EXHIBIT 1.3
Preferred Securities
DUKE CAPITAL FINANCING TRUST [ ]
% Trust Preferred Securities
(Liquidation Amount $ per Preferred Security)
UNDERWRITING AGREEMENT
,
Ladies and Gentlemen:
1. Introductory. Duke Capital Financing Trust [ ], a Delaware statutory
business trust (the "Trust"), and Duke Capital Corporation, a Delaware
corporation (the "Corporation"), propose, subject to the terms and conditions
stated herein, that the Trust issue and sell to the Underwriters named in
Schedule A hereto (the "Underwriters") % Trust Preferred Securities
(liquidation amount $ per preferred security), representing preferred
undivided beneficial interests in the assets of the Trust (the "Preferred
Securities"), guaranteed by the Corporation as to the payment of distributions
and payments upon liquidation or redemption, to the extent set forth in the
Guarantee Agreement (the "Guarantee Agreement") between the Corporation and The
Chase Manhattan Bank, as trustee thereunder (the "Guarantee Trustee"), to be
dated as of the Closing Date (as defined in Section 3 hereof) (the
"Guarantee"), and the Trust and the Corporation hereby agree with you as
hereinafter set forth in this Agreement.
The entire proceeds from the sale of the Preferred Securities will be combined
with the entire proceeds from the sale by the Trust to the Corporation of its
common securities, representing common undivided beneficial interests in the
assets of the Trust (the "Common Securities"), and will be used by the Trust to
purchase the Series % Junior Subordinated Notes due , (the
"Notes") to be issued by the Corporation. The Preferred Securities and the
Common Securities will be issued pursuant to the Amended and Restated Trust
Agreement, to be dated as of , (the "Trust Agreement"), among the
Corporation, as Depositor, and the trustees named therein, including The Chase
Manhattan Bank, as property trustee (the "Property Trustee"), and Chase
Manhattan Bank USA, National Association, as Delaware trustee (the
"Delaware Trustee"). The Notes will be issued pursuant to a Subordinated
Indenture, dated as of April 1, 1998 (the "Original Indenture"), between the
Corporation and The Chase Manhattan Bank, as Trustee (the "Indenture Trustee"),
as amended and supplemented and as to be supplemented by a supplemental
indenture, to be dated as of , (the "Supplemental Indenture" and,
together with the Original Indenture as theretofore amended and supplemented,
the "Indenture"). The Trust Agreement, the Guarantee and the Indenture are
sometimes collectively referred to herein as the "Corporation Agreements."
2. Representations and Warranties of the Trust and the Corporation. The Trust
and the Corporation, jointly and severally, represent and warrant to, and agree
with, the several Underwriters that:
(a) A registration statement (Nos. 333- and 333- ), which also
constitutes a post-effective amendment to a previous registration statement
No. 333-92283, including a combined prospectus, relating to the Preferred
Securities, the Guarantee and the Notes and certain other securities has
been filed with the Securities and Exchange Commission ("Commission") under
the Securities Act of 1933, as amended (the "1933 Act"). Such registration
statement and any post-effective amendment thereto, each in the form
heretofore delivered to you, and, excluding exhibits thereto but including
all documents incorporated by reference in the prospectus contained
therein, to you for each of the other Underwriters, have been declared
effective by the Commission in such form, and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the 1933 Act ("1933 Act
Regulations") being hereinafter called a "Preliminary Prospectus"; the
various parts of such registration statement, including all exhibits
thereto and including the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement became effective, each as amended at the time
such part of the registration statement became effective, being hereinafter
called the "Registration Statement"; and the final prospectus relating to
the Preferred Securities, the Guarantee and the Notes, in the form first
filed pursuant to Rule 424(b) under the 1933 Act Regulations, being
hereinafter called the "Prospectus"; and any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual
report of the Corporation filed pursuant to Section 13(a) or 15(d) of the
1934 Act after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement).
(b) The Registration Statement conforms in all material respects to the
requirements of the 1933 Act and the 1933 Act Regulations, and the
Registration Statement does not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
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necessary to make the statements therein not misleading; the Prospectus
will conform in all material respects to the requirements of the 1933 Act
and the 1933 Act Regulations, and the Prospectus will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the Corporation makes no warranty or representation
to the Underwriters in this subsection with respect to any statements or
omissions in any such document based upon written information furnished to
the Trust or the Corporation by any Underwriter specifically for use
therein.
