McFadden & Moore, P.C. (or other appropriate
counsel reasonably satisfactory to the Representatives, which may include the Corporation’s other
“in-house” counsel). Such counsel may also state that he has relied as to certain factual matters
on information obtained from public officials, officers of the Company and other sources believed
by him to be responsible.
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(f)
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You shall have received an opinion of Robinson, Bradshaw & Hinson, P.A.,
counsel to the Company, dated the Closing Date, to the effect that:
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(i)
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The statements (i) under the caption “Description of the First
and Refunding Mortgage Bonds” in the Base Prospectus and (ii) under the caption
“Description of the Mortgage Bonds” in the Pricing Disclosure Package and the
Prospectus, insofar as such statements purport to summarize certain provisions
of the Mortgage and the Bonds, fairly summarize such provisions in all material
respects.
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(ii)
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No Governmental Approval, which has not been obtained or taken
and is not in full force and effect, is required to authorize, or is required
for, the execution or delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby.
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(iii)
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The Company is not and, solely after giving effect to the
offering and sale of the Bonds and the application of the proceeds thereof as
described in the Prospectus, will not be subject to registration and regulation
as an “investment company” as such term is defined in the Investment Company
Act of 1940, as amended.
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(iv)
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The execution and delivery by the Company of this Agreement and
the consummation by the Company of the transactions contemplated thereby,
including the issuance and sale of the Bonds, will not violate or conflict
with, or result in any contravention of, any Applicable Law of the State of
North Carolina.
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(v)
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The statements in the Pricing Disclosure Package and the
Prospectus under the caption “Underwriting,” insofar as such statements purport
to
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summarize certain provisions of this Agreement, fairly summarize such
provisions in all material respects.
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In rendering the foregoing opinions, Robinson, Bradshaw & Hinson, P.A.
may state that (i) “Governmental Approval” means any consent, approval,
license, authorization or validation of, or filing, qualification or
registration with, any Governmental Authority required to be made or
obtained by the Company pursuant to Applicable Laws, other than any consent,
approval, license, authorization, validation, filing, qualification or
registration that may have become applicable as a result of the involvement
of any party (other than the Company) in the transactions contemplated by
this Agreement or because of such parties’ legal or regulatory status or
because of any other facts specifically pertaining to such parties; (ii)
“Governmental Authorities” means any court, regulatory body, administrative
agency or governmental body of the State of North Carolina having
jurisdiction over the Company under Applicable Laws and the Federal Energy
Regulatory Commission, but excluding the North Carolina Utilities
Commission; and (iii) “Applicable Laws” means those laws, rules and
regulations of the State of North Carolina that, in such counsel’s
experience, are normally applicable to transactions of the type contemplated
by this Agreement (other than state securities or blue sky laws, antifraud
laws, the rules and regulations of the Financial Industry Regulatory
Authority, the North Carolina Public Utilities Act and the rules and
regulations of the North Carolina Utilities Commission), but without such
counsel having made any special investigation as to the applicability of any
specific law, rule or regulation, and the Federal Power Act and the rules
and regulations of the Federal Energy Regulatory Commission thereunder. In
addition, such counsel may state that they have relied as to certain factual
matters on information obtained from public officials, officers and
representatives of the Company and that the signatures on all documents
examined by them are genuine, assumptions which such counsel have not
independently verified.
You shall also have received a statement of Robinson, Bradshaw &
Hinson, P.A., dated the Closing Date, to the effect that:
(i) no facts have come to such counsel’s attention that have caused
such counsel to believe that the documents filed by the Company under the
1934 Act and the 1934 Act Regulations that are incorporated by reference in
the preliminary prospectus supplement that forms a part of the Pricing
Disclosure Package and the Prospectus, were not, on their face,
appropriately responsive in all material respects to the requirements of the
1934 Act and the 1934 Act Regulations (except that in each case such counsel
need not express any view as to the financial statements, schedules and
other financial information included or incorporated by reference therein or
excluded therefrom or the Form T-1) (ii) the Registration Statement, at the
Applicable Time and the Prospectus, as of
14
its date, appeared on their face to be appropriately responsive in all
material respects to the requirements of the 1933 Act and the 1933 Act Rules
and Regulations (except that in each case such counsel need not express any
view as to the financial statements, schedules and other financial
information included or incorporated by reference therein or excluded
therefrom or the Form T-1) and (iii) no facts have come to such counsel’s
attention that have caused such counsel to believe that the Registration
Statement, at the Applicable Time, 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 its date and as of 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
(except that in each case such counsel need not express any view as to the
financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom or the statements
contained in the exhibits to the Registration Statement, including the Form
T-1). Such counsel shall further state that, in addition, no facts have
come to such counsel’s attention that have caused such counsel to believe
that the Pricing Disclosure Package, as of the Applicable Time, contained an
untrue statement of a material fact or omitted 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 (except that such
counsel need not express any view as to the financial statements, schedules
and other financial information included or incorporated by reference
therein or excluded therefrom or the statements contained in the exhibits to
the Registration Statement, including the Form T-1).
