Exhibit 4.3
================================================================================
DUKE ENERGY CORPORATION
AND
JPMORGAN CHASE BANK,
AS PURCHASE CONTRACT AGENT
____________________
PURCHASE CONTRACT AGREEMENT
____________________
DATED AS OF NOVEMBER 19, 2001
================================================================================
TABLE OF CONTENTS
Page
----
RECITALS .................................................................................................................... 1
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1. Definitions ............................................................................................... 1
Section 1.2. Compliance Certificates and Opinions ...................................................................... 14
Section 1.3. Form of Documents Delivered to Agent ...................................................................... 15
Section 1.4. Acts of Holders; Record Dates ............................................................................. 15
Section 1.5. Notices ................................................................................................... 17
Section 1.6. Notice to Holders; Waiver ................................................................................. 17
Section 1.7. Effect of Headings and Table of Contents .................................................................. 18
Section 1.8. Successors and Assigns .................................................................................... 18
Section 1.9. Separability Clause ....................................................................................... 18
Section 1.10. Benefits of Agreement ..................................................................................... 18
Section 1.11. Governing Law ............................................................................................. 18
Section 1.12. Legal Holidays ............................................................................................ 18
Section 1.13. Counterparts .............................................................................................. 19
Section 1.14. Inspection of Agreement ................................................................................... 19
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally ........................................................................... 19
Section 2.2. Form of Agent's Certificate of Authentication ............................................................. 20
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations ............................................................................ 20
Section 3.2. Rights and Obligations Evidenced by the Certificates ...................................................... 21
Section 3.3. Execution, Authentication, Delivery and Dating ............................................................ 21
Section 3.4. Temporary Certificates .................................................................................... 22
Section 3.5. Registration; Registration of Transfer and Exchange ....................................................... 22
Section 3.6. Book-Entry Interests ...................................................................................... 24
Section 3.7. Notices to Holders ........................................................................................ 24
Section 3.8. Appointment of Successor Clearing Agency .................................................................. 24
Section 3.9. Definitive Certificates ................................................................................... 25
Page
----
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates ........................................................... 25
Section 3.11. Persons Deemed Owners ........................................................................................ 26
Section 3.12. Cancellation ................................................................................................. 26
Section 3.13. Establishment of Treasury Units .............................................................................. 27
Section 3.14. Re-establishment of Corporate Units .......................................................................... 28
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event .................................................. 30
Section 3.16. No Consent to Assumption ..................................................................................... 30
Section 3.17. CUSIP Numbers ................................................................................................ 31
ARTICLE IV
The Senior Notes
Section 4.1. Payment of Distribution; Rights to Distributions Preserved; Distribution Rate Reset; Notice .................. 31
Section 4.2. Notice and Voting ............................................................................................ 33
Section 4.3. Tax Event Redemption ......................................................................................... 33
Section 4.4. CUSIP Numbers ................................................................................................ 34
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock ........................................................................... 34
Section 5.2. Contract Adjustment Payments ................................................................................. 36
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments ................................................... 41
Section 5.3A Initial Remarketing .......................................................................................... 42
Section 5.3B Second Remarketing ........................................................................................... 43
Section 5.3C Third Remarketing ............................................................................................ 44
Section 5.4. Payment of Purchase Price; Final Remarketing ................................................................. 46
Section 5.5. Issuance of Shares of Common Stock ........................................................................... 49
Section 5.6. Adjustment of Settlement Rate ................................................................................ 49
Section 5.7. Notice of Adjustments and Certain Other Events ............................................................... 54
Section 5.8. Termination Event; Notice .................................................................................... 55
Section 5.9. Early Settlement ............................................................................................. 55
Section 5.10. No Fractional Shares ......................................................................................... 57
Section 5.11. Charges and Taxes ............................................................................................ 58
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment Payments and to Purchase Common Stock .......... 58
Section 6.2. Restoration of Rights and Remedies ........................................................................... 58
Section 6.3. Rights and Remedies Cumulative ............................................................................... 58
ii
Page
-----
Section 6.4. Delay or Omission Not Waiver ............................................................................. 59
Section 6.5. Undertaking for Costs .................................................................................... 59
Section 6.6. Waiver of Stay or Extension Laws ......................................................................... 59
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities ...................................................................... 60
Section 7.2. Notice of Default ........................................................................................ 60
Section 7.3. Certain Rights of Agent .................................................................................. 61
Section 7.4. Not Responsible for Recitals or Issuance of Securities ................................................... 61
Section 7.5. May Hold Securities ...................................................................................... 62
Section 7.6. Money Held in Custody .................................................................................... 62
Section 7.7. Compensation and Reimbursement ........................................................................... 62
Section 7.8. Corporate Agent Required; Eligibility .................................................................... 62
Section 7.9. Resignation and Removal; Appointment of Successor ........................................................ 63
Section 7.10. Acceptance of Appointment by Successor ................................................................... 64
Section 7.11. Merger, Conversion, Consolidation or Succession to Business .............................................. 64
Section 7.12. Preservation of Information; Communications to Holders ................................................... 65
Section 7.13. No Obligations of Agent .................................................................................. 65
Section 7.14. Tax Compliance ........................................................................................... 65
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders ....................................................... 66
Section 8.2. Supplemental Agreements with Consent of Holders .......................................................... 66
Section 8.3. Execution of Supplemental Agreements ..................................................................... 67
Section 8.4. Effect of Supplemental Agreements ........................................................................ 68
Section 8.5. Reference to Supplemental Agreements ..................................................................... 68
ARTICLE IX
Merger, Consolidation, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions .............. 68
Section 9.2. Rights and Duties of Successor Corporation ............................................................... 69
Section 9.3. Opinion of Counsel Given to Agent ........................................................................ 69
ARTICLE X
Covenants
iii
Page
----
Section 10.1. Performance Under Purchase Contracts ..................................................................... 69
Section 10.2. Maintenance of Office or Agency .......................................................................... 70
Section 10.3. Company to Reserve Common Stock .......................................................................... 70
Section 10.4. Covenants as to Common Stock ............................................................................. 70
iv
PURCHASE CONTRACT AGREEMENT, dated as of November 19, 2001 between Duke
Energy Corporation, a North Carolina corporation (the "Company"), and JPMorgan
Chase Bank, a New York banking corporation, acting as purchase contract agent
for the Holders of Securities from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the Certificates
are executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Agent, as provided in this Agreement, the valid obligations
of the Company, and to constitute these presents a valid agreement of the
Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular; and nouns and
pronouns of the masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision;
(d) the following terms have the meanings given to them in this Section
1.1(d).
"Act" when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, as is in effect on the date hereof.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
"Applicable Ownership Interest" means, with respect to a Corporate Unit and
the U.S. Treasury securities in the Treasury Portfolio, (A) a 1/40, or 2.5%,
undivided beneficial ownership interest in a $1,000 principal or interest amount
of a principal or interest strip in a U.S. Treasury security included in such
Treasury Portfolio which matures on or prior to November 15, 2004 and (B) for
the scheduled interest payment date on the Senior Notes that occurs on the
Purchase Contract Settlement Date, in the case of a Successful Initial
Remarketing, Successful Second Remarketing or Successful Third Remarketing, or
for each scheduled interest payment date on the Senior Notes that occurs after
the Tax Event Redemption Date and on or before the Purchase Contract Settlement
Date, in the case of a Tax Event Redemption, a 0.0274% undivided beneficial
ownership interest in a $1,000 principal or interest amount of a principal or
interest strip in a U.S. Treasury security included in the Treasury Portfolio
that matures on or prior to that interest payment date.
"Applicable Principal Amount" means the aggregate principal amount of the
Senior Notes which are components of Corporate Units on the Initial Remarketing
Date, Second Remarketing Date or Third Remarketing Date, as the case may be.
"Authorized Newspaper" means a daily newspaper, in the English language,
customarily published on each day that is a Business Day in The City of New
York, whether or not published on days that are legal holidays, and of general
circulation in The City of New York. The Authorized Newspaper for the purposes
of the Reset Announcement Date is currently anticipated to be The Wall Street
Journal.
"Bankruptcy Code" means Title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a Person
who is the owner of such Book-Entry Interest as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
2
"Board Resolution" means one or more resolutions of the Board of Directors,
a copy of which has been certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Agent.
"Book-Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday, a Sunday or any other
day on which banking institutions and trust companies in New York City (in the
State of New York) are permitted or required by any applicable law to close.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means a Corporate Units Certificate or a Treasury Units
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1.
"Collateral" has the meaning specified in Section 2.1 of the Pledge
Agreement.
"Collateral Agent" means Bank One Trust Company, N.A., as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 3.13.
"Common Stock" means the common stock, no par value, of the Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean such
successor.
"Contract Adjustment Payments" means in the case of Corporate Units and
Treasury Units the amount payable by the Company in respect of each Purchase
Contract constituting a part of a Corporate Unit or Treasury Unit, equal to
3.68% per annum of the Stated Amount, in each case computed on the basis of a
360 day year of twelve 30 day months, plus any Deferred Contract Adjustment
Payments accrued pursuant to Section 5.2 or 5.3.
3
"Corporate Trust Office" means the office of the Agent at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at 450 West 33/rd/ Street, New York,
New York 10001.
"Corporate Unit" means the collective rights and obligations of a Holder of
a Corporate Units, Series B Certificate in respect of one Senior Note, principal
amount $25, or an appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, subject in each case to the Pledge thereof, and
the related Purchase Contract.
"Corporate Units Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Corporate Units specified on
such certificate.
"Corporate Units Register" and "Corporate Units Registrar" have the
respective meanings specified in Section 3.5.
"Coupon Rate" means the percentage rate per annum at which each Senior Note
will bear interest initially.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC until another Clearing Agency becomes
its successor.
"Duke Capital" means Duke Capital Corporation, a Delaware corporation and
wholly owned subsidiary of the Company, or any successor under the Indenture.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Failed Final Remarketing" has the meaning specified in Section 5.4(b).
"Failed Initial Remarketing" has the meaning specified in Section 5.3A.
4
"Failed Second Remarketing" has the meaning specified in Section 5.3B.
"Failed Third Remarketing" has the meaning specified in Section 5.3C.
"Final Remarketing" has the meaning specified in Section 5.4(b).
"Final Remarketing Date" means the third Business Day immediately preceding
the Purchase Contract Settlement Date.
"Global Senior Note Certificate" means a certificate evidencing the
respective rights and obligations of holders in respect of the number of Senior
Notes specified on such certificate and which is registered in the name of the
Depositary or a nominee thereof.
"Global Certificate" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Depositary or a nominee thereof.
"Holder," when used with respect to a Security or any component thereof,
means the Person in whose name the Security evidenced by a Corporate Units
Certificate and/or Treasury Units Certificate is registered in the related
Corporate Units Register and/or Treasury Units Register, as the case may be.
"Indenture" means the Senior Indenture dated as of April 1, 1998 between
Duke Capital and the Indenture Trustee, as amended and supplemented by the
Fourth Supplemental Indenture dated as of November 19, 2001 between Duke Capital
and the Indenture Trustee (the "Fourth Supplemental Indenture").
"Indenture Trustee" means JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), a New York banking corporation, as trustee under the Indenture,
or any successor thereto.
"Initial Remarketing" has the meaning specified in Section 5.3A.
"Initial Remarketing Date" means the third Business Day immediately
preceding August 16, 2004.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by its Chairman of the Board, its President or a Vice
President and by its Chief Financial Officer, its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"New York Office" shall have the meaning set forth in Section 10.2.
"Officer's Certificate" means a certificate of the Company signed on its
behalf by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Agent.
5
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or an Affiliate and
who shall be reasonably acceptable to the Agent.
"Outstanding Securities," with respect to the Corporate Units or
Treasury Units, means, as of the date of determination, all Corporate Units or
Treasury Units, as the case may be, evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A) Treasury Units
for which the Stated Amount of Treasury Securities has been theretofore
deposited with the Agent in trust for the Holders of such Treasury
Units and (B) Corporate Units for which the Stated Amount of the
related Senior Notes or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, has been theretofore
deposited with the Agent in trust for the Holders of such Corporate
Units;
(ii) Corporate Units or Treasury Units evidenced by
Certificates theretofore cancelled by the Agent or delivered to the
Agent for cancellation or deemed cancelled pursuant to the provisions
of this Agreement; and
(iii) Corporate Units or Treasury Units evidenced by
Certificates in exchange for or in lieu of which other Certificates
have been authenticated, executed on behalf of the Holder and delivered
pursuant to this Agreement, other than any such Certificate in respect
of which there shall have been presented to the Agent proof
satisfactory to it that such Certificate is held by a bona fide
purchaser in whose hands the Corporate Units or Treasury Units
evidenced by such Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
number of the Corporate Units or Treasury Units have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Corporate Units
or Treasury Units owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Corporate Units or
Treasury Units which a Responsible Officer of the Agent knows to be so owned
shall be so disregarded. Corporate Units or Treasury Units so owned which have
been pledged in good faith may be regarded as Outstanding Securities if the
pledgee establishes to the satisfaction of the Agent the pledgee's right so to
act with respect to such Corporate Units or Treasury Units and that the pledgee
is not the Company or any Affiliate of the Company.
"Payment Date" means each February 16, May 16, August 16 and November
16, commencing February 16, 2002.
"Permitted Investments" has the meaning set forth in Section 1.1 of the
Pledge Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated
6
association or government or any agency or political subdivision thereof or any
other entity of whatever nature.
"Pledge" means the pledge under the Pledge Agreement of the Senior Notes or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, and of the Treasury Securities, in each case constituting a part of
the Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
by and among the Company, the Collateral Agent and the Agent, on its own behalf
and as attorney-in-fact for the Holders from time to time of the Securities, as
the same may hereafter be amended in accordance with the terms thereof.
"Predecessor Certificate" means a Predecessor Corporate Units Certificate
or a Predecessor Treasury Units Certificate.
"Predecessor Corporate Units Certificate" of any particular Corporate Units
Certificate means every previous Corporate Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Corporate Units evidenced thereby; and, for the purposes of this definition, any
Corporate Units Certificate authenticated and delivered under Section 3. 10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate
Units Certificate shall be deemed to evidence the same rights and obligations of
the Company and the Holder as the mutilated, destroyed, lost or stolen Corporate
Units Certificate.
"Predecessor Treasury Units Certificate" of any particular Treasury Units
Certificate means every previous Treasury Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Treasury Units evidenced thereby; and, for the purposes of this definition, any
Treasury Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury Units
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Treasury
Units Certificate.
"Primary Treasury Dealer" means a primary U.S. government securities dealer
in The City of New York.
"Proceeds" has the meaning set forth in Section 1.1 of the Pledge
Agreement.
"Purchase Contract," when used with respect to any Security, means the
contract forming a part of such Security and obligating the Company to (i) sell,
and the Holder of such Security to purchase, Common Stock and (ii) pay the
Holder Contract Adjustment Payments, if any, on the terms and subject to the
conditions set forth in Article Five hereof.
"Purchase Contract Settlement Date" means November 16, 2004.
"Purchase Contract Settlement Fund" has the meaning specified in Section
5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
7
"Quotation Agent" means (i) Morgan Stanley & Co. Incorporated and its
respective successors, provided, however, that if the foregoing shall cease to
be a Primary Treasury Dealer, the Company shall substitute therefor another
Primary Treasury Dealer or (ii) any other Primary Treasury Dealer selected by
the Company.
"Record Date" for the distribution payable in respect of the Senior Notes
or the Applicable Ownership Percentage of the Treasury Portfolio payable on any
Payment Date means the first day of the month in which the relevant Payment Date
occurs.
"Redemption Amount" means, for each Senior Note, the product of (i) the
principal amount of such Senior Note and (ii) a fraction whose numerator is the
applicable Treasury Portfolio Purchase Price and whose denominator is the
applicable Tax Event Redemption Principal Amount.
"Redemption Price" means the redemption price per Senior Note equal to the
Redemption Amount plus any accrued and unpaid interest on such Senior Note to
the date of redemption.