(c) The documents incorporated by reference in the Prospectus, at the time
they were filed with the Commission, complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read together
with the other information in the Prospectus, do not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and any
documents deemed to be incorporated by reference in the Prospectus will,
when they are filed with the Commission, comply in all material respects
with the requirements of the 1934 Act and the 1934 Act Regulations, and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the Corporation makes no warranty or
representation to the Underwriters with respect to any statements or
omissions made in reliance upon and in conformity with written information
furnished to the Trust or the Corporation by any Underwriter specifically
for use therein.
(d) The compliance by the Corporation and the Trust with all of the
provisions of this Agreement has been duly authorized by all necessary
corporate or business trust 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 Corporation or any of its Principal
Subsidiaries (as hereinafter defined) is a party or by which any of them or
their respective property is bound or to which any of their property or
assets is subject that would have a material adverse effect on the
business, financial condition or results of operations of the Corporation
and its subsidiaries, taken as a whole, nor will such action result in any
violation of the provisions of the Restated Certificate of Incorporation,
By-Laws of the Corporation or the Trust Agreement or result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over (i) the Corporation or
its Principal Subsidiaries or any of their respective property that would
have a material adverse effect on the business, financial condition or
results of operations of the Corporation and its subsidiaries, taken as a
whole or (ii) the Trust; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Corporation or the
Trust of the transactions contemplated by this Agreement, except for the
registration under the 1933 Act of the Preferred Securities, the Guarantee
and the Notes, the qualification of the Corporation
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Agreements under the Trust Indenture Act of 1939 and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Preferred Securities by the Underwriters.
(e) This Agreement has been duly authorized, executed and delivered by the
Corporation.
(f) Each of PanEnergy Corp and Duke Energy Natural Gas Corporation, each a
Delaware corporation, and Texas Eastern Transmission, LP, a Delaware
limited partnership (each herein called a "Principal Subsidiary"), is in
good standing in the State of Delaware and is a direct or indirect wholly
owned subsidiary of the Corporation.
3. Purchase, Sale and Delivery of Preferred Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Trust agrees to sell to each of the
Underwriters and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust at a purchase price of $ per Preferred Security, the
number of Preferred Securities set forth opposite the name of such Underwriter
in Schedule A hereto, plus the respective principal amount of additional
Preferred Securities which each such Underwriter may become obligated to
purchase pursuant to the provisions of Section 8 hereof.
As compensation to the Underwriters for their commitments hereunder, and in
view of the fact that the proceeds of the sale of the Preferred Securities will
be used by the Trust to purchase the Notes of the Corporation, the Corporation
hereby agrees to pay at the Closing Date (as defined below) to ,
for the accounts of the several Underwriters, a commission equal to $ per
Preferred Security.
The Preferred Securities to be purchased by the Underwriters hereunder will be
represented by a global certificate or certificates in book-entry form which
will be deposited by or on behalf of the Trust with The Depository Trust
Company ("DTC") or its designated custodian and registered in the name of Cede
& Co., as nominee of DTC. The Trust will deliver the Preferred Securities to
, for the respective accounts of the Underwriters, against
payment by or on behalf of such Underwriters of the purchase price therefor by
wire transfer of immediately available funds to the Trust, by causing DTC to
credit the Preferred Securities to the account of , at DTC. The
time and date of such delivery and payment (the "Closing Date") shall be 10:00
a.m., New York City time, on , (unless postponed in accordance with
the provisions of Section 8), or at such other time and date as you, the Trust
and the Corporation may agree upon at the office of Dewey Ballantine LLP, 1301
Avenue of the Americas, New York, New York 10019, or at such other place as
you, the Trust and the Corporation may determine. It is understood that each
Underwriter has authorized , for its account, to accept delivery
of, receipt for, and make payment of the purchase price, for the Preferred
Securities which it has agreed to purchase.
At the Closing Date, the Corporation will pay, or cause to be paid, the
compensation payable to the Underwriters under this Section 3 by wire transfer
of immediately available funds to , as representative of and on
behalf of the Underwriters.
4. Offering by the Underwriters. It is understood that the several Underwriters
propose to offer the Preferred Securities for sale to the public as set forth
in the Prospectus.