In addition, such statement shall confirm that the Prospectus has been
filed with the Commission within the time period required by Rule 424 of the
1933 Act Regulations and any required filing of a Permitted Free Writing
Prospectus pursuant to Rule 433 of the 1933 Act Regulations has been filed
with the Commission within the time period required by Rule 433(d) of the
1933 Act Regulations. Such statement shall further state that the
Registration Statement became effective upon filing under the 1933 Act and
the Mortgage has been qualified under the 1939 Act, and that such counsel
has been orally advised by the Commission that no stop order suspending the
effectiveness of the Registration Statement has been issued and, to such
counsel’s knowledge, no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
In addition, such counsel may state that such counsel does not pass
upon, or assume any responsibility for, the accuracy, completeness or
fairness of the statements contained or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package or the Prospectus
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and has made no independent check or verification thereof (except to
the limited extent referred to in Section 6(f)(i) above).
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(g)
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You shall have received an opinion of Sidley Austin
llp
, counsel for
the Underwriters, dated the Closing Date, with respect to the validity of the Bonds,
the effectiveness of the Registration Statement, the Pricing Disclosure Package and the
Prospectus, as amended or supplemented, and such other related matters as you may
require, and the Company 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, Sidley Austin
llp
may rely on the opinion of Robert T. Lucas III,
Esq. as to matters of North Carolina law and on the opinions of Karol P. Mack, Esq.,
Associate General Counsel of the Corporation, and Robinson, McFadden & Moore, P.C. (or
other appropriate counsel reasonably satisfactory to the Representatives) as to matters
of South Carolina law.
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(h)
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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 Company or Duke Energy Corporation, on the New York Stock
Exchange; or (ii) a general moratorium on commercial banking activities in New York
declared by either Federal or New York State authorities or a material disruption in
commercial banking services or securities settlement or clearance services in the
United States; or (iii) the outbreak or 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 subsection (h) in your reasonable judgment
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Bonds on the terms and in the manner contemplated in the Pricing
Disclosure Package and 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 Company as provided in Section 5(j)
hereof.
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(i)
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You shall have received a certificate of the Chairman of the Board, the
President, any Vice President, the Secretary or an Assistant Secretary and any
financial or accounting officer of the Company, dated the Closing Date, in which such
officers, to the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement are true and
correct as of the Closing Date, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to the
Closing Date, that the conditions specified in Section 6(c) and Section 6(d) 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.
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(j)
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At the time of the execution of this Agreement, you shall have received a
letter dated such date, in form and substance satisfactory to you, from Deloitte &
Touche LLP, the Company’s independent registered public accounting firm, containing
statements and information of the type ordinarily included in
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accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Registration Statement, the Pricing Disclosure Package and the
Prospectus, including specific references to inquiries regarding any increase in
long-term debt (excluding current maturities), decrease in net current assets
(defined as current assets less current liabilities) or member’s equity, and
decrease in operating revenues or net income for the period subsequent to the latest
financial statements incorporated by reference in the Registration Statement when
compared with the corresponding period from the preceding year, as of a specified
date not more than three business days prior to the date of this Agreement.
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(k)
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At the Closing Date, you shall have received from Deloitte & Touche LLP, a
letter dated as of the Closing Date, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (j) of this Section 6, except that
the specified date referred to shall be not more than three business days prior to the
Closing Date.
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The Company will furnish you with such conformed copies of such opinions, certificates,
letters and documents as you reasonably request.
7.
Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
their respective officers and directors, and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act, as follows:
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(i)
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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) including the Rule 430B Information, 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
the Preliminary Prospectus, the Pricing Disclosure Package, the Prospectus (or
any amendment or supplement thereto) or any Permitted Free Writing Prospectus,
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 Company by the Representatives on behalf
of the Underwriters expressly for use in the Registration Statement (or any
amendment thereto), the Preliminary Prospectus, the Pricing Disclosure Package,
the Prospectus (or any amendment or supplement thereto) or any Permitted Free
Writing Prospectus;
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(ii)
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against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation,
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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
Company; and
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(iii)
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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) of this Section 7.
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In no case shall the Company be liable under this indemnity agreement with respect to any claim
made against any Underwriter or any such controlling person unless the Company 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 Company shall not relieve it from any liability which it may have
otherwise than under subsections 7(a) and 7(d). The Company shall be entitled to participate at its
own expense in the defense, or, if it so elects, within a reasonable time after receipt of such
notice, to assume the defense of any suit brought to enforce any such claim, but if it so elects to
assume the defense, such defense shall be conducted by counsel chosen by it 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 Company 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 Company and such Underwriter or
such controlling person shall have been advised by such counsel that a conflict of interest between
the Company 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 Company 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 Company agrees to
notify you within a reasonable time of the assertion of any claim against it, any of its officers
or directors or any person who controls the Company within the meaning of Section 15 of the 1933
Act, in connection with the sale of the Bonds.
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(b)
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Each Underwriter severally agrees that it will indemnify and hold harmless the
Company, its directors and each of the officers of the Company who signed the
Registration Statement and each person, if any, who controls the Company 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), the Preliminary Prospectus,
the Pricing Disclosure Package, the Prospectus (or any amendment or supplement thereto)
or any Permitted Free Writing Prospectus, in
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reliance upon and in conformity with written information furnished to the Company by
the Representatives on behalf of the Underwriters expressly for use in the
Registration Statement (or any amendment thereto), the Preliminary Prospectus, the
Pricing Disclosure Package, the Prospectus (or any amendment or supplement thereto)
or any Permitted Free Writing Prospectus. In case any action shall be brought
against the Company or any person so indemnified based on the Registration Statement
(or any amendment thereto), the Preliminary Prospectus, the Pricing Disclosure
Package, the Prospectus (or any amendment or supplement thereto) or any Permitted
Free Writing Prospectus and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the Company,
and the Company and each person so indemnified shall have the rights and duties
given to the Underwriters, by the provisions of subsection (a) of this Section.
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(c)
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No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding, and does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
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(d)
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If the indemnification provided for in this Section 7 is unavailable to or
insufficient to hold harmless an indemnified party in respect of any and all loss,
liability, claim, damage and expense whatsoever (or actions in respect thereof) that
would otherwise have been indemnified under the terms of such indemnity, then each
indemnifying party shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from the
offering of the Bonds. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified party
failed to give the notice required above, then each indemnifying party shall contribute
to such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative fault of
the Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage or
expense (or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company bear to
the total compensation received by the Underwriters in respect of the underwriting
discount as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to
state a
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material fact relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The
Company and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section were determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section. The amount paid or payable by an indemnified
party as a result of the losses, liabilities, claims, damages or expenses (or
actions in respect thereof) referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Bonds
underwritten by it and distributed to the public were offered to the public exceeds
the amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations
to contribute are several in proportion to their respective underwriting obligations
and not joint.
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8.
Default by One or More of the Underwriters.
(a) If any Underwriter shall default in its
obligation to purchase the principal amount of the Bonds 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 Bonds 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 Bonds, then the Company 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 Bonds on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged for the purchase of
such Bonds, or the Company notifies you that it has so arranged for the purchase of such Bonds, you
or the Company 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, the Pricing Disclosure Package or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the Registration Statement,
the Pricing Disclosure Package 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 Bonds.
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(b)
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If, after giving effect to any arrangements for the purchase of the Bonds of a
defaulting Underwriter or Underwriters by you or the Company as provided in subsection
(a) above, the aggregate amount of such Bonds which remains unpurchased does not exceed
one-tenth of the aggregate amount of all the Bonds to be purchased at such Closing
Date, then the Company shall have the right to require each non-defaulting Underwriter
to purchase the amount of Bonds which
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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 amount of Bonds which such Underwriter agreed to purchase hereunder) of the
Bonds 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.