"Register" means the Corporate Units Register and the Treasury Units
Register.
"Registrar" means the Corporate Units Registrar and the Treasury Units
Registrar.
"Remarketing Agent" has the meaning specified in Section 5.3A.
"Remarketing Agreement" means the Remarketing Agreement dated as of
November 19, 2001 by and among the Company, Duke Capital, Morgan Stanley & Co.
Incorporated, as Remarketing Agent, and the Purchase Contract Agent, and any
supplemental remarketing agreement among such parties entered into in connection
therewith, or any replacement remarketing agreement entered into in accordance
with the Remarketing Agreement, by and among the Company, Duke Capital, any
successor remarketing agent and the Purchase Contract Agent.
"Remarketing Fee" has the meaning specified in Section 5.3A.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Agent" means a nationally recognized investment banking firm chosen
by the Company to determine the Reset Rate. It is currently anticipated that
Morgan Stanley & Co. Incorporated will act in such capacity.
"Reset Announcement Date" means, (i) in the case of the Reset Rate to be
determined on the Initial Remarketing Date, the tenth Business Day immediately
preceding August 16, 2004, (ii) in the case of the Reset Rate to be determined
on the Second Remarketing Date, the tenth Business Day immediately preceding
September 16, 2004, (iii) in the case of the Reset Rate to be determined on the
Third Remarketing Date, the tenth Business Day immediately preceding October 16
2004 and (iv) in the case of the Reset Rate to be determined on the Final
Remarketing Date, the tenth Business Day immediately preceding the Purchase
Contract Settlement Date.
8
"Reset Rate" means the interest rate per annum (to be determined by the
Reset Agent), rounded to the nearest one-thousandth (0.001) of one percent per
annum, equal to the sum of (X) the Reset Spread and (Y) the rate of interest on
(1) in the case of the Reset Rate to be determined on the Initial Remarketing
Date, the Two and One-Quarter Year Benchmark Treasury in effect on the Initial
Remarketing Date, (2) in the case of the Reset Rate to be determined on the
Second Remarketing Date, the Two and One-Sixth Year Benchmark Treasury in effect
on the Second Remarketing Date, (3) in the case of the Reset Rate to be
determined on the Third Remarketing Date, the Two and One-Twelfth Year Benchmark
Treasury in effect on the Third Remarketing Date or (4) in the case of the Reset
Rate to be determined on the Final Remarketing Date, the Two-Year Benchmark
Treasury in effect on the Final Remarketing Date; provided, however, that the
Reset Rate shall not exceed the maximum rate permitted by applicable law.
"Reset Spread" means (a) in the case of the Reset Rate to be determined on
the Initial Remarketing Date, a spread amount to be determined by the Reset
Agent on the applicable Reset Announcement Date as the appropriate spread so
that the Reset Rate will be the interest rate that the Senior Notes should bear
in order for the Applicable Principal Amount of Senior Notes to have an
approximate aggregate market value of 100.5% of the Treasury Portfolio Purchase
Price on the Initial Remarketing Date, (b) in the case of the Reset Rate to be
determined on the Second Remarketing Date, a spread amount to be determined by
the Reset Agent on the applicable Reset Announcement Date as the appropriate
spread so that the Reset Rate will be the interest rate that the Senior Notes
should bear in order for the Applicable Principal Amount of Senior Notes to have
an approximate aggregate market value of 100.5% of the Treasury Portfolio
Purchase Price on the Second Remarketing Date, (c) in the case of the Reset Rate
to be determined on the Third Remarketing Date, a spread amount to be determined
by the Reset Agent on the applicable Reset Announcement Date as the appropriate
spread so that the Reset Rate will be the interest rate that the Senior Notes
should bear in order for the Applicable Principal Amount of Senior Notes to have
an approximate aggregate market value of 100.5% of the Treasury Portfolio
Purchase Price on the Third Remarketing Date and (d) in the case of the Reset
Rate to be determined on the Final Remarketing Date, a spread amount determined
by the Reset Agent on the applicable Reset Announcement Date as the appropriate
spread so that the Reset Rate will be the interest rate that the Senior Notes
should bear in order for the Senior Notes to have an approximate market value of
100.5% of their principal amount on the Final Remarketing Date.
"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Second Remarketing" has the meaning specified in Section 5.3B.
"Second Remarketing Date" means the third Business Day immediately
preceding September 16, 2004.
"Security" means a Corporate Unit or a Treasury Unit.
"Senior Indebtedness" means indebtedness of any kind of the Company unless
the instrument under which such indebtedness is incurred expressly provides that
it is on a parity in right of payment with or subordinate in right of payment to
the Contract Adjustment Payments.
9
"Senior Notes" means the 4.32% Senior Notes due 2006 of Duke Capital, to be
issued under the Indenture as of the date hereof. Any reference herein to "one
Senior Note", "a Senior Note" or "the Senior Note" or any phrase herein having a
similar meaning shall be a reference to a Senior Note in the principal amount of
$25.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means the stated amount of a Security, or $25.
"Successful Final Remarketing" has the meaning specified in Section 5.4(b).
"Successful Initial Remarketing" has the meaning specified in Section 5.3A.
"Successful Second Remarketing" has the meaning specified in Section 5.3B.
"Successful Third Remarketing" has the meaning specified in Section 5.3C.
"Tax Event" means the receipt by Duke Capital of an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, (b) any amendment to or change in an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority or (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the generally accepted position on the original
issue date of the Senior Notes, which amendment, change or proposed change is
effective or which interpretation or pronouncement is announced on or after the
original issue date of the Senior Notes, there is more than an insubstantial
risk that interest payable by Duke Capital on the Senior Notes would not be
deductible, in whole or in part, by Duke Capital for United States federal
income tax purposes.
"Tax Event Redemption" means, if a Tax Event shall occur and be continuing,
the redemption of the Senior Notes, at the option of the Company, in whole but
not in part, on not less than 30 days nor more than 60 days notice.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"Tax Event Redemption Principal Amount" means either (i) if the Tax Event
Redemption Date occurs prior to August 16, 2004 or, in the event of a Failed
Initial Remarketing, prior to September 16, 2004, in the event of a Failed
Second Remarketing, prior to October 16, 2004 or in the event of a Failed Third
Remarketing, prior to the Purchase Contract Settlement Date, the aggregate
principal amount of the Senior Notes which are components of Corporate Units on
the Tax Event Redemption Date or (ii) if the Tax Event Redemption Date occurs on
or after August 16, 2004 in the case of a Successful Initial Remarketing, on or
after September 16, 2004 in the case of a Successful Second Remarketing or on or
after October 16, 2004 in the case of a Successful Third Remarketing or, in the
event of a Failed Third Remarketing, on or after the
10
Purchase Contract Settlement Date, the aggregate principal amount of the Senior
Notes outstanding on such Tax Event Redemption Date.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following
events: (i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) at any time on or prior to the
Purchase Contract Settlement Date, a judgment, decree or court order for the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days, or (iii) at any time on or
prior to the Purchase Contract Settlement Date the Company shall file a petition
for relief under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization or liquidation under the Bankruptcy Code or any other
similar applicable federal or State law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of its property, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due.
"Third Remarketing" has the meaning specified in 5.3C.
"Third Remarketing Date" means the third Business Day immediately
preceding October 16, 2004.
"Threshold Appreciation Price" has the meaning specified in Section
5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or any
successor statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Portfolio" means (1) in connection with the Initial
Remarketing, the Second Remarketing or the Third Remarketing, as the case may
be, a portfolio of zero-coupon U.S. Treasury securities consisting of (a)
principal or interest strips of U.S. Treasury securities which mature on or
prior to November 15, 2004 in an aggregate amount equal to the Applicable
Principal Amount and (b) with respect to the scheduled interest payment date on
the Senior Notes that occurs on the Purchase Contract Settlement Date, principal
or interest strips in U.S. Treasury securities which mature on or prior to such
date in an aggregate amount equal to the aggregate interest payment that would
be due on the Applicable Principal Amount of the Senior Notes on such date if
the applicable Coupon Rate on the Senior Notes were not reset to the Reset Rate
as described in Section 4.1 and (2) in connection with a Tax Event Redemption,
(a) if the Tax Event
11
Redemption Date occurs prior to August 16, 2004 or, in the event of a Failed
Initial Remarketing, prior to September 16, 2004, in the event of a Failed
Second Remarketing, prior to October 16, 2004 or in the event of a Failed Third
Remarketing, prior to the Purchase Contract Settlement Date, a portfolio of
zero-coupon U.S. Treasury securities consisting of (i) principal or interest
strips of U.S. Treasury securities which mature on or prior to November 15, 2004
in an aggregate amount equal to the applicable Tax Event Redemption Principal
Amount and (ii) with respect to each scheduled interest payment date on the
Senior Notes that occurs after the Tax Event Redemption Date and on or before
the Purchase Contract Settlement Date, principal or interest strips of U.S.
Treasury securities which mature on or prior to such date in an aggregate amount
equal to the aggregate interest payment that would be due on the applicable Tax
Event Redemption Principal Amount of the Senior Notes on such date, and (b) if
the Tax Event Redemption Date occurs on or after August 16, 2004 in the case of
a Successful Initial Remarketing, on or after September 16, 2004 in the case of
a Successful Second Remarketing or on or after October 16, 2004 in the case of a
Successful Third Remarketing or, in the event of a Failed Third Remarketing, on
or after the Purchase Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury securities consisting of (i) principal or interest strips of U.S.
Treasury securities which mature on or prior to November 16, 2006 in an
aggregate amount equal to the applicable Tax Event Redemption Principal Amount
and (ii) with respect to each scheduled interest payment date on the Senior
Notes that occurs after the Tax Event Redemption Date, principal or interest
strips of such U.S. Treasury securities which mature on or prior to such date in
an aggregate amount equal to the aggregate interest payment that would be due on
the applicable Tax Event Redemption Principal Amount of the Senior Notes on such
date.
"Treasury Portfolio Purchase Price" means the lowest aggregate price
quoted by the Primary Treasury Dealer to the Quotation Agent (a) in the case of
a Tax Event Redemption, on the third Business Day immediately preceding the Tax
Event Redemption Date for the purchase of the applicable Treasury Portfolio for
settlement on the Tax Event Redemption Date and (b) in the case of the Initial
Remarketing, the Second Remarketing or the Third Remarketing, on the Initial
Remarketing Date, the Second Remarketing Date or the Third Remarketing Date,
respectively, for the purchase of the applicable Treasury Portfolio for
settlement on November 16, 2004.
"Treasury Security" means zero-coupon U.S. Treasury security (CUSIP
Number 912803AB9) that matures on November 15, 2004.
"Treasury Unit" means the collective rights, and obligations of a
Holder of a Treasury Units, Series B Certificate in respect of a 1/40, or 2.5%,
undivided beneficial ownership interest in a Treasury Security with a principal
amount of $ 1,000, subject to the Pledge thereof, and the related Purchase
Contract.
"Treasury Units Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Treasury Units specified
on such certificate.
"Treasury Units Register" and "Treasury Units Registrar" have the
respective meanings specified in Section 3.5.
12
"Two-Year Benchmark Treasury" means direct obligations of the United
States (which may be obligations traded on a when-issued basis only) having a
maturity comparable to the remaining term to maturity of the Senior Notes, as
agreed upon by the Company and the Reset Agent. The rate for the Two-Year
Benchmark Treasury will be the bid side rate displayed at 10:00 A.M., New York
City time, on the Final Remarketing Date in the Telerate system (or if the
Telerate system is (a) no longer available on the Final Remarketing Date or (b)
in the opinion of the Reset Agent (after consultation with the Company) no
longer an appropriate system from which to obtain such rate, such other
nationally recognized quotation system as, in the opinion of the Reset Agent
(after consultation with the Company) is appropriate). If such rate is not so
displayed, the rate for the Two-Year Benchmark Treasury shall be, as calculated
by the Reset Agent, the yield to maturity for the Two-Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on
the Final Remarketing Date of three leading United States government securities
dealers selected by the Reset Agent (after consultation with the Company) (which
may include the Reset Agent or an Affiliate thereof).
"Two and One-Quarter Year Benchmark Treasury" means direct obligations
of the United States (which may be obligations traded on a when-issued basis
only) having a maturity comparable to the remaining term to maturity of the
Senior Notes, as agreed upon by the Company and the Reset Agent. The rate for
the Two and-One Quarter Year Benchmark Treasury will be the bid side rate
displayed at 10:00 A.M., New York City time, on the Initial Remarketing Date in
the Telerate system (or if the Telerate system is (a) no longer available on the
Initial Remarketing Date or (b) in the opinion of the Reset Agent (after
consultation with the Company) no longer an appropriate system from which to
obtain such rate, such other nationally recognized quotation system as, in the
opinion of the Reset Agent (after consultation with the Company) is
appropriate). If such rate is not so displayed, the rate for the Two and
One-Quarter Year Benchmark Treasury shall be, as calculated by the Reset Agent,
the yield to maturity for the Two and One-Quarter Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on
the Initial Remarketing Date of three leading United States government
securities dealers selected by the Reset Agent (after consultation with the
Company) (which may include the Reset Agent or an Affiliate thereof).
"Two and One-Sixth Year Benchmark Treasury" means direct obligations of
the United States (which may be obligations traded on a when-issued basis only)
having a maturity comparable to the remaining term to maturity of the Senior
Notes, as agreed upon by the Company and the Reset Agent. The rate for the Two
and-One Sixth Year Benchmark Treasury will be the bid side rate displayed at
10:00 A.M., New York City time, on the Second Remarketing Date in the Telerate
system (or if the Telerate system is (a) no longer available on the Second
Remarketing Date or (b) in the opinion of the Reset Agent (after consultation
with the Company) no longer an appropriate system from which to obtain such
rate, such other nationally recognized quotation system as, in the opinion of
the Reset Agent (after consultation with the Company) is appropriate). If such
rate is not so displayed, the rate for the Two and One-Sixth Year Benchmark
Treasury shall be, as calculated by the Reset Agent, the yield to maturity for
the
13
Two and One-Sixth Year Benchmark Treasury, expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis, and computed by taking the arithmetic mean of the secondary market bid
rates, as of 10:30 A.M., New York City time, on the Second Remarketing Date of
three leading United States government securities dealers selected by the Reset
Agent (after consultation with the Company) (which may include the Reset Agent
or an Affiliate thereof).
"Two and One-Twelfth Year Benchmark Treasury" means direct obligations
of the United States (which may be obligations traded on a when-issued basis
only) having a maturity comparable to the remaining term to maturity of the
Senior Notes, as agreed upon by the Company and the Reset Agent. The rate for
the Two and-One Twelfth Year Benchmark Treasury will be the bid side rate
displayed at 10:00 A.M., New York City time, on the Third Remarketing Date in
the Telerate system (or if the Telerate system is (a) no longer available on the
Third Remarketing Date or (b) in the opinion of the Reset Agent (after
consultation with the Company) no longer an appropriate system from which to
obtain such rate, such other nationally recognized quotation system as, in the
opinion of the Reset Agent (after consultation with the Company) is
appropriate). If such rate is not so displayed, the rate for the Two and
One-Twelfth Year Benchmark Treasury shall be, as calculated by the Reset Agent,
the yield to maturity for the Two and One-Twelfth Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on
the Third Remarketing Date of three leading United States government securities
dealers selected by the Reset Agent (after consultation with the Company) (which
may include the Reset Agent or an Affiliate thereof).
"Underwriting Agreement" means the Underwriting Agreement dated
November 13, 2001 among the Company, Duke Capital and Morgan Stanley & Co.