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5. Covenants of the Trust and the Corporation. The Trust and the Corporation,
jointly and severally, covenant and agree with the several Underwriters that:
(a) The Trust and the Corporation will advise you promptly of the filing of
any amendment or supplementation of the Registration Statement or the
Prospectus, of the filing of any Rule 462(b) registration statement and of
the institution by the Commission of any stop order proceedings in respect
of the Registration Statement, and will use their best efforts to prevent
the issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(b) If at any time when a prospectus relating to the Preferred Securities,
the Guarantee or the Notes is required to be delivered under the 1933 Act
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact, or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend the Prospectus to comply with the
1933 Act, the Trust and the Corporation promptly will prepare and file with
the Commission an amendment, supplement or an appropriate document pursuant
to Section 13 or 14 of the 1934 Act which will correct such statement or
omission or which will effect such compliance.
(c) The Trust and the Corporation, during the period when a prospectus
relating to the Preferred Securities, the Guarantee or the Notes is
required to be delivered under the 1933 Act, will timely file all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the 1934 Act.
(d) The Corporation will make generally available to its security holders,
in each case as soon as practicable but not later than 60 days after the
close of the period covered thereby, earnings statements (in form complying
with the provisions of Section 11(a) of the 1933 Act, which need not be
certified by independent certified public accountants unless required by
the 1933 Act) covering (i) a twelve-month period beginning not later than
the first day of the Corporation's fiscal quarter next following the
effective date of the Registration Statement and (ii) a twelve-month period
beginning not later than the first day of the Corporation's fiscal quarter
next following the date of this Agreement.
(e) The Trust and the Corporation will furnish to you, without charge,
copies of the Registration Statement ( of which will be signed and will
include all exhibits other than those incorporated by reference), the
Prospectus, and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as you reasonably request.
(f) The Trust and the Corporation will arrange or cooperate in arrangements
for the qualification of the Preferred Securities, and to the extent
required or advisable, the Guarantee and the Notes for sale under the laws
of such jurisdictions as you designate and will continue such
qualifications in effect so long as required for the distribution;
provided, however, that neither the Trust nor the Corporation shall be
required to qualify as a foreign corporation or to file any general
consents to service of process under the laws of any state where it is not
now so subject.
(g) The Corporation will pay all expenses incident to the performance of
the obligations of the Trust and the Corporation under this Agreement
including (i) the printing and filing of the Registration Statement and the
printing of this Agreement and any Blue Sky Survey, (ii) the
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issuance and delivery of the Preferred Securities, the Guarantee and the
Notes as specified herein, (iii) the fees and disbursements of counsel for
the Underwriters in connection with the qualification of the Preferred
Securities, the Guarantee and the Notes under the securities laws of any
jurisdiction in accordance with the provisions of Section 5(f) and in
connection with the preparation of the Blue Sky Survey, such fees not to
exceed $7,500, (iv) the printing and delivery to the Underwriters, in
quantities as hereinabove referred to, of copies of the Registration
Statement and any amendments thereto, and of the Prospectus and any
amendments or supplements thereto, (v) any fees charged by independent
rating agencies for rating the Preferred Securities and, if applicable, the
Notes, (vi) all fees and expenses of the Trustees, including the Indenture
Trustee, Property Trustee, Guarantee Trustee and Delaware Trustee and the
fees and disbursements of their counsel, (vii) any fees and expenses in
connection with the listing of the Preferred Securities and, if applicable,
the Notes on the New York Stock Exchange, and the cost of registering the
Preferred Securities under Section 12 of the 1934 Act, (viii) any filing
fee required by the National Association of Securities Dealers, Inc., (ix)
the costs of any depository arrangements for the Preferred Securities with
DTC or any successor depositary and (x) the costs and expenses of the
Corporation relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Preferred Securities, 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 Corporation, travel and lodging expenses of
and officers of the Corporation 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).
6. Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Preferred Securities will be
subject to the accuracy of the representations and warranties on the part of
the Trust or the Corporation herein, to the accuracy of the statements of
trustees or representatives of the Trust and officers of the Corporation made
pursuant to the provisions hereof, to the performance by the Trust and the
Corporation of their obligations hereunder and to the following additional
conditions precedent:
(a) Prior to the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the Trust,
the Corporation or you, shall be threatened by the Commission.
(b) Prior to the Closing Date, the rating assigned by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services to (i) any debt
securities of the Corporation or (ii) any trust preferred securities of
Duke Capital Financing Trust I, Duke Capital Financing Trust II or Duke
Capital Financing Trust III as of the date of this Agreement shall not have
been lowered.