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(c)
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If, after giving effect to any arrangements for the purchase of the Bonds of a
defaulting Underwriter or Underwriters by you or the Company as provided in subsection
(a) above, the aggregate amount of such Bonds which remains unpurchased exceeds
one-tenth of the aggregate amount of all the Bonds to be purchased at such Closing
Date, or if the Company shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Bonds of a defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company as provided in Section 5(j) hereof and the indemnity and
contribution agreement in Section 7 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
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9.
Representations and Indemnities to Survive Delivery.
The respective indemnities,
agreements, representations, warranties and other statements of the Company or its officers and of
the several 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 any Underwriter or the Company, or any of its officers or directors or any controlling
person, and will survive delivery of and payment for the Bonds.
10.
Reliance on Your Acts.
In all dealings hereunder, the Representatives shall act on behalf
of each of the Underwriters, and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by the Representatives.
11.
No Fiduciary Relationship
. The Company acknowledges and agrees that (i) the purchase and
sale of the Bonds pursuant to this Agreement is an arm’s-length commercial transaction between the
Company on the one hand, and the Underwriters on the other hand, (ii) in connection with the
offering contemplated hereby and the process leading to such transaction, each Underwriter is and
has been acting solely as a principal and is not the agent or fiduciary of the Company or its
shareholders, creditors, employees, or any other party, (iii) no Underwriter has assumed or will
assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no Underwriter has any
obligation to the Company with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement, (iv) the Underwriters and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from those of the
Company, and (v) the Underwriters have not provided any legal, accounting, regulatory or tax advice
with respect to the transaction contemplated hereby and the
21
Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it
deemed appropriate.
12.
Notices.
All communications hereunder will be in writing and, if sent to the Underwriters,
will be mailed or telecopied and confirmed to Banc of America Securities LLC, NY1-100-18-03, New
York, NY 10036, Attention: High Grade Transaction Management/Legal (Fax no.: 646-855-5958),
Citigroup Global Markets Inc., Attention: General Counsel, (Fax no.: 212-816-7912), Morgan Stanley
& Co. Incorporated, Morgan Stanley & Co. Incorporated 1585 Broadway, 29th Floor New York, NY
10036, Attention: Investment Banking Division, (Fax no.: 212-507-8999), and Wells Fargo Securities,
LLC, 301 S. College Street, Charlotte, NC 28288, Attention: Transaction Management Department (Fax
no.: 704-383-9165), or if sent to the Company, will be mailed or telecopied and confirmed to it at
526 South Church Street, Charlotte, N.C. 28202, (Fax no.: 980-373-3699), attention of Treasurer.
Any such communications shall take effect upon receipt thereof.
13.
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.
14.
Successors.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Company 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, officers and
directors 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 and directors and their
respective successors, heirs and legal representatives, and for the benefit of no other person,
firm or corporation. No purchaser of Bonds from any Underwriter shall be deemed to be a successor
or assign by reason merely of such purchase.
15.
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.
16.
Applicable Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
22
If the foregoing is in accordance with your understanding, kindly sign and return to us two
counterparts hereof, and upon confirmation and acceptance by the Underwriters, this letter and such
confirmation and acceptance will become a binding agreement between the Company, on the one hand,
and each of the Underwriters, on the other hand, in accordance with its terms.
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Very truly yours,
Duke Energy Carolinas, LLC
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By:
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/s/ M. Allen Carrick
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M. Allen Carrick
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Assistant Treasurer
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The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
Banc of America Securities LLC
Citigroup Global Markets Inc.
Morgan Stanley & Co. Incorporated
Wells Fargo Securities, LLC
On behalf of each of the Underwriters
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Banc of America Securities LLC
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Citigroup Global Markets Inc.
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By:
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/s/ Peter J. Carbone
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By:
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/s/ Brian D. Bednarski
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Name: Peter J. Carbone
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Name: Brian D. Bednarski
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Title: Vice President
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Title: Managing Director
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Morgan Stanley & Co. Incorporated
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Wells Fargo Securities, LLC
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By:
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/s/ Yurij Slyz
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By:
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/s/ Carolyn C. Hurley
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Name: Yurij Slyz
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Name: Carolyn C. Hurley
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Title: Vice President
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Title: Vice President
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23
SCHEDULE A
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Principal Amount
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Underwriter
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of Bonds to be Purchased
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Banc of America Securities LLC
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$
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131,250,000
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Citigroup Global Markets Inc.