Incorporated as the underwriter.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and, if
requested by the Agent, an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
14
(1) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, he or
she or it has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless the Company knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, the
Company stating that the information with respect to such factual matters is in
the possession of the Company unless the Person giving such certificate or
Opinion of Counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to the Company. Such
instrument or
15
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 7. 1) conclusive in favor of the Agent and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Securities shall be proved by the Corporate Units
Register or the Treasury Units Register, as the case may be.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Corporate Units and the Outstanding Treasury Units,
as the case may be, on such record date, and no other Holders, shall be entitled
to take the relevant action with respect to the Corporate Units or the Treasury
Units, as the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing in this paragraph
shall be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite number of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Agent in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Agent in writing, and to each Holder of Securities in the manner
set forth in Section 1.6, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the Company shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
16
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
Section 1.5. Notices.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be
sufficient for everypurpose hereunder (unless otherwise herein
expressly provided) if made,given, furnished or filed in writing
personally delivered or mailed, first-class postage prepaid, to and
the Agent at JPMorgan Chase Bank, 450 West 33rd Street, New York, New
York 10001, Attention: Institutional Trust Services, or at any other
address previously furnished in writing by the Agent to the Holders and
the Company; or
(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made,given, furnished or filed in writing and
personally delivered ormailed, first-class postage prepaid, to the
Company at Duke EnergyCorporation, 526 South Church Street, Charlotte,
North Carolina 28202,Attention: Chief Financial Officer, or at any
address previouslyfurnished in writing to the Agent by the Company; or
(3) the Collateral Agent by the Agent, the Company or any
Holder shall be sufficient for every purpose hereunder (unless
otherwise hereinexpressly provided) if made, given, furnished or filed
in writing andpersonally delivered or mailed, first-class postage
to the Collateral Agent at Bank One Trust Company, N.A., One North
prepaid, addressed State Street, 9/th/ Floor, Chicago, Illinois 60602,
Trust Services Division, or at any other address previously furnished
in writing by the Collateral Agent to the Agent, the Company and the
Holders; or
(4) the Indenture Trustee by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
mailed, first-class postage prepaid, addressed to the Indenture Trustee
at JPMorgan Chase Bank, 450 West 33/rd/ Street, New York, New York
10001, Attention: Institutional Trust Services, or at any other address
previously furnished in writing by the Indenture Trustee to the
Company.
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this
17
Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Agent, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, then, to the extent permitted by law, the
validity, legality and enforceability of the remaining provisions hereof and
thereof shall not in any way be affected or impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement to the extent provided
hereby and shall be bound by all of the applicable terms and conditions hereof
and of the Securities evidenced by their Certificates by their acceptance of
delivery of such Certificates.
Section 1.11. Governing Law.
THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Corporate Units
Certificates or the Treasury Units Certificates) payment of the Contract
Adjustment Payments, if any, shall not be made on such date, but such payments
shall be made on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, provided that no interest shall accrue or be
payable
18
by the Company or any Holder for the period from and after any such Payment Date
unless there shall be a default in the payment due on such next succeeding
Business Day, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Corporate Units Certificates or the Treasury Units Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the immediately following Business Day with the same force and
effect as if performed on the Purchase Contract Settlement Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder.
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
The Corporate Units Certificates (including the form of Purchase
Contract forming part of the Corporate Units evidenced thereby) shall be in
substantially the form set forth in Exhibit A hereto, with such letters, numbers
or other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Corporate Units are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Corporate Units Certificates, as evidenced by their
execution of the Corporate Units Certificates.
The definitive Corporate Units Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing such
Corporate Units Certificates, consistent with the provisions of this Agreement,
as evidenced by their execution thereof.
The Treasury Units Certificates (including the form of Purchase Contract
forming part of the Treasury Units evidenced thereby) shall be in substantially
the form set forth in Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such
19
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Treasury Units are
listed or any depositary therefor, or as may, consistently herewith, be
determined by the officers of the Company executing such Treasury Units
Certificates, as evidenced by their execution of the Treasury Units
Certificates.
The definitive Treasury Units Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing such
Treasury Units Certificates, consistent with the provisions of this Agreement,
as evidenced by their execution thereof.
Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED
IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING
AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Corporate
Units shall be in substantially the form set forth on the form of the Corporate
Units Certificates.
The form of the Agent's certificate of authentication of the Treasury
Units shall be in substantially the form set forth on the form of the Treasury
Units Certificates.
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations.
The aggregate number of Corporate Units and Treasury Units evidenced by
Certificates authenticated, executed on behalf of the Holders and delivered
hereunder is limited to 30,000,000 (or 34,500,000 if the Underwriter's
overallotment option is exercised in full) except for Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Certificates pursuant to Section 3.4, 3.5,
3.9, 3.10, 3.13, 3.14, 5.9 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Corporate Unit or Treasury Unit and any integral
multiple thereof.
20
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Corporate Units Certificate shall evidence the number of Corporate
Units specified therein, with each such Corporate Unit representing the
ownership by the Holder thereof of a beneficial interest in a Senior Note or the
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
subject to the Pledge of such Senior Note or the Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, by such Holder pursuant to the
Pledge Agreement, and the rights and obligations of the Holder thereof and the
Company under one Purchase Contract. The Agent as attorney-in-fact for, and on
behalf of, the Holder of each Corporate Unit shall pledge, pursuant to the
Pledge Agreement, the Senior Note or the Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, forming a part of such Corporate Unit,
to the Collateral Agent and grant to the Collateral Agent a security interest in
the right, title, and interest of such Holder in such Senior Note or the
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, for
the benefit of the Company, to secure the obligation of the Holder under each
Purchase Contract to purchase the Common Stock of the Company.
Each Treasury Units Certificate shall evidence the number of Treasury
Units specified therein, with each such Treasury Unit representing the ownership
by the Holder thereof of a 1/40, or 2.5%, undivided beneficial interest in a
Treasury Security with a principal amount at maturity equal to $1,000, subject
to the Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the Company
under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf
of, the Holder of each Treasury Unit shall pledge, pursuant to the Pledge
Agreement, the Treasury Security to the Collateral Agent and grant to the
Collateral Agent a security interest in the right, title and interest of such
Holder in such Treasury Security, for the benefit of the Company, to secure the
obligation of the Holder under each Purchase Contract to purchase the Common
Stock of the Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holders and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents and its
Treasurer or one of its Assistant Treasurers or its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
21
No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized officer of the Agent, as such Holder's
attorney-in-fact. Such signature by an authorized officer of the Agent shall be
conclusive evidence that the Holder of such Certificate has entered into the
Purchase Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized officer of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Corporate Units or Treasury Units are listed,
or as may, consistently herewith, be determined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office or the New York Office, at the expense of the Company and
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder, and deliver in
exchange therefor, one or more definitive Certificates of like tenor and
denominations and evidencing a like number of Corporate Units or Treasury Units,
as the case may be, as the temporary Certificate or Certificates so surrendered.
Until so exchanged, the temporary Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Corporate Units
or Treasury Units, as the case may be, evidenced thereby as definitive
Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a Register (the
"Corporate Units Register") in which, subject to such reasonable regulations as
it may prescribe, the Agent shall provide for the registration of Corporate
Units Certificates and of transfers of Corporate Units Certificates (the Agent,
in such capacity, the "Corporate Units Registrar") and a Register (the "Treasury
Units Register") in which, subject to such reasonable regulations as it may
prescribe,
22
the Agent shall provide for the registration of Treasury Units Certificates and
of transfers of Treasury Units Certificates (the Agent, in such capacity, the
"Treasury Units Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office or the New York Office, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
designated transferee or transferees, and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any authorized
denominations, like tenor, and evidencing a like number of Corporate Units or
Treasury Units, as the case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Corporate Units or Treasury Units, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office or the New York
Office. Whenever any Certificates are so surrendered for exchange, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver the Certificates which the Holder
making the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Corporate
Units or Treasury Units, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the
Corporate Units or Treasury Units, as the case may be, evidenced by the
Certificate surrendered upon such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer
or for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or its attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.4,
3.6, 3.9 and 8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver, any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Business Day immediately preceding the earlier of the Purchase
Contract Settlement Date or the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date
has occurred, deliver the shares of Common Stock issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate (together with any cash or other property to which the Holder is
entitled), or (ii) if a Termination Event shall have occurred prior to the
Purchase Contract Settlement Date, transfer the Senior Notes, the appropriate
Applicable Ownership Interest of the Treasury Portfolio or the Treasury
Securities, as
23
the case may be, evidenced thereby, in each case subject to the applicable
conditions and in accordance with the applicable provisions of Article Five
hereof.
Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary or a nominee or a custodian thereof by, or on behalf of, the Company.
Such Global Certificate shall initially be registered on the books and records
of the Company in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner's interest in such Global Certificate, except as provided in
Section 3.9. The Agent shall enter into an agreement with the Depositary if so
requested by the Company. Unless and until definitive, fully registered
Certificates have been issued to Beneficial Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force and
effect;
(b) the Company and the Agent shall be entitled to deal with the
Clearing Agency for all purposes of this Agreement (including the payment of
Contract Adjustment Payments, if any, and receiving approvals, votes or consents
hereunder) as the Holder of the Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6 conflict
with any other provisions of this Agreement, the provisions of this Section 3.6
shall control; and
(d) the rights of the Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. The Clearing Agency will make book entry transfers
among Clearing Agency Participants and receive and transmit payments of Contract
Adjustment Payments, if any, to such Clearing Agency Participants.
Section 3.7. Notices to Holders.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Securities registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency ceases to be eligible as a "clearing agency"
under the Exchange Act or is unwilling or unable to continue to serve as
security depositary, the Company may, in its sole discretion, appoint a
successor Clearing Agency with respect to the Securities.
24
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency ceases to be eligible as a "clearing agency"
under the Exchange Act and a successor Clearing Agency is not appointed pursuant
to Section 3.8 hereof within 90 days after the Company becomes aware of such
cessation, (ii) the Company receives a notice from the Clearing Agency that the
Clearing Agency is unwilling or unable to continue as a depositary with respect
to the Securities and no successor depositary has been appointed within 90 days
after the Company receives a notice thereof from the Clearing Agency, or (iii)
the Company elects to terminate the book-entry system through the Clearing
Agency with respect to the Securities, then upon surrender of the Global
Certificates representing the Book Entry Interests with respect to the
Securities by the Clearing Agency, accompanied by registration instructions, the
Company shall cause definitive Certificates to be delivered to Beneficial Owners
in accordance with the instructions of the Clearing Agency. Neither the Company
nor the Agent shall be liable for any delay in delivery of such instructions and
may conclusively rely on and shall be protected in relying on, such
instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate at the cost of the Holder, evidencing the same number of Corporate
Units or Treasury Units, as the case may be, and bearing a Certificate number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence
to their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to the
Company or the Agent that such Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver to the Holder,
in lieu of any such destroyed, lost or stolen Certificate, a new Certificate,
evidencing the same number of Corporate Units or Treasury Units, as the case may
be, and bearing a Certificate number not contemporaneously outstanding, at the
cost of the Holder.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the earlier of
the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate (together with any cash or other property to which
the Holder is entitled), or (ii) if a Termination Event shall have occurred
prior to the Purchase Contract Settlement Date, transfer the Senior Notes, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or the
Treasury Securities, as the case may be, evidenced thereby, in each case
25
subject to the applicable conditions and in accordance with the applicable
provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section, the
Company and the Agent may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the reasonable fees and expenses of
the Agent) connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
the Company and the Agent, and any agent of the Company or the Agent, may treat
the Person in whose name such Certificate is registered as the owner of the
Corporate Units or Treasury Units evidenced thereby, for the purpose of
receiving interest on the Senior Notes or on the maturing quarterly interest
strips of the Treasury Portfolio, as applicable, receiving payments of Contract
Adjustment Payments, if any, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any interest on the Senior Notes or
the Contract Adjustment Payments, if any, payable in respect of the Purchase
Contracts constituting a part of the Corporate Units or Treasury Units evidenced
thereby shall be overdue and notwithstanding any notice to the contrary, and
neither the Company nor the Agent, nor any agent of the Company or the Agent,
shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Senior
Notes, the appropriate Applicable Ownership Interest of the Treasury Portfolio
or Treasury Securities, as the case may be, after the occurrence of a
Termination Event or pursuant to an Early Settlement, or upon the registration
of
26
a transfer or exchange of a Security, or a Collateral Substitution or the
re-establishment of a Corporate Unit shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange for any
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the Agent shall
upon written request be returned to the Company.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.13. Establishment of Treasury Units.
A Holder may separate the Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable, from the related
Purchase Contracts in respect of Corporate Units by substituting for such Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, Treasury Securities in an aggregate principal
amount of such Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable (a "Collateral Substitution"), at any time from and
after the date of this Agreement and on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date in the case of the
Senior Notes and on or prior to the second Business Day immediately preceding
the Purchase Contract Settlement Date in the case of the appropriate Applicable
Ownership Interest of the Treasury Portfolio, in each case by (a) depositing
with the Collateral Agent Treasury Securities having an aggregate principal
amount at maturity equal to the aggregate principal amount of the Senior Notes
comprising part of such Corporate Units or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio comprising part of such Corporate Units, as the case may be,
and (b) transferring the related Corporate Units to the Agent accompanied by a
notice to the Agent, substantially in the form of Exhibit D hereto, stating that
the Holder has transferred the relevant amount of Treasury Securities to the
Collateral Agent and requesting that the Agent instruct the Collateral Agent to
release the Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, underlying such Corporate Units,
whereupon the Agent shall promptly give such instruction to the Collateral
Agent, substantially in the form of Exhibit C hereto. Upon receipt of the
Treasury Securities described in clause (a) above and the instruction described
in clause (b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release to the Agent, on behalf of the Holder, Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, having the appropriate aggregate principal amount
in the case of such Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from the Pledge, free
and clear of the Company's security interest therein, and upon receipt thereof
the Agent shall promptly:
27
(i) cancel the related Corporate Units;
(ii) transfer the Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, to
the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Treasury Units Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Treasury Units as the number
of Corporate Units that were evidenced by the cancelled Corporate Units
Certificate.
Holders who elect to separate the Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
from the related Purchase Contract and to substitute Treasury Securities for
such Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, shall be responsible for any fees or
expenses payable to the Collateral Agent for its services as Collateral Agent in
respect of the substitution, and the Company shall not be responsible for any
such fees or expenses.
Holders may make Collateral Substitutions (i) only in integral
multiples of 40 Corporate Units if Senior Notes are being substituted for by
Treasury Securities, or (ii) only in integral multiples of 100,000 Corporate
Units if the appropriate Applicable Ownership Interests of the Treasury
Portfolio are being substituted for by Treasury Securities.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Corporate Units or
fails to deliver a Corporate Units Certificate(s) to the Agent after depositing
Treasury Securities with the Collateral Agent, the Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, constituting a part of such Corporate Units, and any interest on such
Senior Note or the Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, shall be held in the name of the Agent or its nominee in trust
for the benefit of such Holder, until such Corporate Units are so transferred or
the Corporate Units Certificate is so delivered, as the case may be, or, with
respect to a Corporate Units Certificate, such Holder provides evidence
satisfactory to the Company and the Agent that such Corporate Units Certificate
has been destroyed, lost or stolen, together with any indemnity that may be
required by the Agent and the Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying a Corporate Unit remains in effect, such Corporate Unit
shall not be separable into its constituent parts, and the rights and
obligations of the Holder in respect of the Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, and
Purchase Contract comprising such Corporate Unit may be acquired, and may be
transferred and exchanged, only as a Corporate Unit.
Section 3.14. Reestablishment of Corporate Units.
A Holder of a Treasury Unit may recreate Corporate Units at any time
(i) on or prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, if a Tax Event Redemption or a Successful Initial
Remarketing, Successful Second Remarketing or Successful Third Remarketing
alternatively has not occurred, and (ii) on or prior to the second
28
Business Day immediately preceding the Purchase Contract Settlement Date, if a
Tax Event Redemption or a Successful Initial Remarketing, Successful Second
Remarketing or Successful Third Remarketing has occurred and an Applicable
Ownership Interest in the Treasury Portfolio has become a component of the
Corporate Units, in each case by (a) depositing with the Collateral Agent Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, having an aggregate principal amount in the case
of the Senior Notes, or an appropriate Applicable Ownership Interest (as defined
in clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, equal to the aggregate principal amount at maturity of the Treasury
Securities comprising part of the Treasury Units and (b) transferring the
related Treasury Units to the Agent accompanied by a notice to the Agent,
substantially in the form of Exhibit D hereto, stating that the Holder has
transferred the relevant amount of Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, to the
Collateral Agent and requesting that the Agent instruct the Collateral Agent to
release the Treasury Securities underlying such Treasury Units, whereupon the
Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit C hereto. Upon receipt of the Senior Notes
or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, described in clause (a) above and the instruction described in
clause (b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release to the Agent, on behalf of the Holder, the
Treasury Securities having a corresponding aggregate principal amount from the
Pledge, free and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Treasury Units;
(ii) transfer the Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Corporate Units Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Corporate Units as the number
of Treasury Units that were evidenced by the cancelled Treasury Units
Certificate.