(c) Since the respective most recent dates as of which information is given
in the Prospectus and up to the Closing Date, there shall not have been any
material adverse change in the condition of the Trust or the Corporation,
financial or otherwise, except as reflected in or contemplated by the
Prospectus, and, since such dates and up to the Closing Date, there shall
not have been any material transaction entered into by the Corporation
other than transactions
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contemplated by the Prospectus and transactions in the ordinary course of
business, the effect of which in your judgment is so material and adverse
as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Preferred Securities on the terms and in
the manner contemplated by the Prospectus.
(d) You shall have received an opinion or opinions of Dewey Ballantine LLP,
counsel to the Corporation, dated the Closing Date, to the effect that:
(i) The Corporation has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement.
(ii) Each of PanEnergy Corp and Duke Energy Natural Gas Corporation has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware and Texas Eastern
Transmission, LP has been duly formed and is validly existing as a
limited partnership in good standing under the laws of the State of
Delaware, in each case with power and authority to own its properties
and conduct its business as described in the Prospectus.
(iii) The Corporation is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
(iv) The Corporation is not a holding company under the Public Utility
Holding Company Act of 1935, as amended.
(v) The Registration Statement has become effective under the 1933 Act,
and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened under the 1933 Act.
(vi) The Registration Statement as of the date of effectiveness under
the 1933 Act and the Prospectus as of the date it was filed with, or
transmitted for filing to, the Commission complied as to form in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations; and nothing has come to their attention that would
lead them to believe that the Registration Statement as of the date of
effectiveness under the 1933 Act (or if an amendment to such
Registration Statement or an annual report on Form 10-K has been filed
by the Corporation with the Commission subsequent to the effectiveness
of the Registration Statement, then at the time of the most recent such
filing) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of
the date it was filed with, or transmitted for filing to, the
Commission and at the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Such
opinion may state that such counsel do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in or incorporated by reference into the Registration Statement and
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the Prospectus except as otherwise expressly provided in such opinion
and do not express any opinion or belief as to the financial statements
or other financial data contained in or incorporated by reference into
the Registration Statement and the Prospectus, the statement of the
eligibility and qualification of each of the Indenture Trustee,
Property Trustee and Guarantee Trustee or as to the information set
forth in the Prospectus under the caption "Description of the Preferred
Securities--Book-Entry Issuance--The Depository Trust Company."
(vii) The statements made in the Prospectus under the captions
"Description of the Preferred Securities," "Description of the
Guarantees," "Description of the Series Junior Subordinated Notes"
and "Description of the Junior Subordinated Notes," insofar as they
purport to summarize provisions of documents specifically referred to
therein, fairly present the information called for with respect thereto
by Form S-3, and the statements as to matters of law and legal
conclusions contained in the Prospectus under the caption "Material
Federal Income Tax Considerations" are correct in all material
respects.
(viii) Each of the Indenture, the Guarantee Agreement and the Trust
Agreement has been duly qualified under the Trust Indenture Act of
1939, as amended.
(ix) This Agreement has been duly authorized, executed and delivered by
the Corporation.
(x) The performance by the Corporation of this Agreement and the
Corporation Agreements will not contravene any of the provisions of the
Restated Certificate of Incorporation or By-Laws of the Corporation,
nor will such performance contravene any statute or any order, rule or
regulation of which such counsel is aware of any court or governmental
agency or body having jurisdiction over the Corporation or any of its
Principal Subsidiaries or any of their respective property, nor will
such action 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 known to such counsel to which the Corporation or any of
its Principal Subsidiaries is a party or by which any of them or their
respective property is bound or to which any of their property or
assets is subject which affects in a material way the Corporation's
ability to perform its obligations under this Agreement and the
Corporation Agreements.
(xi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issuance of the Notes and the Guarantee or the
consummation by the Corporation and the Trust of the transactions
contemplated by this Agreement or the Indenture, except such as have
been obtained under the 1933 Act and the Trust Indenture Act of 1939
and such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Preferred
Securities by the Underwriters.