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131,250,000
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Morgan Stanley & Co. Incorporated
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131,250,000
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Wells Fargo Securities, LLC.
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131,250,000
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BBVA Securities Inc.
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37,500,000
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Banca IMI S.p.A.
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37,500,000
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Goldman, Sachs & Co.
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37,500,000
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Scotia Capital (USA) Inc.
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37,500,000
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SunTrust Robinson Humphrey, Inc.
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37,500,000
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Blaylock Robert Van, LLC
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7,500,000
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SL Hare Capital, Inc.
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7,500,000
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CastleOak Securities, L.P.
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7,500,000
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Toussaint Capital Partners, LLC
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7,500,000
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Cabrera Capital Markets, LLC
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7,500,000
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Total
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$
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750,000,000
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A-1
SCHEDULE B
PRICING DISCLOSURE PACKAGE
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1)
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Base Prospectus
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2)
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Preliminary Prospectus Supplement dated November 19, 2009
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3)
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Permitted Free Writing Prospectuses
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a)
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Pricing Term Sheet attached as Schedule C hereto
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B-1
SCHEDULE C
Filed pursuant to Rule 433
November 16, 2009
Relating to
Preliminary Prospectus Supplement dated November 16, 2009 to
Prospectus dated October 3, 2007
Registration Statement No. 333-146483-03
Duke Energy Carolinas, LLC
First and Refunding Mortgage Bonds,
$750,000,000 5.30% Series due 2040
Pricing Term Sheet
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Issuer:
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Duke Energy Carolinas, LLC
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Ratings (Moody’s/S&P):
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A1/A (stable/positive)
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A securities rating is not a recommendation to buy, sell
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or hold securities and may be subject to revision or
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withdrawal at any time.
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Settlement:
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November 19, 2009; T + 3
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Interest Payment Dates:
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February 15 and August 15, commencing August 15
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Security Description:
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First and Refunding Mortgage Bonds, 5.30% Series due 2040
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Principal Amount:
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$750,000,000
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Maturity:
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February 15, 2040
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Coupon:
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5.30%
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Benchmark Treasury:
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4.50% due August 15, 2039
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Benchmark Treasury Yield:
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4.277%
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Spread to Benchmark Treasury:
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+105 bp
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Yield to Maturity:
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5.327%
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Initial Price to Public:
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99.573% per Bond
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Redemption Provisions:
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Make-Whole Call:
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+20 bp
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CUSIP:
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26442CAH7
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C-1
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Book-Running Managers:
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Banc of America Securities LLC
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Citigroup Global Markets Inc.
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Morgan Stanley & Co. Incorporated
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Wells Fargo Securities, LLC
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Co-Managers:
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BBVA Securities Inc.
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Banca IMI S.p.A.
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Goldman, Sachs & Co.
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Scotia Capital (USA) Inc.
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SunTrust Robinson Humphrey, Inc.
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Junior Co-Managers:
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Blaylock Robert Van, LLC
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SL Hare Capital, Inc.
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CastleOak Securities, L.P.
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Toussaint Capital Partners, LLC
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Cabrera Capital Markets, LLC
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The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus
in that registration statement and other documents the issuer has filed with the SEC for more
complete information about the issuer and this offering. You may get these documents for free
by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any
underwriter or any dealer participating in the offering will arrange to send you the prospectus if
you request it by calling Banc of America Securities LLC toll free at 1-800-294-1322, Citigroup
Global Markets Inc. toll free at 1-877-858-5407, Morgan Stanley & Co. Incorporated toll free at
1-866-718-1649 or Wells Fargo Securities, LLC toll free at 1-800-326-5897.
C-2
Annex A
Material Agreements
$300,000,000 Credit Agreement, dated September 5, 2003, among Duke Energy Receivables Finance
Company, LLC, as Borrower, CAFCO, LLC, as Initial Lender, the other Lenders listed therein and
Citicorp North America, Inc., as Administrative Agent.
Servicing Agreement, dated September 5, 2003, among Duke Energy Receivables Finance Company, LLC,
as Buyer, Duke Energy Corporation, as initial Servicer, and Citicorp North America, Inc., as
Administrative Agent.
Receivables Purchase Agreement, dated September 5, 2003, between Duke Energy Corporation, as
Seller, and Duke Energy Receivables Finance Company, LLC, as Buyer.
Annex A-1