Holders of Treasury Units may reestablish Corporate Units in integral
multiples of 40 Treasury Units for 40 Corporate Units if a Tax Event Redemption
or a Successful Initial Remarketing, Successful Second Remarketing or Successful
Third Remarketing has not occurred, and in integral multiples of 100,000
Treasury Units for 100,000 Corporate Units if a Tax Event Redemption or a
Successful Initial Remarketing, Successful Second Remarketing or Successful
Third Remarketing has occurred.
In the event a Holder re-establishing Corporate Units pursuant to this
Section 3.14 fails to effect a book-entry transfer of the Treasury Units or
fails to deliver a Treasury Units Certificate(s) to the Agent after depositing
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, with the Collateral Agent, the Treasury
Securities constituting a part of such Treasury Units shall be held in the name
of the Agent or its nominee in trust for the benefit of such Holder, until such
Treasury Units are so transferred or the Treasury Units Certificate is so
delivered, as the case may be, or, with respect to a Treasury Units Certificate,
such Holder provides evidence satisfactory to the Company and the Agent that
such
29
Treasury Units Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Treasury Unit remains in effect, such Treasury Unit shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Treasury Unit in respect of the Treasury Security and
Purchase Contract comprising such Treasury Unit may be acquired, and may be
transferred and exchanged, only as a Treasury Unit.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the
Agent of the Senior Notes, the appropriate Applicable Ownership Interest of the
Treasury Portfolio or the Treasury Securities, as the case may be, underlying
the Corporate Units and the Treasury Units pursuant to the terms of the Pledge
Agreement, the Agent shall request transfer instructions with respect to such
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio or Treasury Securities, as the case may be, from each Holder by
written request mailed to such Holder at its address as it appears in the
Corporate Units Register or the Treasury Units Register, as the case may be.
Upon book-entry transfer of the Corporate Units or Treasury Units or delivery of
a Corporate Units Certificate or Treasury Units Certificate to the Agent with
such transfer instructions, the Agent shall transfer the Senior Notes, the
Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities,
as the case may be, underlying such Corporate Units or Treasury Units, as the
case may be, to such Holder by book-entry transfer, or other appropriate
procedures, in accordance with such instructions; provided, however, that, to
the extent that a Holder of Corporate Units or Treasury Units would otherwise be
entitled to receive less than $1,000 principal amount at maturity of the
Treasury Portfolio or the Treasury Securities, the Agent shall dispose of such
securities for cash using a customary method (and shall have no liability
relating to the amount of cash so received, unless any deficiency in the amount
of such cash arose from the negligence, willful misconduct or bad faith of the
Agent), and transfer the appropriate amount of such cash to such Holder in
accordance with such Holder's instructions. In the event a Holder of Corporate
Units or Treasury Units fails to effect such transfer or delivery, the Senior
Notes, the appropriate Applicable Ownership Interest of the Treasury Portfolio
or Treasury Securities, as the case may be, underlying such Corporate Units or
Treasury Units, as the case may be, and any distributions thereon, shall be held
in the name of the Agent or its nominee in trust for the benefit of such Holder,
until such Corporate Units or Treasury Units are transferred or the Corporate
Units Certificate or Treasury Units Certificate is surrendered or such Holder
provides satisfactory evidence that such Corporate Units Certificate or Treasury
Units Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Section 3.16. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise of the related Purchase Contract by the Company
or its trustee, receiver, liquidator or a person or entity performing similar
functions, in the event that the Company becomes the debtor under the
30
Bankruptcy Code or subject to other similar state or federal law providing for
reorganization or liquidation.
Section 3.17. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Agent shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Agent of any
changes in the "CUSIP" numbers.
ARTICLE IV
The Senior Notes
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset; Notice.
A distribution on any Senior Note or on the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, which is paid
on any Payment Date shall, subject to receipt thereof by the Agent from the
Collateral Agent as provided by the terms of the Pledge Agreement, be paid to
the Person in whose name the Corporate Units Certificate (or one or more
Predecessor Corporate Units Certificates) of which such Senior Note or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, is a part is registered at the close of business on the Record Date for
such Payment Date.
Each Corporate Units Certificate evidencing Senior Notes (or the
appropriate Applicable Ownership Interest in the Treasury Portfolio) delivered
under this Agreement upon registration of transfer of or in exchange for or in
lieu of any other Corporate Units Certificate shall carry the rights to
distributions accrued and unpaid, and distributions to accrue, which were or
will be carried by the Senior Notes (or such Applicable Ownership Interest in
the Treasury Portfolio, as the case may be) underlying such other Corporate
Units Certificate.
In the case of any Corporate Units with respect to which Cash
Settlement of the underlying Purchase Contract is effected on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date
pursuant to prior notice, or with respect to which Early Settlement of the
underlying Purchase Contract is effected on an Early Settlement Date, or with
respect to which a Collateral Substitution is effected, in each case on a date
that is after any Record Date and on or prior to the next succeeding Payment
Date, interest on the Senior Notes or distributions on the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
underlying such Corporate Units otherwise payable on such Payment Date shall be
payable on such Payment Date notwithstanding such Cash Settlement or Early
Settlement or Collateral Substitution, and such distributions shall, subject to
receipt thereof by the Agent, be
31
payable to the Person in whose name the Corporate Units Certificate (or one or
more Predecessor Certificates) was registered at the close of business on the
Record Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Corporate Units with respect to which (x) Cash
Settlement of the underlying Purchase Contract is effected on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date or (y)
Early Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, as the case may be, or with respect to which a Collateral
Substitution has been effected, distributions on the related Senior Notes or on
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, that would otherwise be payable after the Purchase Contract
Settlement Date or Early Settlement Date or Collateral Substitution shall not be
payable hereunder to the Holder of such Corporate Units; provided, however, that
-------- -------
to the extent that such Holder continues to hold the separated Senior Notes that
formerly comprised a part of such Holder's Corporate Units, such Holder shall be
entitled to receive the distributions on such separated Senior Notes.
The applicable Coupon Rate on the Senior Notes on and after August 16,
2004 alternatively will be reset on the Successful Initial Remarketing Date,
Successful Second Remarketing Date or Successful Third Remarketing Date to the
applicable Reset Rate (such Reset Rate to be in effect on and after August 16,
2004, September 16, 2004, or October 16, 2004, respectively), except in the
event of a Failed Third Remarketing. In the event of a Failed Third Remarketing,
the applicable Coupon Rate on the Senior Notes outstanding on and after the
Purchase Contract Settlement Date will be reset on the Final Remarketing Date to
the applicable Reset Rate (such Reset Rate to be in effect on and after the
Purchase Contract Settlement Date). On the applicable Reset Announcement Date
the Reset Spread and the Two-Year Benchmark Treasury, Two and One-Twelfth Year
Benchmark Treasury, Two and One-Sixth Year Benchmark Treasury or Two and
One-Quarter Year Benchmark Treasury, as applicable, to be used to determine the
Reset Rate will be announced by Duke Capital or the Company, such announcement
to be made by a customary method, as determined by Duke Capital or the Company,
as applicable. On the Business Day immediately following the Reset Announcement
Date, the holders of Senior Notes will be notified of such Reset Spread and
Two-Year Benchmark Treasury, Two and One-Twelfth Year Benchmark Treasury, Two
and One-Sixth Year Benchmark Treasury or Two and One-Quarter Benchmark Treasury,
as applicable, by Duke Capital or the Company. Such notice shall be sufficiently
given to holders of Senior Notes if published in an Authorized Newspaper.
Not later than 7 calendar days nor more than 15 calendar days prior to
the Reset Announcement Date, the Company will request DTC or its nominee (or any
successor Clearing Agency or its nominee) by first-class mail, postage prepaid,
to notify the Beneficial Owners or Clearing Agency Participants holding
Corporate Units or Treasury Units of such Reset Announcement Date and, in the
case of a Final Remarketing, the procedures to be followed by Holders of
Corporate Units who intend to settle their obligation under the Purchase
Contract with separate cash on the fourth Business Day immediately preceding the
Purchase Contract Settlement Date.
32
Section 4.2. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Senior
Notes pledged with the Collateral Agent but only to the extent instructed by the
Holders as described below. Upon receipt of notice of any meeting at which
holders of Senior Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Senior Notes, the Agent shall, as
soon as practicable thereafter, mail to the Holders of Corporate Units a notice
(a) containing such information as is contained in the notice or solicitation,
(b) stating that each Holder on the record date set by the Agent therefor
(which, to the extent possible, shall be the same date as the record date for
determining the holders of Senior Notes entitled to vote) shall be entitled to
instruct the Agent as to the exercise of the voting rights pertaining to the
Senior Notes underlying their Corporate Units and (c) stating the manner in
which such instructions may be given. Upon the written request of the Holders of
Corporate Units on such record date, the Agent shall endeavor insofar as
practicable to vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Senior Notes as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of a Corporate Unit, the Agent shall abstain from
voting the Senior Notes underlying such Corporate Units. The Company hereby
agrees, if applicable, to solicit Holders of Corporate Units to timely instruct
the Agent in order to enable the Agent to vote such Senior Notes.
Section 4.3. Tax Event Redemption.
Upon the occurrence of a Tax Event Redemption prior to August 16, 2004
or, in the event of a Failed Initial Remarketing, prior to September 16, 2004,
in the event of a Failed Second Remarketing, prior to October 16, 2004 or in the
event of a Failed Third Remarketing, prior to the Purchase Contract Settlement
Date, pursuant to the terms of the Pledge Agreement, the Collateral Agent will
apply, out of the aggregate Redemption Price for the Senior Notes that are
components of Corporate Units, an amount equal to the aggregate Redemption
Amount for the Senior Notes that are components of Corporate Units to purchase
on behalf of the Holders of Corporate Units the Treasury Portfolio and promptly
remit the remaining portion of such Redemption Price to the Agent for payment to
the Holders of such Corporate Units, such payment to be made promptly to Holders
of record on the redemption date, each such Holder being entitled to receive a
pro rata portion of such remaining portion, based on the number of Corporate
Units held by such Person. The Treasury Portfolio will be substituted for the
pledged Senior Notes, and will be held by the Collateral Agent in accordance
with the terms of the Pledge Agreement to secure the obligation of each Holder
of a Corporate Unit to purchase the Common Stock of the Company under the
Purchase Contract constituting a part of such Corporate Units. Following the
occurrence of a Tax Event Redemption prior to August 16, 2004 or, in the event
of a Failed Initial Remarketing, prior to September 16, 2004, in the event of a
Failed Second Remarketing, prior to October 16, 2004 or in the event of a Failed
Third Remarketing, prior to the Purchase Contract Settlement Date, the Holders
of Corporate Units and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Treasury Portfolio as the Holder of
Corporate Units and the Collateral Agent had in respect of the Senior Notes, as
the case may be, subject to the Pledge thereof as provided in Articles 2, 3, 4,
5 and 6 of the Pledge Agreement, and any reference herein or in the Certificates
to the Senior Notes shall be deemed to
33
be a reference to such Treasury Portfolio and any reference herein or in the
Certificates to interest on the Senior Notes shall be deemed to be a reference
to corresponding distributions on the Treasury Portfolio. The Company may cause
to be made in any Corporate Units Certificates thereafter to be issued such
change in phraseology and form (but not in substance) as may be appropriate to
reflect the substitution of the Treasury Portfolio for Senior Notes as
collateral.
Section 4.4. CUSIP Numbers.
Duke Capital in issuing the Senior Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Indenture Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Senior Notes or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Senior Notes, and any such redemption shall not be
affected by any defect in or omission of such numbers. Duke Capital will
promptly notify the Indenture Trustee and the Agent of any changes in the
"CUSIP" numbers.
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall, unless an Early Settlement has occurred
in accordance with Section 5.9 hereof, obligate the Holder of the related
Security to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price"), a
number of newly issued shares of Common Stock equal to the Settlement Rate
unless, on or prior to the Purchase Contract Settlement Date, there shall have
occurred a Termination Event with respect to the Security of which such Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is equal to or greater than $47.5481 (the
"Threshold Appreciation Price"), .5258 shares of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $40.125, the number of shares of Common
Stock per Purchase Contract equal to the Stated Amount divided by the Applicable
Market Value and (c) if the Applicable Market Value is less than or equal to
$40.125, .6231 shares of Common Stock per Purchase Contract, in each case
subject to adjustment as provided in Section 5.6 (and in each case rounded
upward or downward to the nearest 1/10,000th of a share). As provided in Section
5.10, no fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of fractional shares
in connection with an Early Settlement, the third Trading Day immediately
preceding the relevant Early Settlement Date. The "Closing Price" of the Common
Stock on any date of determination means the closing sale price (or, if no
closing price
34
is reported, the last reported sale price) of the Common Stock on The New York
Stock Exchange, Inc. (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, the last sale price on and as
reported by the Nasdaq National Market or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the over-the-counter
market as reported by the National Quotation Bureau or similar organization, or,
if such bid price is not available, the market value of the Common Stock on such
date as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Company. A "Trading Day" means a day on
which the Common Stock (A) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter market at the
close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the Common Stock.
Promptly after the calculation of the Settlement Rate and the
Applicable Value, the Company shall give the Agent notice thereof. All
calculations and determinations of the Settlement Rate and the Applicable Value
shall be made by the Company or its agent and the Agent shall have no
responsibility with respect thereto.
Each Holder of a Corporate Unit or a Treasury Unit, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including the execution
of Certificates on behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to and
agrees to be bound by the Pledge of the Senior Notes, the Treasury Portfolio or
the Treasury Securities pursuant to the Pledge Agreement; provided that upon a
--------
Termination Event, the rights of the Holder of such Security under the Purchase
Contract may be enforced without regard to any other rights or obligations. Each
Holder of a Corporate Unit or Treasury Unit, by its acceptance thereof, further
covenants and agrees, that, to the extent and in the manner provided in Section
5.4 and the Pledge Agreement, but subject to the terms thereof, Proceeds of the
Treasury Securities, the remarketing of Senior Notes or the Treasury Portfolio,
as applicable, on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such Proceeds.
Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such
transferee), under the terms of this Agreement, the Purchase Contracts
underlying such Certificate and the Pledge Agreement and the transferor shall be
released from the obligations under this Agreement, the Purchase Contracts
underlying the Certificates so transferred and the Pledge Agreement. The Company
covenants and agrees, and each Holder of a Certificate, by its acceptance
thereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.
35
Section 5.2. Contract Adjustment Payments.
(a) Subject to Section 5.3 herein, the Company shall pay, on each
Payment Date, the Contract Adjustment Payments, if any, payable in respect of
each Purchase Contract to the Person in whose name a Certificate (or one or more
Predecessor Certificates) is registered at the close of business on the Record
Date next preceding such Payment Date in such coin or currency of the United
States as at the time of payment shall be legal tender for payments. The
Contract Adjustment Payments, if any, will be payable at the New York Office
maintained for that purpose or, at the option of the Company, by check mailed to
the address of the Person entitled thereto at such Person's address as it
appears on the Corporate Units Register or the Treasury Units Register or by
wire transfer to the account designated by written notice by such Person
delivered to the Agent at least 15 days prior to the applicable Payment Date.