(xii) The Trust Agreement has been duly authorized, executed and
delivered by the Corporation and, assuming due authorization, execution
and delivery thereof by The Chase Manhattan Bank, as Property Trustee,
constitutes a valid and legally binding instrument of the Corporation,
enforceable against the Corporation in accordance with its terms,
subject to the qualifications that the enforceability of the
Corporation's obligations under the Trust
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Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(xiii) The Guarantee Agreement has been duly authorized, executed and
delivered by the Corporation and assuming due authorization, execution
and delivery thereof by The Chase Manhattan Bank, as Guarantee Trustee,
constitutes a valid and legally binding instrument of the Corporation,
enforceable against the Corporation in accordance with its terms,
subject to the qualifications that the enforceability of the
Corporation's obligations under the Guarantee Agreement may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(xiv) The Indenture has been duly authorized, executed and delivered by
the Corporation and, assuming due authorization, execution and delivery
thereof by The Chase Manhattan Bank, as Indenture Trustee, constitutes
a valid and legally binding instrument of the Corporation, enforceable
against the Corporation in accordance with its terms, subject to the
qualifications that the enforceability of the Corporation's obligations
under the Indenture may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(xv) The Notes have been duly authorized and executed by the
Corporation and, when authenticated by The Chase Manhattan Bank, as
Indenture Trustee, in the manner provided in the Indenture and
delivered against payment therefor, will constitute valid and legally
binding obligations of the Corporation, enforceable against the
Corporation in accordance with their terms, subject to the
qualifications that the enforceability of the Corporation's obligations
under the Notes may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and are entitled to the benefits
afforded by the Indenture in accordance with the terms of the Indenture
and the Notes.
In rendering the foregoing opinion or opinions, Dewey Ballantine LLP may
state that such opinion or opinions are limited to the Federal laws of the
United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware, and that they are expressing no
opinion as to the effect of the laws of any other jurisdiction. In
addition, such counsel may state that they have relied as to certain
factual matters on information obtained from public officials, officers of
the Corporation and other sources believed by them to be responsible and
that the signatures on all documents examined by them are genuine,
assumptions which such counsel have not independently verified.
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(e) You shall have received an opinion, dated the Closing Date, of Ellen T.
Ruff, Esq., General Counsel of the Corporation, to the effect that:
(i) Each of the Corporation and the Principal Subsidiaries is duly
qualified to do business in each jurisdiction in which the ownership or
leasing of its property or the conduct of its business requires such
qualification, except where the failure to so qualify, considering all
such cases in the aggregate, does not have a material adverse effect on
the business, properties, financial position or results of operations
of the Corporation and its subsidiaries taken as a whole.
(ii) The descriptions in the Registration Statement and the Prospectus
of legal or governmental proceedings are accurate and fairly present
the information required to be shown, and such counsel does not know of
any litigation or any legal or governmental proceeding instituted or
threatened against the Corporation or any of its subsidiaries or any of
their respective properties that would be required to be disclosed in
the Prospectus and is not so disclosed.
Such counsel shall also state that nothing has come to her attention that
has caused her to believe that the Registration Statement as of the date of
effectiveness under the 1933 Act and the Prospectus as of the date it was
filed with, or transmitted for filing to, the Commission, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as of the date it was filed with, or
transmitted for filing to, the Commission and at the Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Such counsel may also state that, except as otherwise expressly
provided in such opinion, she does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in or
incorporated by reference into the Registration Statement and the
Prospectus and does not express any opinion or belief as to the financial
statements or other financial data contained in or incorporated by
reference into the Registration Statement and the Prospectus, the statement
of the eligibility and qualification of each of the Indenture Trustee,
Property Trustee and Guarantee Trustee or as to the information set forth
in the Prospectus under the caption "Description of the Preferred
Securities--Book-Entry Issuance--The Depository Trust Company."
In rendering the foregoing opinion, such counsel may rely, to the extent
recited therein, upon opinions of local counsel. Such counsel may also
state that she has relied as to certain factual matters on information
obtained from public officials, officers of the Corporation and other
sources believed by her to be responsible.
(f) You shall have received the opinion of Richards, Layton & Finger, P.A.,
special Delaware counsel to the Trust and the Corporation, dated the
Closing Date, to the effect that:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act of the State
of Delaware (the "Delaware Business Trust Act"), and all filings
required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been
made.
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(ii) Under the Delaware Business Trust Act and the Trust Agreement, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) Under the Delaware Business Trust Act and the Trust Agreement,
the Trust has the business trust power and authority (a) to execute and
deliver this Agreement, (b) to perform its obligations under this
Agreement and (c) to issue and perform its obligations under the
Preferred Securities and the Common Securities.