Upon the occurrence of a Termination Event, the Company's obligation to
pay Contract Adjustment Payments (including any accrued or Deferred Contract
Adjustment Payments), if any, shall cease.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of a Corporate Unit) any other
Certificate shall carry the rights to Contract Adjustment Payments, if any,
accrued and unpaid, and to accrue Contract Adjustment Payments, if any, which
were carried by the Purchase Contracts underlying such other Certificates.
Subject to Section 5.9, in the case of any Security with respect to
which Early Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date, or in respect of which Cash Settlement of the underlying
Purchase Contract is effected on the fourth Business Day immediately preceding
the Purchase Contract Settlement Date, or with respect to which a Collateral
Substitution or a re-establishment of Corporate Units pursuant to Section 3.14
is effected, in each case on a date that is after any Record Date and on or
prior to the next succeeding Payment Date, Contract Adjustment Payments on the
Purchase Contracts underlying such Securities otherwise payable on such Payment
Date shall be payable on such Payment Date notwithstanding such Cash Settlement,
Early Settlement, Collateral Substitution or establishment or re-establishment
of Corporate Units, and such Contract Adjustment Payments shall be paid to the
Person in whose name the Certificate evidencing such Security (or one or more
Predecessor Certificates) is registered at the close of business on such Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security with respect to which (x) Cash Settlement
of the underlying Purchase Contract is effected on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date or (y) Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, as the case may be, or with respect to which a Collateral
Substitution or an establishment or a re-establishment of Corporate Units has
been effected, Contract Adjustment Payments, if any, that would otherwise be
payable after the Purchase Contract Settlement Date or Early Settlement Date,
Collateral Substitution or such establishment or reestablishment with respect to
such Purchase Contract shall not be payable.
36
(b) The Company's obligations with respect to Contract Adjustment
Payments, if any, will be subordinated and junior in right of payment to the
Company's obligations under any Senior Indebtedness.
(c) In the event (a) of any payment by, or distribution of assets of,
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution, winding-up, liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, or (b) subject to the provisions of
Subsection 5.2(e) below, that (i) a default shall have occurred and be
continuing with respect to the payment of principal, interest or any other
monetary amounts due and payable on any Senior Indebtedness and such default
shall have continued beyond the period of grace, if any, specified in the
instrument evidencing such Senior Indebtedness (and the Agent shall have
received written notice thereof from the Company or one or more holders of
Senior Indebtedness or their representative or representatives or the trustee or
trustees under any indenture pursuant to which any such Senior Indebtedness may
have been issued), or (ii) the maturity of any Senior Indebtedness shall have
been accelerated because of a default in respect of such Senior Indebtedness
(and the Agent shall have received written notice thereof from the Company or
one or more holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture pursuant to which
any such Senior Indebtedness may have been issued), then:
(i) the holders of all Senior Indebtedness shall first be entitled
to receive, in the case of (a) above, payment of all amounts due or to
become due upon all Senior Indebtedness and, in the case of subclauses
(i) and (ii) of clause (b) above, payment of all amounts due thereon,
or provision shall be made for such payment in money or moneys worth,
before the Holders of any of the Securities are entitled to receive any
Contract Adjustment Payments on the Purchase Contracts underlying the
Securities;
(ii) any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities, to
which the Holders of any of the Securities would be entitled except for
the provisions of Subsections 5.2(b) through (n), including any such
payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being
subordinated to the payment of such Contract Adjustment Payments on the
Purchase Contracts underlying the Securities, shall be paid or
delivered by the Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of
all Senior Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or distribution
is made of such Contract Adjustment Payments to the Holders of such
Securities; and
37
(iii) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Company of any kind or
character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being
subordinated to the payment of Contract Adjustment Payments on the
Purchase Contracts underlying the Securities, shall be received by the
Agent or the Holders of any of the Securities when such payment or
distribution is prohibited pursuant to Subsections 5.2(b) through (n),
such payment or distribution shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture pursuant to which any
instruments evidencing any such Senior Indebtedness may have been
issued, ratably as aforesaid, for application to the payment of all
Senior Indebtedness remaining unpaid until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent
payment or distribution (or provision therefor) to the holders of such
Senior Indebtedness.
(d) For purposes of Subsections 5.2(b) through (n), the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
Person provided for by a plan of reorganization or readjustment, the payment of
which is subordinated at least to the extent provided in Subsections 5.2(b)
through (n) with respect to such Contract Adjustment Payments on the Securities
to the payment of all Senior Indebtedness which may at the time be outstanding;
provided that (i) the indebtedness or guarantee of indebtedness, as the case may
be, that constitutes Senior Indebtedness is assumed by the Person, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of the Senior Indebtedness are not, without the consent of each such
holder adversely affected thereby, altered by such reorganization or
readjustment;
(e) Any failure by the Company to make any payment on or perform any
other obligation under Senior Indebtedness, other than any indebtedness incurred
by the Company or assumed or guaranteed, directly or indirectly, by the Company
for money borrowed (or any deferral, renewal, extension or refunding thereof) or
any indebtedness or obligation as to which the provisions of this subsection (e)
shall have been waived by the Company in the instrument or instruments by which
the Company incurred, assumed, guaranteed or otherwise created such indebtedness
or obligation, shall not be deemed a default or event of default if (i) the
Company shall be disputing its obligation to make such payment or perform such
obligation and (ii) either (A) no final judgment relating to such dispute shall
have been issued against the Company which is in full force and effect and is
not subject to further review, including a judgment that has become final by
reason of the expiration of the time within which a party may seek further
appeal or review, and (B) in the event of a judgment that is subject to further
review or appeal has been issued, the Company shall in good faith be prosecuting
an appeal or other proceeding for review and a stay of execution shall have been
obtained pending such appeal or review.
(f) Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities shall be subrogated (equally and ratably with the
holders of all obligations of the Company which by their express terms are
subordinated to Senior Indebtedness of the Company to the same extent as payment
of the Contract Adjustment Payments in respect of the Purchase
38
Contracts underlying the Securities is subordinated and which are entitled to
like rights of subrogation) to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until all such Contract Adjustment
Payments owing on the Securities shall be paid in full, and as between the
Company, its creditors other than holders of such Senior Indebtedness and the
Holders, no such payment or distribution made to the holders of Senior
Indebtedness by virtue of Subsections 5.2(b) through (n) that otherwise would
have been made to the Holders shall be deemed to be a payment by the Company on
account of such Senior Indebtedness, it being understood that the provisions of
Subsections 5.2(b) through (n) are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
(g) Nothing contained in Subsections 5.2(b) through (n) or elsewhere in
this Agreement or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders such Contract Adjustment Payments on the Securities as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Agent or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Agreement, subject
to the rights, if any, under these Subsections 5.2(b) through (n), of the
Holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
(h) Upon payment or distribution of assets of the Company referred to
in these Subsections 5.2(b) through (n), the Agent and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Agent or to the Holders, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to these
Subsections 5.2(b) through (n).
(i) The Agent shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Agent determines in good faith that further evidence is required
with respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to Subsections 5.2(b)
through (n), the Agent may request such Person to furnish evidence to the
reasonable satisfaction of the Agent as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under Subsections 5.2(b)
39
through (n), and, if such evidence is not furnished, the Agent may defer payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
(j) Nothing contained in Subsections 5.2(b) through (n) shall affect
the obligations of the Company to make, or prevent the Company from making,
payment of the Contract Adjustment Payments, except as otherwise provided in
these Subsections 5.2(b) through (n).
(k) Each Holder of Securities, by his acceptance thereof, authorizes
and directs the Agent in his, her or its behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in Subsections
5.2(b) through (n) and appoints the Agent his, her or its attorney-in-fact, as
the case may be, for any and all such purposes.
(l) The Company shall give prompt written notice to the Agent of any
fact known to the Company which would prohibit the making of any payment of
moneys to or by the Agent in respect of the Securities pursuant to the
provisions of this Section. Notwithstanding the provisions of Subsections 5.2(b)
through (e) or any other provisions of this Agreement, the Agent shall not be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment of moneys to or by the Agent, or the taking of any other
action by the Agent, unless and until the Agent shall have received written
notice thereof mailed or delivered to the Agent at its Institutional Trust
Services department from the Company, any Holder, any paying agent or the holder
or representative of any Senior Indebtedness; provided that if at least two
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose, the Agent shall not have received with
respect to such moneys the notice provided for in this Section, then, anything
herein contained to the contrary notwithstanding, the Agent shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to or on or
after such date.
(m) The Agent in its individual capacity shall be entitled to all the
rights set forth in this Section with respect to any Senior Indebtedness at the
time held by it, to the same extent as any other holder of Senior Indebtedness
and nothing in this Agreement shall deprive the Agent of any of its rights as
such holder.
(n) No right of any present or future holder of any Senior Indebtedness
to enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any noncompliance by the Company with the terms, provisions and covenants
of this Agreement, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
Nothing in this Section 5.2 shall apply to claims of, or payments to,
the Agent under or pursuant to Section 7.7.
With respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Agent shall be determined solely by the express provisions of
this Agreement; (ii) the Agent shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement;
(iii) no implied covenants or obligations shall be read into this
40
Agreement against the Agent; and (iv) the Agent shall not be deemed to be a
fiduciary as to such holders.
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) at least ten
Business Days prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Contract Adjustment Payments, if
any, to the NYSE or other applicable self-regulatory organization or to Holders
of the Securities, but in any event not less than one Business Day prior to such
Record Date. Any Contract Adjustment Payments, if any, so deferred shall, to the
extent permitted by law, bear additional Contract Adjustment Payments thereon at
the rate of 8.00% per annum (computed on the basis of 360 day year of twelve 30
day months), compounding on each succeeding Payment Date, until paid in full
(such deferred installments of Contract Adjustment Payments, if any, together
with the additional Contract Adjustment Payments accrued thereon, being referred
to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to this Section. No
Contract Adjustment Payments, if any, may be deferred to a date that is after
the Purchase Contract Settlement Date and no such deferral period may end other
than on a Payment Date. If the Purchase Contracts are terminated upon the
occurrence of a Termination Event, the Holder's right to receive Contract
Adjustment Payments, if any, and Deferred Contract Adjustment Payments will
terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
other than:
(i) purchases, redemptions or acquisitions of shares of capital
stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of
employees, officers or directors or a stock purchase or dividend
reinvestment plan, or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the
date of such event;
(ii) as a result of a reclassification of the Company's capital
stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's
capital stock;
41
(iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged;
(iv) dividends or distributions in capital stock of the Company
(or rights to acquire capital stock) or repurchases, acquisitions or
redemptions of capital stock in connection with the issuance or
exchange of capital stock (or securities convertible into or
exchangeable for shares of our capital stock);
(v) redemptions, exchanges or repurchases of any rights
outstanding under a shareholder rights plan or the declaration or
payment thereunder of a dividend or distribution of or with respect to
rights in the future); or
(vi) mandatory sinking fund payments with respect to any series of
preferred stock or preferred stock A of the Company; provided that the
aggregate stated value of all such series outstanding at the time of
such payment does not exceed 5% of the aggregate of (1) the total
principal amount of all then outstanding bonds or other securities
representing secured indebtedness issued or assumed by the Company and
(2) the Company's capital and surplus to be stated on the Company's
books of account after giving effect to such payment; provided however
that any moneys deposited into any sinking fund and not in violation of
this clause (vi) may thereafter be applied to the purchase or
redemption of such preferred stock or preferred stock A in accordance
with the terms of such sinking fund without regard to the foregoing
restrictions.
Section 5.3A Initial Remarketing.
Unless a Tax Event Redemption has occurred, the Company and Duke
Capital shall engage a nationally recognized investment bank (the "Remarketing
Agent") pursuant to the Remarketing Agreement to sell the Senior Notes of
Corporate Unit Holders (the "Initial Remarketing") on the third Business Day
immediately preceding August 16, 2004 (the "Initial Remarketing Date"). In order
to facilitate the remarketing, the Agent shall notify, by 11:00 a.m., New York
City time, on the Business Day immediately preceding the Initial Remarketing
Date, the Remarketing Agent, the Company, and Duke Capital of the aggregate
principal amount of Senior Notes which constitute part of the Corporate Units to
be remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, will present for remarketing such Senior Notes to the
Remarketing Agent. Upon receipt of the notice from the Agent and such Senior
Notes from the Collateral Agent, the Remarketing Agent will, on the Initial
Remarketing Date, use its reasonable efforts to remarket such Senior Notes on
such date at a price of approximately 100.5% (but not less than 100%) of the
Treasury Portfolio Purchase Price. If the Remarketing Agent is able to remarket
the Senior Notes at a price equal to or greater than 100% of the Treasury
Portfolio Purchase Price (a "Successful Initial Remarketing"), the portion of
the proceeds from such Successful Initial Remarketing equal to the Treasury
Portfolio Purchase Price will be applied to purchase the Treasury Portfolio. In
addition, the Remarketing Agent may deduct as a remarketing fee ("Remarketing
Fee") an amount not exceeding 25 basis points (0.25%) of the Treasury Portfolio
Purchase Price from any amount of such proceeds in excess of the Treasury
Portfolio Purchase Price. Any proceeds in excess of those required to pay the
Treasury Portfolio Purchase Price and the Remarketing Fee will be remitted to
the Agent for a
42
prompt payment to the Holders of the related Corporate Units to be made on a pro
rata basis. Corporate Units Holders whose Senior Notes are so remarketed will
not otherwise be responsible for the payment of any Remarketing Fee in
connection therewith. The Treasury Portfolio will be substituted for the Senior
Notes of Corporate Unit Holders and the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio will be pledged to the Collateral Agent to secure the
Corporate Unit Holders' obligation to pay the Purchase Price for the Common
Stock under the related Purchase Contracts on the Purchase Contract Settlement
Date. Following the occurrence of a Successful Initial Remarketing, the Holders
of Corporate Units and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Treasury Portfolio as the Holder of
Corporate Units and the Collateral Agent had in respect of the Senior Notes, as
the case may be, subject to the Pledge thereof as provided in Articles 2, 3, 4,
5 and 6 of the Pledge Agreement, and any reference herein or in the Certificates
to the Senior Notes shall be deemed to be a reference to such Treasury Portfolio
and any reference herein or in the Certificates to interest on the Senior Notes
shall be deemed to be a reference to corresponding distributions on the Treasury
Portfolio. The Company may cause to be made in any Corporate Units Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the substitution of the Treasury
Portfolio for Senior Notes as collateral.
If, (i) in spite of using its reasonable efforts, the Remarketing Agent
cannot remarket the related Senior Notes (other than to the Company) of such
Holders of Corporate Units at a price not less than 100% of the Treasury
Portfolio Purchase Price, or (ii) the remarketing has not occurred because a
condition precedent to the remarketing has not been fulfilled, the remarketing
will be deemed to have failed (a "Failed Initial Remarketing"). The Company will
cause a notice of a Failed Initial Remarketing to be published on the second
Business Day immediately preceding August 16, 2004 in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal.
Holders of and the holders of beneficial interest in the Securities
shall be hereby deemed to agree that the obligations of the Remarketing Agent
and the Reset Agent under the Remarketing Agreement and the related supplemental
remarketing agreement are subject to satisfaction of conditions set forth in or
incorporated by reference into any such agreement.
Section 5.3B Second Remarketing.