(iv) Under the Delaware Business Trust Act and the Trust Agreement, the
execution and delivery by the Trust of this Agreement and the
performance by the Trust of its obligations hereunder and under the
Trust Agreement have been duly authorized by all necessary business
trust action on the part of the Trust.
(v) The Trust Agreement constitutes a valid and binding obligation of
the Corporation and the trustees named therein, enforceable against the
Corporation and the trustees named therein, in accordance with its
terms, subject, as to enforcement, to the effect upon the Trust
Agreement of (a) bankruptcy, insolvency, moratorium, receivership,
liquidation, fraudulent conveyance or transfer, reorganization and
other similar laws relating to or affecting the remedies and rights of
creditors generally, (b) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered or
applied in a proceeding in equity or at law) and (c) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution.
(vi) The Preferred Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and non-assessable
preferred undivided beneficial interests in the assets of the Trust;
the Holders of the Preferred Securities, as beneficial owners of the
Trust (the "Securityholders"), are entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware; provided, however, that such counsel may note that the
Securityholders may be obligated, pursuant to the Trust Agreement, to
(a) provide indemnity and/or security in connection with and pay a sum
sufficient to cover any taxes or governmental charges arising from
transfers or exchanges of Preferred Securities certificates and the
issuance of replacement Preferred Securities certificates and (b)
provide security and/or indemnity in connection with requests of or
directions to the Property Trustee (as defined in the Trust Agreement)
to exercise its rights and powers under the Trust Agreement; and under
the Delaware Business Trust Act and the Trust Agreement, the issuance
of the Preferred Securities is not subject to preemptive or other
similar rights.
(vii) The Common Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and fully paid common
undivided beneficial interests in the assets of the Trust; and under
the Delaware Business Trust Act and the Trust Agreement, the issuance
of the Common Securities is not subject to preemptive or other similar
rights.
(viii) The issuance and sale by the Trust of the Preferred Securities
and the Common Securities, the execution, delivery and performance by
the Trust of this Agreement, the performance by the Trust of the Trust
Agreement, the consummation by the Trust of the
11
transactions contemplated herein and therein and the compliance by the
Trust with its obligations hereunder do not violate (a) any of the
provisions of the Certificate of Trust of the Trust or the Trust
Agreement or (b) any applicable Delaware law or Delaware administrative
regulation.
(ix) Assuming that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities
(other than having a Delaware trustee as required by the Delaware
Business Trust Act and the filing of documents with the Secretary of
State of the State of Delaware) or employees in the State of Delaware,
no authorization, approval, consent or order of any Delaware court or
Delaware governmental authority or Delaware agency is required to be
obtained by the Trust solely as a result of the issuance and sale of
the Preferred Securities, the consummation by the Trust of the
transactions contemplated in this Agreement and the Trust Agreement or
the compliance by the Trust of its obligations hereunder and
thereunder.
(x) Assuming that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities
(other than having a Delaware trustee as required by the Delaware
Business Trust Act and the filing of documents with the Secretary of
State of the State of Delaware) or employees in the State of Delaware,
and assuming that the Trust is treated as a grantor trust for federal
income tax purposes, the Securityholders (other than those holders of
the Preferred Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State
of Delaware solely as a result of their participation in the Trust, and
the Trust will not be liable for any income tax imposed by the State of
Delaware.
In rendering the opinion expressed in this paragraph (f), such counsel need
express no opinion concerning the securities laws of the State of Delaware.
(g) You shall have received the opinion or opinions of , counsel
for the Underwriters, dated the Closing Date, with respect to the
incorporation of the Corporation, the validity of the Notes, the
Registration Statement and the Prospectus, as amended or supplemented, and
such other related matters as you may require, and the Corporation shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(h) On or after the date hereof, there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally or of the securities of Duke Energy Corporation, the Corporation,
Duke Capital Financing Trust I, Duke Capital Financing Trust II or Duke
Capital Financing Trust III on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the outbreak or material
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war if the effect of any such
event specified in this subsection (h) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Preferred Securities on the terms and in the manner
contemplated in the Prospectus. In such event there shall be no liability
on the part of any party to any other party except as otherwise provided in
Section 7 hereof and except for the expenses to be borne by the Corporation
as provided in Section 5(g) hereof.