Unless a Tax Event Redemption or a Successful Initial Remarketing has
occurred, the Company and Duke Capital shall engage the Remarketing Agent
pursuant to the Remarketing Agreement to sell the Senior Notes of Corporate Unit
Holders (the "Second Remarketing") on the third Business Day immediately
preceding September 16, 2004 (the "Second Remarketing Date"). In order to
facilitate the remarketing, the Agent shall notify, by 11:00 a.m., New York City
time, on the Business Day immediately preceding the Second Remarketing Date, the
Remarketing Agent, the Company, and Duke Capital of the aggregate principal
amount of Senior Notes which constitute part of the Corporate Units to be
remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, will present for remarketing such Senior Notes to the
Remarketing Agent. Upon receipt of the notice from the Agent and such Senior
Notes from the Collateral Agent, the Remarketing Agent will, on the Second
Remarketing Date,
43
use its reasonable efforts to remarket such Senior Notes on such date at a price
of approximately 100.5% (but not less than 100%) of the Treasury Portfolio
Purchase Price. If the Remarketing Agent is able to remarket the Senior Notes at
a price equal to or greater than 100% of the Treasury Portfolio Purchase Price
(a "Successful Second Remarketing"), the portion of the proceeds from such
Successful Second Remarketing equal to the Treasury Portfolio Purchase Price
will be applied to purchase the Treasury Portfolio. In addition, the Remarketing
Agent may deduct the Remarketing Fee not exceeding 25 basis points (0.25%) of
the Treasury Portfolio Purchase Price from any amount of such proceeds in excess
of the Treasury Portfolio Purchase Price. Any proceeds in excess of those
required to pay the Treasury Portfolio Purchase Price and the Remarketing Fee
will be remitted to the Agent for a prompt payment to the Holders of the related
Corporate Units to be made on a pro rata basis. Corporate Units Holders whose
Senior Notes are so remarketed will not otherwise be responsible for the payment
of any Remarketing Fee in connection therewith. The Treasury Portfolio will be
substituted for the Senior Notes of Corporate Unit Holders and the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio will be pledged to the Collateral Agent to
secure the Corporate Unit Holders' obligation to pay the Purchase Price for the
Common Stock under the related Purchase Contracts on the Purchase Contract
Settlement Date. Following the occurrence of a Successful Second Remarketing,
the Holders of Corporate Units and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as the
Holder of Corporate Units and the Collateral Agent had in respect of the Senior
Notes, as the case may be, subject to the Pledge thereof as provided in Articles
2, 3, 4, 5 and 6 of the Pledge Agreement, and any reference herein or in the
Certificates to the Senior Notes shall be deemed to be a reference to such
Treasury Portfolio and any reference herein or in the Certificates to interest
on the Senior Notes shall be deemed to be a reference to corresponding
distributions on the Treasury Portfolio. The Company may cause to be made in any
Corporate Units Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect the
substitution of the Treasury Portfolio for Senior Notes as collateral.
If, (i) in spite of using its reasonable efforts, the Remarketing Agent
cannot remarket the related Senior Notes (other than to the Company) of such
Holders of Corporate Units at a price not less than 100% of the Treasury
Portfolio Purchase Price, or (ii) the remarketing has not occurred because a
condition precedent to the remarketing has not been fulfilled, the remarketing
will be deemed to have failed (a "Failed Second Remarketing"). The Company will
cause a notice of a Failed Second Remarketing to be published on the second
Business Day immediately preceding September 16, 2004 in a daily newspaper in
the English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal.
Holders of and the holders of beneficial interest in the Securities
shall be hereby deemed to agree that the obligations of the Remarketing Agent
and the Reset Agent under the Remarketing Agreement and the related supplemental
remarketing agreement are subject to satisfaction of conditions set forth in or
incorporated by reference into any such agreement.
Section 5.3C Third Remarketing.
44
Unless a Tax Event Redemption, Successful Initial Remarketing or a
Successful Second Remarketing has occurred, the Company and Duke Capital shall
engage a Remarketing Agent pursuant to the Remarketing Agreement to sell the
Senior Notes of Corporate Unit Holders (the "Third Remarketing") on the third
Business Day immediately preceding October 16, 2004 (the "Third Remarketing
Date"). In order to facilitate the remarketing, the Agent shall notify, by 11:00
a.m., New York City time, on the Business Day immediately preceding the Third
Remarketing Date, the Remarketing Agent, the Company, and Duke Capital of the
aggregate principal amount of Senior Notes which constitute part of the
Corporate Units to be remarketed. Concurrently, the Collateral Agent, pursuant
to the terms of the Pledge Agreement, will present for remarketing such Senior
Notes to the Remarketing Agent. Upon receipt of the notice from the Agent and
such Senior Notes from the Collateral Agent, the Remarketing Agent will, on the
Third Remarketing Date, use its reasonable efforts to remarket such Senior Notes
on such date at a price of approximately 100.5% (but not less than 100%) of the
Treasury Portfolio Purchase Price. If the Remarketing Agent is able to remarket
the Senior Notes at a price equal to or greater than 100% of the Treasury
Portfolio Purchase Price (a "Successful Third Remarketing"), the portion of the
proceeds from such Successful Third Remarketing equal to the Treasury Portfolio
Purchase Price will be applied to purchase the Treasury Portfolio. In addition,
the Remarketing Agent may deduct the Remarketing Fee not exceeding 25 basis
points (0.25%) of the Treasury Portfolio Purchase Price from any amount of such
proceeds in excess of the Treasury Portfolio Purchase Price. Any proceeds in
excess of those required to pay the Treasury Portfolio Purchase Price and the
Remarketing Fee will be remitted to the Agent for a prompt payment to the
Holders of the related Corporate Units to be made on a pro rata basis. Corporate
Units Holders whose Senior Notes are so remarketed will not otherwise be
responsible for the payment of any Remarketing Fee in connection therewith. The
Treasury Portfolio will be substituted for the Senior Notes of Corporate Unit
Holders and the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio will be
pledged to the Collateral Agent to secure the Corporate Unit Holders' obligation
to pay the Purchase Price for the Common Stock under the related Purchase
Contracts on the Purchase Contract Settlement Date. Following the occurrence of
a Successful Third Remarketing, the Holders of Corporate Units and the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Treasury Portfolio as the Holder of Corporate Units and the
Collateral Agent had in respect of the Senior Notes, as the case may be, subject
to the Pledge thereof as provided in Articles 2, 3, 4, 5 and 6 of the Pledge
Agreement, and any reference herein or in the Certificates to the Senior Notes
shall be deemed to be a reference to such Treasury Portfolio and any reference
herein or in the Certificates to interest on the Senior Notes shall be deemed to
be a reference to corresponding distributions on the Treasury Portfolio. The
Company may cause to be made in any Corporate Units Certificates thereafter to
be issued such change in phraseology and form (but not in substance) as may be
appropriate to reflect the substitution of the Treasury Portfolio for Senior
Notes as collateral.
If, (i) in spite of using its reasonable efforts, the Remarketing Agent
cannot remarket the related Senior Notes (other than to the Company) of such
Holders of Corporate Units at a price not less than 100% of the Treasury
Portfolio Purchase Price, or (ii) the remarketing has not occurred because a
condition precedent to the remarketing has not been fulfilled, the remarketing
will be deemed to have failed (a "Failed Third Remarketing"). The Company will
cause a notice of a Failed Third Remarketing to be published on the second
Business Day immediately
45
preceding October 16, 2004 in a daily newspaper in the English language of
general circulation in The City of New York, which is expected to be The Wall
Street Journal.
Holders of and the holders of beneficial interest in the Securities
shall be hereby deemed to agree that the obligations of the Remarketing Agent
and the Reset Agent under the Remarketing Agreement and the related supplemental
remarketing agreement are subject to satisfaction of conditions set forth in or
incorporated by reference into any such agreement.
Section 5.4. Payment of Purchase Price; Final Remarketing.
(a) (i) Unless a Tax Event Redemption, Successful Initial
Remarketing, Successful Second Remarketing, Successful Third
Remarketing, Termination Event or Early Settlement has occurred, each
Holder of a Corporate Unit may pay in cash ("Cash Settlement") the
Purchase Price for the shares of Common Stock to be purchased pursuant
to a Purchase Contract if such Holder notifies the Agent by use of a
notice in substantially the form of Exhibit E hereto of its intention
to make a Cash Settlement. Such notice shall be made on or prior to
5:00 p.m., New York City time, on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date. The Agent shall
promptly notify the Collateral Agent of the receipt of such a notice
from a Holder intending to make a Cash Settlement.
(ii) A Holder of a Corporate Unit who has so notified the Agent of
its intention to make a Cash Settlement is required to pay the Purchase
Price to the Collateral Agent prior to 11:00 a.m., New York City time,
on the fourth Business Day immediately preceding the Purchase Contract
Settlement Date in lawful money of the United States by certified or
cashiers' check or wire transfer, in each case in immediately available
funds payable to or upon the order of the Company. Any cash received by
the Collateral Agent will be invested promptly by the Collateral Agent
in Permitted Investments and paid to the Company on the Purchase
Contract Settlement Date in settlement of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge Agreement.
Any funds received by the Collateral Agent in respect of the investment
earnings from the investment in such Permitted Investments, will be
distributed to the Agent when received for payment to the Holder.
(iii) If a Holder of a Corporate Unit fails to notify the Agent of
its intention to make a Cash Settlement in accordance with paragraph
(a)(i) above, such failure shall constitute an event of default
hereunder and under the Pledge Agreement and the Holder shall be deemed
to have consented to the disposition of the pledged Senior Notes
pursuant to the Final Remarketing as described in paragraph (b) below.
If a Holder of a Corporate Unit does notify the Agent as provided in
paragraph (a)(i) above of its intention to pay the Purchase Price in
cash, but fails to make such payment as required by paragraph (a)(ii)
above, such failure shall also constitute an event of default hereunder
and under the Pledge Agreement and the Holder shall be deemed to have
consented to the disposition of the pledged Senior Notes pursuant to
the Final Remarketing as described in paragraph (b) below.
46
(b) Unless a Tax Event Redemption, Successful Initial Remarketing,
Successful Second Remarketing or Successful Third Remarketing has occurred, the
Senior Notes of Corporate Unit Holders who have not notified the Agent of their
intention to effect a Cash Settlement as provided in paragraph (a)(i) above will
be sold by the Remarketing Agent (the "Final Remarketing") on the third Business
Day immediately preceding the Purchase Contract Settlement Date (the "Final
Remarketing Date"). The Agent shall notify, by 11:00 a.m., New York City time,
on the Business Day immediately preceding the Final Remarketing Date, the
Remarketing Agent, the Company and Duke Capital of the aggregate principal
amount of Senior Notes that are part of Corporate Units to be remarketed.
Concurrently, the Collateral Agent, pursuant to the terms of the Pledge
Agreement, will present for remarketing such Senior Notes to the Remarketing
Agent. Upon receipt of such notice from the Agent and such Senior Notes from the
Collateral Agent, the Remarketing Agent will, on the Final Remarketing Date, use
its reasonable efforts to remarket such Senior Notes on such date at a price of
approximately 100.5% (but not less than 100%) of the aggregate principal amount
of such Senior Notes. If the Remarketing Agent is able to remarket the Senior
Notes at a price equal to or greater than 100% of the aggregate principal amount
of Senior Notes (a "Successful Final Remarketing"), the Remarketing Agent will
remit the entire amount of the proceeds from such Successful Final Remarketing
to the Collateral Agent; provided, however, that the Remarketing Agent may
deduct the Remarketing Fee not exceeding 25 basis points (0.25%) of the
aggregate principal amount of the remarketed Senior Notes from any amount of the
proceeds of a Successful Final Remarketing in excess of the aggregate principal
amount of the remarketed Senior Notes. The portion of the proceeds equal to the
aggregate principal amount of Senior Notes will automatically be applied by the
Collateral Agent, in accordance with the Pledge Agreement, to satisfy in full
such Corporate Units holders' obligations to pay the Purchase Price for the
Common Stock under the related Purchase Contracts on the Purchase Contract
Settlement Date. Any proceeds in excess of those required to pay the Purchase
Price and the Remarketing Fee will be remitted to the Agent for payment to the
Holders of the related Corporate Units. Corporate Units Holders whose Senior
Notes are so remarketed will not otherwise be responsible for the payment of any
Remarketing Fee in connection therewith. If, (i) in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket the related Senior
Notes (other than to the Company) of such Holders of Corporate Units at a price
not less than 100% of the aggregate principal amount of the Senior Notes, or
(ii) the remarketing has not occurred because a condition precedent to the
remarketing has not been fulfilled, the remarketing will be deemed to have
failed (a "Failed Final Remarketing") and in accordance with the terms of the
Pledge Agreement the Collateral Agent for the benefit of the Company will
exercise its rights as a secured party with respect to such Senior Notes,
including those actions specified in paragraph (c) below. The Company will cause
a notice of such Failed Final Remarketing to be published on the second Business
Day immediately preceding the Purchase Contract Settlement Date in a daily
newspaper in the English language of general circulation in The City of New
York, which is expected to be The Wall Street Journal.
(c) With respect to any Senior Notes that are subject to a Failed Final
Remarketing, the Collateral Agent for the benefit of the Company reserves all of
its rights
47
as a secured party with respect thereto and, subject to applicable law and
paragraph (h) below, may, among other things, (i) retain the Senior Notes or
(ii) sell the Senior Notes in one or more public or private sales, each in full
satisfaction of the Holders' obligations under the Purchase Contracts.
(d) Unless a Termination Event or an Early Settlement has occurred, the
Purchase Contract underlying each Treasury Unit and, if a Tax Event Redemption
or a Successful Initial Remarketing, Successful Second Remarketing, or
Successful Third Remarketing has occurred, each Corporate Unit will be settled
with the Proceeds at maturity of the Treasury Security or the Applicable
Ownership Interest (as defined in clause (A) of the definition of such term) of
the Treasury Portfolio, as applicable. Upon receipt of such Proceeds, the
Collateral Agent will invest the Proceeds promptly in Permitted Investments and
pay the Proceeds to the Company on the Purchase Contract Settlement Date in
accordance with the terms of this Agreement and the Pledge Agreement. Any such
Proceeds received by the Collateral Agent in excess of the Purchase Price and
any funds received by the Collateral Agent in respect of the investment earnings
from the investment in such Permitted Investments will be distributed to the
Agent when received for payment to the Holder.
(e) Any distribution to Holders of excess funds and interest described
above, shall be payable at the New York Office maintained for that purpose or,
at the option of the Holder, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Register or, at the option
of the Company, by wire transfer to the bank account designated by such Holder
in writing, such payments to be made to the same Persons entitled to receive
Common Stock with respect to Purchase Contracts referred to in Subsection (d)
above.
(f) Unless a Holder settles the underlying Purchase Contract through
the Early Settlement in the manner described in Section 5.9, the Company shall
not be obligated to issue any shares of Common Stock in respect of a Purchase
Contract or deliver any certificate therefor to the Holder unless it shall have
received payment in full of the Purchase Price for the shares of Common Stock to
be purchased thereunder in the manner set forth in this Section 5.4.
(g) Upon Cash Settlement of any Purchase Contract, (i) the Collateral
Agent will in accordance with the terms of the Pledge Agreement cause the
pledged Senior Notes underlying the relevant Security to be released from the
Pledge by the Collateral Agent free and clear of any security interest of the
Company and transferred to the Agent for delivery to the Holder thereof or its
designee as soon as practicable and (ii) subject to the receipt thereof from the
Collateral Agent, the Agent shall, by book-entry transfer, or other appropriate
procedures, in accordance with instructions provided by the Holder thereof,
transfer such Senior Notes to such Holder (or, if no such instructions are given
to the Agent by the Holder, the Agent shall hold such Senior Notes and any
distributions thereon in the name of the Agent or its nominee in trust for the
benefit of such Holder).
(h) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and are payable solely out of any Cash Settlement or
the Proceeds of any
48
Collateral pledged to secure the obligations of the Holders and in no
event will Holders be liable for any deficiency between the Proceeds of
Collateral and the Purchase Price.