12
(i) You shall have received a certificate of the Chairman of the Board, the
President, any Vice President, the Secretary or any Assistant Secretary and
any financial or accounting officer of the Corporation and a certificate of
a trustee or authorized representative of the Trust, each dated the Closing
Date, in which such officers or trustee or representative, as the case may
be, to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Corporation and the
Trust in this Agreement are true and correct as of the Closing Date, that
the Corporation and the Trust have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date, that the conditions specified in Section 6(b)
and Section 6(c) have been satisfied, and that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened by the
Commission.
(j) On the date of this Agreement, you shall have received a letter dated
the date hereof, in form and substance satisfactory to you, from the
Corporation's independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Prospectus.
(k) At the Closing Date you shall have received from the Corporation's
independent public accountants a letter, dated the Closing Date, to the
effect that such accountants reaffirm the statements made in the letter
furnished pursuant to paragraph (j) of this Section 6, except that the
specified date referred to shall be a date not more than three business
days prior to the Closing Date.
The Corporation will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
7. Indemnification. (a) The Trust and the Corporation, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act,
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the prospectus constituting a part of the Registration
Statement in the form in which it became effective or the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with written
information furnished to the Trust or the Corporation by any Underwriter
through you expressly for use in the Registration Statement (or any
amendment thereto) or such Preliminary Prospectus, such prospectus, or the
Prospectus (or any amendment or supplement thereto);
13
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of the
Trust and the Corporation; and
(iii) against any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) of this Section 7.
In no case shall the Trust or the Corporation be liable under this indemnity
agreement with respect to any claim made against any Underwriter or any such
controlling person unless the Trust and the Corporation shall be notified in
writing of the nature of the claim within a reasonable time after the assertion
thereof, but failure so to notify the Trust or the Corporation shall not
relieve either of them from any liability which either of them may have
otherwise than on account of this indemnity agreement. The Trust and the
Corporation shall be entitled to participate at their own expense in the
defense, or, if they so elect, within a reasonable time after receipt of such
notice, to assume the defense of any suit brought to enforce any such claim,
but if they so elect to assume the defense, such defense shall be conducted by
counsel chosen by them and approved by the Underwriter or Underwriters or
controlling person or persons, or defendant or defendants in any suit so
brought, which approval shall not be unreasonably withheld. In any such suit,
any Underwriter or any such controlling person shall have the right to employ
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the Trust and
the Corporation and such Underwriter shall have mutually agreed to the
employment of such counsel, or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the Trust or the Corporation and such Underwriter or
such controlling person shall have been advised by such counsel that a conflict
of interest between the Trust or the Corporation and such Underwriter or such
controlling person may arise and for this reason it is not desirable for the
same counsel to represent both the indemnifying party and also the indemnified
party (it being understood, however, that the Trust and the Corporation shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for all such Underwriters
and all such controlling persons, which firm shall be designated in writing by
you). The Trust and the Corporation agree to notify you within a reasonable
time of the assertion of any claim against them, any of their officers,
directors or trustees or any person who controls the Trust or the Corporation
within the meaning of Section 15 of the 1933 Act, in connection with the sale
of the Preferred Securities.
(b) Each Underwriter severally agrees that it will indemnify and hold harmless
the Trust and the Corporation, their directors, trustees, representatives and
each of the officers of the Corporation who signed the Registration Statement
and each person, if any, who controls them within the meaning of Section 15 of
the 1933 Act to the same extent as the indemnity contained in subsection (a) of
this Section, but only with respect to statements or omissions made in the
Registration Statement (or any amendment thereto) or any Preliminary
Prospectus, such prospectus or the Prospectus (or any
14
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Trust or the Corporation by such
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto), such Preliminary Prospectus, such prospectus or the
Prospectus (or any amendment or supplement thereto). In case any action shall
be brought against the Trust or the Corporation or any person so indemnified
based on the Registration Statement (or any amendment thereto) or such
Preliminary Prospectus, such prospectus or the Prospectus (or any amendment or
supplement thereto) and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Trust and the Corporation, and the Trust and the Corporation and each person so
indemnified shall have the rights and duties given to the Underwriters, by the
provisions of subsection (a) of this Section.
(c) 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.
(d) If the indemnification provided for in this Section 7 is unavailable to
or insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses (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 losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Trust and the Corporation on
the one hand and the Underwriters on the other from the offering of the
Preferred Securities. 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 Trust and the Corporation on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant equity
considerations. The relative benefits received by the Trust and the Corporation
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 Trust and the Corporation 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 material fact relates to information supplied by
the Trust or the Corporation 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 Trust, the
Corporation 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, claims, damages,
liabilities or
15
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 Preferred Securities 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.
8. Default by One or More of the Underwriters. (a) If any Underwriter shall
default in its obligation to purchase the Preferred Securities which it has
agreed to purchase hereunder on the Closing Date, you may in your discretion
arrange for you or another party or other parties to purchase such Preferred
Securities on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such
Preferred Securities, then the Trust and the Corporation shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Preferred Securities on such
terms. In the event that, within the respective prescribed periods, you notify
the Trust and the Corporation that you have so arranged for the purchase of
such Preferred Securities, or the Trust or the Corporation notifies you that it
has so arranged for the purchase of such Preferred Securities, you, the Trust
or the Corporation shall have the right to postpone such Closing Date for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or
in any other documents or arrangements, and the Trust and the Corporation agree
to file promptly any amendments to the Registration Statement or the Prospectus
which may be required. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Preferred Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Preferred Securities of a defaulting Underwriter or Underwriters by you, the
Trust or the Corporation as provided in subsection (a) above, the aggregate
number of such Preferred Securities which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Preferred Securities to be
purchased at such Closing Date, then the Trust and the Corporation shall have
the right to require each non-defaulting Underwriter to purchase the number of
Preferred Securities which such Underwriter agreed to purchase hereunder at
such Closing Date and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Preferred Securities
which such Underwriter agreed to purchase hereunder) of the Preferred
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Preferred Securities of a defaulting Underwriter or Underwriters by you, the
Trust or the Corporation as provided in subsection (a) above, the aggregate
number of such Preferred Securities which remains unpurchased exceeds one-
eleventh of the aggregate number of all the Preferred Securities to be
purchased at such
16
Closing Date, or if the Trust or the Corporation shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Preferred Securities of a defaulting Underwriter or Underwriters, then
this Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Trust or the Corporation, except for the
expenses to be borne by the Corporation as provided in Section 5(g) hereof and
the indemnity and contribution agreement in Section 7 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
9. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of
the Trust and the Corporation or their officers and of the 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 Underwriters or the Trust and the
Corporation, or any of their officers, directors, trustees, representatives or
any controlling person, and will survive delivery of and payment for the
Preferred Securities.
10. Reliance on Your Acts. In all dealings hereunder, shall act on behalf
of each of the Underwriters, and the parties hereto shall be entitled to act
and rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by in connection with the transaction to be
performed under this Agreement.
11. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed or telecopied and confirmed to the
Underwriters in care of Attn: , , , facsimile number
( ) - , or, if sent to the Trust or the Corporation, will be mailed or
telecopied and confirmed to them at 526 South Church Street, Charlotte, N.C.
28202, facsimile number (704) 382-1452, attention of David L. Hauser, Vice
President and Treasurer; provided, however, that any notice to an Underwriter
pursuant to Section 7 hereof shall be sent by mail or telecopy to such
Underwriter at its address or telecopy number set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address or
telecopy number will be supplied to the Trust and the Corporation by . Any
such communications shall take effect upon receipt thereof.
12. Business Day. As used herein, the term "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for business.
13. Successors. This Agreement shall inure to the benefit of and be binding
upon the Underwriters, the Trust and the Corporation and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons,
officers, directors, trustees and representatives referred to in Section 7 and
their respective successors, heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and said controlling persons,
officers, directors, trustees and representatives and their respective
successors, heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Preferred Securities from any
Underwriter shall be deemed to be a successor or assign by reason merely of
such purchase.
17
14. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
18
If the foregoing is in accordance with your understanding, kindly sign and
return to us two counterparts hereof, and upon confirmation and acceptance by
on behalf of each of the Underwriters, this letter and such confirmation
and acceptance will become a binding agreement between the Trust and the
Corporation, on the one hand, and each of the Underwriters, on the other hand,
in accordance with its terms. It is understood that confirmation and acceptance
of this letter by on behalf of each of the Underwriters is pursuant to the
authority set forth in a form of Agreement Among Underwriters, the form of
which shall be submitted to the Trust and the Corporation for examination, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
Duke Capital Financing Trust [ ]
By: Duke Capital Corporation
as Depositor
By: _________________________________
Name:
Title:
Duke Capital Corporation
By: _________________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
By:
By: ___________________________
Name:
Title:
On behalf of each of the Underwriters
19
SCHEDULE A
Number of
Preferred
Underwriter Securities
- ----------- ----------
--------
Total..............................................................
========