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event or an Early Settlement shall have occurred,
on the Purchase Contract Settlement Date, upon its receipt of payment in full of
the Purchase Price for the shares of Common Stock purchased by the Holders
pursuant to the foregoing provisions of this Article and subject to Section
5.6(b), the Company shall issue and deposit with the Agent, for the benefit of
the Holders of the Outstanding Securities, one or more certificates representing
newly issued shares of Common Stock registered in the name of the Agent (or its
nominee) as custodian for the Holders (such certificates for shares of Common
Stock, together with any dividends or distributions for which both a record date
and payment date for such dividend or distribution has occurred on or after the
Purchase Contract Settlement Date, being hereinafter referred to as the
"Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Securities then held by such Holder) together with cash
in lieu of fractional shares as provided in Section 5.10 and any dividends or
distributions with respect to such shares constituting part of the Purchase
Contract Settlement Fund, but without any interest thereon, and the Certificate
so surrendered shall forthwith be cancelled. Such shares shall be registered in
the name of the Holder or the Holder's designee as specified in the settlement
instructions provided by the Holder to the Agent. If any shares of Common Stock
issued in respect of a Purchase Contract are to be registered to a Person other
than the Person in whose name the Certificate evidencing such Purchase Contract
is registered, no such registration shall be made unless the Person requesting
such registration has paid any transfer and other taxes required by reason of
such registration in a name other than that of the registered Holder of the
Certificate evidencing such Purchase Contract or has established to the
satisfaction of the Company that such tax either has been paid or is not
payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on the Common Stock in Common Stock, the Settlement Rate, as in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution, shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not include
49
shares held in treasury by the Company but shall include any shares issuable in
respect of any scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in treasury by the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of the Common
Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than pursuant to a dividend
reinvestment plan or share purchase plan), the Settlement Rate in effect at the
opening of business on the day following the date fixed for such determination
shall be increased by dividing such Settlement Rate by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate offering price of the total number of shares
of Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in treasury
by the Company but shall include any shares issuable in respect of any scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
shall not issue any such rights, options or warrants in respect of shares of
Common Stock held in treasury by the Company.
(3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of capital
stock, securities, cash or other property (but excluding any rights, options or
warrants referred to in paragraph (2) of this Section, any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in paragraph (1) of this Section), the Settlement Rate shall be increased so
that the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current
50
Market Price per share of the Common Stock on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Agent) on such date of the portion of the evidences of
indebtedness, shares of capital stock, securities, cash or other property so
distributed applicable to one share of Common Stock and the denominator shall be
such Current Market Price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. In any case in which this Paragraph (4) is
applicable, paragraphs (1) and (2) of this Section 5.6(a) shall not be
applicable.
(5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (i) regular
quarterly cash distributions, (ii) any cash that is distributed in a
Reorganization Event to which Section 5.6(b) applies or (iii) cash that is
distributed as part of a distribution referred to in paragraph (4) of this
Section) in an aggregate amount that, combined together with (II) the aggregate
amount of any other distributions (other than regular quarterly cash
distributions) to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to this paragraph (5) or paragraph (6)
of this Section has been made and (III) the aggregate of any cash plus the fair
market value, as of the expiration of the applicable tender or exchange offer
referred to below (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), of consideration
payable in respect of any tender or exchange offer (other than consideration
payable in respect of any odd-lot tender offer) by the Company or any of its
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of the distribution described in clause (I)
above and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made, exceeds 15% of the product of the
Current Market Price per share of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date for determination, the Settlement Rate shall be increased so that the
same shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for determination
of the stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the combined amount distributed or payable in the
transactions described in clauses (I), (II) and (III) above and (y) the number
of shares of Common Stock outstanding on such date for determination and (ii)
the denominator of which shall be equal to the Current Market Price per share of
the Common Stock on such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or
any subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described
51
in a Board Resolution) that combined together with (II) the aggregate of the
cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the expiration of such tender or exchange offer, of consideration payable in
respect of any other tender or exchange offer (other than consideration payable
in respect of any odd-lot tender offer) by the Company or any subsidiary of the
Company for all or any portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (5) of this Section or this paragraph
(6) has been made and (III) the aggregate amount of any distributions (other
than regular quarterly cash distributions) to all holders of the Company's
Common Stock made exclusively in cash within the 12 months preceding the
expiration of such tender or exchange offer and in respect of which no
adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has
been made, exceeds 15% of the product of the Current Market Price per share of
the Common Stock as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender or exchange offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Settlement Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Settlement Rate immediately prior to the close of
business as of the Expiration Time by a fraction (i) the numerator of which
shall be equal to (A) the product of (I) the Current Market Price per share of
the Common Stock as of the Expiration Time and (II) the number of shares of
Common Stock outstanding (including any tendered shares) as of the Expiration
Time less (B) the amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
transactions described in clauses (I), (II) and (III) above (assuming in the
case of clause (I) the acceptance, up to any maximum specified in the terms of
the tender or exchange offer, of Purchased Shares), and (ii) the denominator of
which shall be equal to the product of (A) the Current Market Price per share of
the Common Stock as of the Expiration Time and (B) the number of shares of
Common Stock outstanding (including any tendered shares) as of the Expiration
Time less the number of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
or split becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision, split
or combination becomes effective" within the meaning of paragraph (3) of this
Section).
52
(8) The "Current Market Price" per share of Common Stock on any day
means the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 30 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Common Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate, shall be calculated to
the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in
the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an adjustment shall also
be made to the Applicable Market Value solely to determine which of clauses (a),
(b) or (c) of the definition of Settlement Rate in Section 5.1 will apply on the
Purchase Contract Settlement Date and, if clause (b) of such definition applies,
to determine the Settlement Rate thereunder. Such adjustment shall be made by
multiplying the Applicable Market Value by a fraction of which the numerator
shall be the Settlement Rate immediately after such adjustment pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and
the denominator shall be the Settlement Rate immediately before such adjustment;
provided, however, that if such adjustment to the Settlement Rate is required to
be made pursuant to the occurrence of any of the events contemplated by
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a)
during the period taken into consideration for determining the Applicable Market
Value, appropriate and customary adjustments shall be made to the Settlement
Rate.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares of capital
stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company with or into
another Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), the Settlement
53
Rate will be adjusted to provide that each Holder of Securities will receive on
the Purchase Contract Settlement Date with respect to each Purchase Contract
forming a part thereof (or upon any Early Settlement), the kind and amount of
securities, cash and other property receivable upon such Reorganization Event
(without any interest thereon, and without any right to dividends or
distribution thereon which have a record date that is prior to the Purchase
Contract Settlement Date) by a holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date or the Early Settlement Date, as the case may be, had occurred
immediately prior to such Reorganization Event assuming such holder of Common
Stock is not a Person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be (any such Person, a "Constituent Person"),
or an Affiliate of a Constituent Person to the extent such Reorganization Event
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Reorganization Event (provided that if the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by the non-electing
shares). In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires or leases the
assets of the Company or, in the event of a liquidation or dissolution of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Agent an agreement supplemental hereto
providing that the Holders of each Outstanding Security shall have the rights
provided by this Section 5.6. Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions of this
Section shall similarly apply to successive Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided,
the Company shall:
(i) forthwith compute the Settlement Rate in accordance with
Section 5.6 and prepare and transmit to the Agent an Officer's Certificate
setting forth the Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which
such adjustment is based, and any related adjustment to the Applicable
Market Value; and
(ii) within 10 Business Days following the occurrence of an event
that requires an adjustment to the Settlement Rate and the Applicable
Market Value pursuant to Section 5.6 (or if the Company is not aware of
such occurrence, as soon as practicable after becoming so aware), provide a
written notice to the Holders of the Securities of the
54
occurrence of such event and a statement in reasonable detail setting
forth the method by which the adjustment to the Settlement Rate and the
Applicable Market Value was determined and setting forth the adjusted
Settlement Rate and the Applicable Market Value.
(b) The Agent shall not at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts exist
which may require any adjustment of the Settlement Rate or the Applicable Market
Value, or with respect to the nature or extent or calculation of any such
adjustment when made, or with respect to the method employed in making the same.
The Agent shall not be accountable with respect to the validity or value (or the
kind or amount) of any shares of Common Stock, or of any securities or property,
which may at the time be issued or delivered with respect to any Purchase
Contract; and the Agent makes no representation with respect thereto. The Agent
shall not be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock pursuant to a Purchase Contract or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or Deferred Contract Adjustment Payments, if the Company shall
have such obligation, and the rights and obligations of Holders to purchase
Common Stock, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Purchase Contract Settlement Date, a Termination Event shall
have occurred. Upon and after the occurrence of a Termination Event, the
Securities shall thereafter represent the right to receive the Senior Notes or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, forming a part of such Securities in the case of Corporate Units,
or Treasury Securities in the case of Treasury Units, in accordance with the
provisions of Section 4.3 of the Pledge Agreement; provided, however, that, to
the extent that a Holder of Corporate Units or Treasury Units would otherwise be
entitled to receive less than $1,000 principal amount at maturity of the
Treasury Portfolio or the Treasury Securities, the Agent shall dispose of such
securities for cash using a customary method (and shall have no liability
relating to the amount of cash so received, unless any deficiency in the amount
of such cash arose from the negligence, willful misconduct or bad faith of the
Agent), and transfer the appropriate amount of such cash to such Holder in
accordance with such Holder's instructions. Upon the occurrence of a Termination
Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Agent, the Collateral Agent and to the
Holders, at their addresses as they appear in the Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9, at the option of the Holder thereof, Purchase Contracts underlying
Securities having an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof may be settled early ("Early Settlement") in the case of
Corporate Units (unless a Tax Event Redemption or a Successful
55
Initial Remarketing, Successful Second Remarketing or Successful Third
Remarketing has occurred) on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date and in the case of Treasury
Units on or prior to the second Business Day immediately preceding the Purchase
Contract Settlement Date, in each case, as provided herein; provided however,
that if a Tax Event Redemption or a Successful Initial Remarketing, Successful
Second Remarketing or Successful Third Remarketing has occurred and the Treasury
Portfolio has become a component of the Corporate Units, Purchase Contracts
underlying Corporate Units may be settled early on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, but
only in an aggregate amount of 100,000 Corporate Units or in an integral
multiple thereof. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
Securities shall deliver such Certificate to the Agent at the Corporate Trust
Office or the New York Office duly endorsed for transfer to the Company or in
blank with the form of Election to Settle Early on the reverse thereof duly
completed and accompanied by payment (payable to the Company) in immediately
available funds in an amount (the "Early Settlement Amount") equal to (i) the
product of (A) the Stated Amount times (B) the number of Purchase Contracts with
respect to which the Holder has elected to effect Early Settlement plus (ii) if
such delivery is made with respect to any Purchase Contracts during the period
from the close of business on any Record Date next preceding any Payment Date to
the opening of business on such Payment Date, an amount equal to the Contract
Adjustment Payments, if any, payable on such Payment Date with respect to such
Purchase Contracts; provided that no payment shall be required pursuant to
clause (ii) of this sentence if the Company shall have elected to defer the
Contract Adjustment Payments which would otherwise be payable on such Payment
Date. Except as provided in the immediately preceding sentence and subject to
the second to last paragraph of Section 5.2, no payment or adjustment shall be
made upon Early Settlement of any Purchase Contract on account of any Contract
Adjustment Payments accrued on such Purchase Contract or on account of dividends
on the Common Stock issued upon such Early Settlement or on account of any
Deferred Contract Adjustment Payments. If the foregoing requirements are first
satisfied with respect to Purchase Contracts underlying any Securities at or
prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the
"Early Settlement Date" with respect to such Securities and if such requirements
are first satisfied after 5:00 p.m., New York City time, on a Business Day or on
a day that is not a Business Day, the "Early Settlement Date" with respect to
such Securities shall be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities and payment of any transfer or similar taxes payable by such
Holder in connection with the issuance of the related Common Stock to any person
other than such Holder, the Company shall issue, and the Holder shall be
entitled to receive, .5258 shares of newly issued Common Stock on account of
each Purchase Contract as to which Early Settlement is effected (the "Early
Settlement Rate"); provided, however, that upon the Early Settlement of the
Purchase Contracts, the Holder of such related Securities will forfeit the right
to receive any Deferred Contract Adjustment Payments and future Contract
Adjustment Payments, if any, except to the extent that the Early Settlement Date
is after the close of business on a Record Date and prior to the opening of
business on the corresponding Payment Date. The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this
56
Section 5.9, the Company shall issue and shall deliver to the Agent at the
Corporate Trust Office a certificate or certificates for the full number of
shares of Common Stock' issuable upon such Early Settlement together with
payment in lieu of any fraction of a share, as provided in Section 5.10.
(c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the shares of Common Stock issuable
upon Early Settlement of Purchase Contracts to be issued and delivered, and (ii)
the related Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, in the case of Corporate Units, or the related Treasury
Securities, in the case of Treasury Units, to be released from the Pledge by the
Collateral Agent and transferred, in each case to the Agent for delivery to the
Holder thereof or its designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Senior Notes, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury
Securities, as the case may be, from the Collateral Agent, as applicable, the
Agent shall, in accordance with the instructions provided by the Holder thereof
on the applicable form of Election to Settle Early on the reverse of the
Certificate evidencing the related Securities, (i) transfer to the Holder the
Senior Notes, Treasury Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities, and (ii) deliver to the Holder a certificate
or certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Securities as to which
Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts, or with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. If Certificates evidencing more than one Purchase
Contract shall be surrendered for settlement at one time by the same Holder, the
number of full shares of Common Stock which shall be delivered upon settlement
shall be computed on the basis of the aggregate number of Purchase Contracts
evidenced by the Certificates so surrendered. Instead of any fractional share of
Common Stock which would otherwise be deliverable upon settlement of any
Purchase Contracts on the Purchase Contract Settlement Date or upon Early
Settlement, or with respect to the payment of Deferred Contract Adjustment
Payments on the Purchase Contract Settlement Date, the Company, through the
Agent, shall make a cash payment in respect of such fractional interest in an
amount equal to the value of such fractional shares times the Applicable Market
Value. The Company shall provide the Agent from time to time with sufficient
funds to permit the Agent to make all cash payments required by this Section
5.10 in a timely manner.
57
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts and in payment of any Deferred Contract Adjustment
Payments; provided, however, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Agent, as custodian for such Holder, and the Company
shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or that no such tax is due.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Common Stock.
The Holder of any Corporate Units or Treasury Units shall have the
right, which is absolute and unconditional, (1) (subject to the right of the
Company to defer payment thereof pursuant to Section 5.3, and to the forfeiture
of any Deferred Contract Adjustment Payments upon Early Settlement pursuant to
Section 5.9(b) or upon the occurrence of a Termination Event) to receive payment
of each installment of the Contract Adjustment Payments, if any, with respect to
the Purchase Contract constituting a part of such Security on the respective
Payment Date for such Security, and (2) to purchase Common Stock pursuant to
such Purchase Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common Stock, and such
rights shall not be impaired without the consent of such Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or
58
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of Corporate Units
or Treasury Units, by its acceptance of such Corporate Units or Treasury Units
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Agreement, or in
any suit against the Agent for any action taken, suffered or omitted by it as
Agent, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided that the provisions of
this Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Agent, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of interest on any
Senior Notes or Contract Adjustment Payments, if any, on any Purchase Contract
on or after the respective Payment Date therefor in respect of any Security held
by such Holder, or for enforcement of the right to purchase shares of Common
Stock under the Purchase Contracts constituting part of any Security held by
such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
59
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set
forth in this Agreement and the Pledge Agreement, and no implied
covenants or obligations shall be read into this Agreement or the
Pledge Agreement against the Agent; and
(2) The Agent may, with respect to the Securities, conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to
the Agent and conforming to the requirements of this Agreement or the
Pledge Agreement, as applicable, but in the case of any certificates
or opinions which by any provision hereof are specifically required to
be furnished to the Agent, the Agent shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Agreement or the Pledge Agreement, as applicable, but need not
confirm or investigate the accuracy of mathematical calculations
stated therein.
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own willful misconduct or bad faith, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that
the Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
(d) The Agent is authorized to execute and deliver the Pledge
Agreement in its capacity as Agent.
Section 7.2. Notice of Default.
Upon the occurrence of any default by the Company hereunder of which a
Responsible Officer of the Agent has actual knowledge, the Agent shall transmit
a written notice thereof by
60
mail to the Company and not less than 45 days after such notice to the Company
has been so transmitted, shall transmit by mail to the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7. 1:
(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, Senior Note, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officer's Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate of the Company;
(d) the Agent may consult with counsel of its selection and
the-advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, Senior Note,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of
61
the Pledge Agreement or the Pledge. The Agent shall not be accountable for the
use or application by the Company of the proceeds in respect of the Purchase
Contracts and shall not be responsible for the perfection, priority or
maintenance of any security interest created under the Pledge Agreement.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law or provided herein.
The Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise expressly provided herein or as
otherwise agreed in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time such compensation for
all services rendered by it hereunder as the parties shall agree from
time to time in writing;
(2) except as otherwise expressly provided herein, to reimburse
the Agent upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Agent in accordance with any
provision of this Agreement (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence, willful misconduct or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to
hold it harmless against, any loss, liability or expense, including
taxes (other than taxes based upon, measured by or determined by the
income of the Agent) incurred without negligence, willful misconduct or
bad faith on its part, arising out of or in connection with the
acceptance or administration of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
The provisions of this Section shall survive the termination of this
Agreement.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a
62
subsidiary of a bank holding company having) a combined capital and surplus of
at least $50,000,000, subject to supervision or examination by Federal or State
authority and having an office in the Borough of Manhattan, The City of New
York, if there be such a corporation in the Borough of Manhattan, The City of
New York, qualified and eligible under this Article and willing to act on
reasonable terms. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
anytime the Agent shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. The provisions of this Section shall
survive the termination of this Agreement.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company. If the instrument of acceptance by a successor Agent required by
Section 7.10 shall not have been delivered to the Agent within 30 days after
such removal, the Agent being removed may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(d) If at any time
(1) the Agent fails to comply with Section 3.10(b) of the TIA,
as if the Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Agent shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of
63
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Agent and the appointment of a successor
Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by the Company and accepted appointment in
the manner required by Section 7.10, any Holder who has been a bona fide Holder
of a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses
appear in the applicable Register.
Each notice shall include the name of the successor Agent and the
address of its Corporate Trust Office and New York Office, if any.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies referred
to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the
time of such acceptance such successor Agent shall be qualified and eligible
under this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not
64
delivered, by the Agent then in office, any successor by merger, conversion or
consolidation to such Agent may adopt such authentication and execution and
deliver the Certificates so authenticated and executed with the same effect as
if such successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Agent, and furnish to the Agent reasonable proof that
each such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to be mailed and of
payment, or provision for the payment, of the reasonable expenses of such
mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article V hereof.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Agent or its officers, employees or agents be liable for indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, whether or not the likelihood of
such loss or damage was known to the Agent and regardless of the form of action.
Section 7.14. Tax Compliance.
(a) The Agent will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Securities or
(ii) based on consultation with the Company, the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
65
(b) The Agent shall comply with any written direction received from
the Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Agent, at any time and from time to
time, may enter into one or more agreements supplemental hereto, in form
satisfactory to the Company and the Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company herein and in the Certificates; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.6(b); or
(5) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions
herein, or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall not
adversely affect the interests of the Holders in any material respect.
Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized by
or pursuant to a Board Resolution, and the Agent may enter into an agreement or
agreements supplemental hereto for the purpose of modifying in any manner the
terms of the Purchase Contracts or the provisions of this Agreement or the
rights of
66
the Holders in respect of the Securities (other than the Senior Notes, which may
be modified only in accordance with the applicable provisions of the Indenture);
provided, however, that, except as contemplated herein, no such supplemental
agreement shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's obligations under any Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral or otherwise adversely affect
the Holder's rights in or to such Collateral or adversely alter the
rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments, if any, or any
Deferred Contract Adjustment Payment, or change any place where, or the
coin or currency in which, any Contract Adjustment Payment is payable;
(4) impair the right to institute suit for the enforcement of
any Purchase Contract, any Contract Adjustment Payment, if any, or any
Deferred Contract Adjustment Payment, if any;
(5) reduce the number of shares of Common Stock (or the amount
of any other property) to be purchased pursuant to any Purchase
Contract, increase the price to purchase shares of Common Stock (or any
other property) upon settlement of any Purchase Contract, change the
Purchase Contract Settlement Date or otherwise adversely affect the
Holder's rights under any Purchase Contract; or
(6) reduce the percentage of the outstanding Purchase Contracts
the consent of whose Holders is required for any such supplemental
agreement;
provided, that if any amendment or proposal referred to above would adversely
- --------
affect only the Corporate Units or the Treasury Units, then only the affected
class of Holders as of the record date, if any, for Holders entitled to vote
thereon will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than a majority of such class or the Holders of each affected
Outstanding Security within such class, as applicable.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
67
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
this Agreement and the Securities shall be modified in accordance therewith, and
such supplemental agreement shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered hereunder shall
be bound thereby.
Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent in exchange for
Outstanding Certificates.
ARTICLE IX
Merger, Consolidation, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge with and into, consolidate
with or convert into any other Person or sell, assign, transfer, lease or convey
all or substantially all of its properties and assets to any Person, unless (i)
the successor shall be a Person organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and such
Person shall expressly assume all the obligations of the Company under the
Purchase Contracts, this Agreement, the Remarketing Agreement and the Pledge
Agreement by one or more supplemental agreements in form reasonably satisfactory
to the Agent and the Collateral Agent, executed and delivered to the Agent
and/or the Collateral Agent, as the case may be, by such Person, and (ii) such
successor Person shall not, immediately after such merger, consolidation or
conversion, or such sale, assignment, transfer, lease or conveyance, be in
default of its payment obligations under this Agreement, the Remarketing
Agreement, any Purchase Contracts or the Pledge Agreement or in material default
in the performance of any other covenant hereunder or thereunder.
68
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such merger, consolidation, conversion, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor Person in accordance with Section 9.1, such successor Person shall
succeed to and be substituted for the Company with the same effect as if it had
been named herein as the Company, and its predecessor shall, except in the case
of a lease, be released from its obligations under this Agreement. Such
successor Person thereupon may cause to be signed, and may issue in its own name
any or all of the Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Agent; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Agreement prescribed, the Agent shall authenticate and execute on behalf of the
Holders and deliver any Certificates which previously shall have been signed and
delivered by the officers of the Company to the Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Agent for
that purpose. All the Certificates so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Certificates theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Certificates had been issued at the date of the execution hereof.
In case of any such merger, consolidation, conversion, sale,
assignment, transfer, lease or conveyance, such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.
Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such merger, consolidation, conversion,
sale, assignment, transfer, lease or conveyance, and any such assumption,
complies with the provisions of this Article and that all conditions precedent
hereunder to the consummation of any such merger, consolidation, conversion,
sale, assignment, transfer, lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
69
Section 10.2. Maintenance of Office or Agency.
The Company will maintain or cause to be maintained in the Borough of
Manhattan, The City of New York an office or agency (a "New York Office") where
Certificates may be presented or surrendered for payment and for acquisition of
shares of Common Stock (or other property) upon settlement of the Purchase
Contracts on the Purchase Contract Settlement Date or Early Settlement and for
transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for a
Collateral Substitution or re-establishment of a Corporate Unit and where
notices and demands to or upon the Company in respect of the Securities and this
Agreement may be served. The Company will give prompt written notice to the
Agent of the location, and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Agent as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Borough of Manhattan, the City of New
York, as the places of payment for the Securities, and hereby appoints the
Agent, acting through its Corporate Trust Office, as the registrar, paying agent
and transfer agent for the Corporate Units and the Treasury Units and for the
other purposes contemplated by this Section 10.2.
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable. The Company shall
comply, in all material respects, with all applicable securities laws regulating
the offer, issuance and delivery of shares of Common Stock upon settlement of
Purchase Contracts and will endeavor to list such shares on each national
securities exchange or automated quotation system on which the Common Stock is
then listed.
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DUKE ENERGY CORPORATION
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Purchase
Contract Agent
By:
-----------------------------------------
Name:
Title:
EXHIBIT A
(Form of Face of Corporate Units, Series B Certificate)
[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, 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 SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]/1/
No. ______ CUSIP No. [ ]
Number of Corporate Units, Series B __________
Corporate Units, Series B
This Corporate Units, Series B Certificate ("Corporate Units
Certificate") certifies that ____________ is the registered Holder of the number
of Corporate Units, Series B ("Corporate Units") set forth above (or such other
number as is set forth in Schedule of Increases or Decreases in Global
Certificate annexed hereto). Each Corporate Unit represents (i) either (a)
beneficial ownership by the Holder of $25 principal amount of 4.32 % Senior
Notes due 2006 (the "Senior Note") of Duke Capital Corporation, a Delaware
corporation, subject to the Pledge of such Senior Note by such Holder pursuant
to the Pledge Agreement or (b) upon the occurrence of a Tax Event Redemption
prior to the Purchase Contract Settlement Date or a Successful Initial
Remarketing, Successful Second Remarketing or Successful Third Remarketing, the
appropriate Applicable Ownership Interest of the Treasury Portfolio, subject to
the Pledge of such Applicable
__________________________
/1/ To be inserted in Global Certificates only.
A-2
Ownership Interest of the Treasury Portfolio by such Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with Duke Energy Corporation, a North Carolina corporation
(the "Company," which term, as used herein, includes its successors pursuant to
the Purchase Contract Agreement). All capitalized terms used herein which are
defined in the Purchase Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
constituting part of each Corporate Unit evidenced hereby have been pledged to
the Collateral Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising a portion of such Corporate
Unit.
The Pledge Agreement provides that all payments of principal on the
pledged Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, or interest payments on any pledged Senior Notes
(as defined in the Pledge Agreement) or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio, as the case may be, constituting part of the Corporate Units
received by the Collateral Agent shall be paid by the Collateral Agent by wire
transfer in same day funds (i) in the case of (A) interest payments with respect
to pledged Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (B) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments from the remarketing of
principal or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such terms) of the Treasury Portfolio, as the
case may be, with respect to any Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, that have been
released from the Pledge pursuant to the Pledge Agreement, to the Holders to the
account designated by the Holders by a prior written notice, no later than 2:00
p.m., New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or after 12:30 p.m., New
York City time, on a Business Day, then such payment shall be made no later than
10:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in
the case of payments of remarketing proceeds in respect of any pledged Senior
Notes or the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio that has not been
released from the Pledge pursuant to the Pledge Agreement, as the case may be,
to the Company on the Purchase Contract Settlement Date (as defined herein) in
accordance with the terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Corporate Units of which such
pledged Senior Notes or the Treasury Portfolio, as the case may be, are a part
under the Purchase Contracts forming a part of such Corporate Units. Interest on
any Senior Notes or distributions on the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio, as the case may be, forming part of a Corporate Unit
evidenced hereby which are payable quarterly in arrears on February 16, May 16,
August 16 and November 16, each year, commencing February 16, 2002 (a "Payment
Date"), shall, subject to receipt thereof by the Agent from the Collateral
Agent, be paid to the Person in whose name this Corporate Units Certificate (or
a Predecessor Corporate Units Certificate) is registered at the close of
business on the Record Date for such Payment Date.
A-3
Each Purchase Contract evidenced hereby obligates the Holder of this
Corporate Units Certificate to purchase, and the Company to sell, on November
16, 2004 (the "Purchase Contract Settlement Date"), at a price equal to $25 (the
"Stated Amount"), a number of newly issued shares of Common Stock, no par value
("Common Stock"), of the Company equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Corporate Units of
which such Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the "Purchase Price") for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of (1) cash received from a
Holder or (2) payment received in respect of the remarketing of the Senior Notes
or the appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case may be,
pledged to secure the obligations under such Purchase Contract of the Holder of
the Corporate Units of which such Purchase Contract is a part.
Interest on the Senior Notes or distributions on the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, will be payable at the
Corporate Trust Office of the Agent and at the New York Office or, at the option
of the Company, by check mailed to the address of the Person entitled thereto as
such address appears on the Corporate Units Register or by wire transfer to the
account designated by a prior written notice from such Person.
The Company shall pay on each Payment Date in respect of each Purchase
Contract forming part of a Corporate Unit evidenced hereby an amount (the
"Contract Adjustment Payments") equal to 3.68 % per annum of the Stated Amount,
computed on the basis of a 360-day year of twelve 30 day months, subject to
deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. Such Contract
Adjustment Payments, if any, shall be payable to the Person in whose name this
Corporate Units Certificate (or a Predecessor Corporate Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments, if any, will be payable at the Corporate
Trust Office of the Agent and at the New York Office or, at the option of the
Company, by check mailed to the address of the Person entitled thereto as such
address appears on the Corporate Units Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Corporate Units Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
A-4
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
DUKE ENERGY CORPORATION
By:
--------------------------------------------------
Name:
Title:
By:
--------------------------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: JPMORGAN CHASE BANK,
not individually but solely as attorney-in-fact
of such Holder
By:
--------------------------------------------------
Authorized Officer
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Corporate Units Certificates referred to in the
within mentioned Purchase Contract Agreement.
By: JPMORGAN CHASE BANK
as Purchase Contract Agent
By:
--------------------------------------------------
Authorized Officer
Dated:
A-6
(Form of Reverse of Corporate Units Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 19, 2001 (as may be supplemented from
time to time, the "Purchase Contract Agreement"), between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
thereunder, herein called the "Agent"), to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the terms upon which
the Corporate Units Certificates are, and are to be, executed and delivered. In
the case of any inconsistency between this Certificate and the terms of the
Purchase Contract Agreement, the terms of the Purchase Contract Agreement shall
prevail.
Each Purchase Contract evidenced hereby obligates the Holder of this
Corporate Units Certificate to purchase, and the Company to sell, on the
Purchase Contract Settlement Date at a price equal to the Purchase Price, a
number of newly issued shares of Common Stock of the Company equal to the
Settlement Rate, unless, on or prior to the Purchase Contract Settlement Date,
there shall have occurred a Termination Event or an Early Settlement with
respect to the Security of which such Purchase Contract is a part. The
"Settlement Rate" is equal to (a) if the Applicable Market Value (as defined
below) is equal to or greater than $47.5481 (the "Threshold Appreciation
Price"), .5258 shares of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than the Threshold Appreciation Price but is
greater than $40.125, the number of shares of Common Stock per Purchase Contract
equal to the Stated Amount divided by the Applicable Market Value and (c) if the
Applicable Market Value is less than or equal to $40.125, .6231 shares of Common
Stock per Purchase Contract, in each case subject to adjustment as provided in
the Purchase Contract Agreement. No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in the Purchase
Contract Agreement.
Each Purchase Contract evidenced hereby which is settled either through
Early Settlement or Cash Settlement shall obligate the Holder of the related
Corporate Units to purchase at the Purchase Price, and the Company to sell, a
number of newly issued shares of Common Stock equal to the Early Settlement Rate
or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of fractional shares
in connection with an Early Settlement, the third Trading Day immediately
preceding the relevant Early Settlement Date. The "Closing Price" of the Common
Stock on any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common Stock on
The New York Stock Exchange, Inc. (the "NYSE") on such date or, if the Common
Stock is not listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which the Common Stock is so listed, or if the Common Stock is not so listed on
a United States national or regional securities exchange, the last sale price on
and
A-7
as reported by the Nasdaq National Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the over-the-counter
market as reported by the National Quotation Bureau or similar organization, or,
if such bid price is not available, the market value of the Common Stock on such
date as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Company. A "Trading Day" means a day on
which the Common Stock (A) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter market at the
close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Corporate Units Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement or an Early Settlement or from the
Proceeds of a remarketing of the related pledged Senior Notes of such holders or
of the appropriate Applicable Ownership Interest of the Treasury Portfolio.
Unless a Tax Event Redemption or a Successful Initial Remarketing, Successful
Second Remarketing or Successful Third Remarketing has occurred, a Holder of
Corporate Units who does not elect to make an effective (1) Cash Settlement on
or prior to 5:00 p.m., New York City time, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date, or (2) Early
Settlement on or prior to 5:00 p.m. New York City time, on the fifth Business
Day immediately preceding the Purchase Contract Settlement Date, shall pay the
Purchase Price for the shares of Common Stock to be issued under the related
Purchase Contract from the Proceeds of the sale of the related pledged Senior
Notes held by the Collateral Agent. Unless a Tax Event Redemption or a
Successful Initial Remarketing, Successful Second Remarketing or Successful
Third Remarketing has occurred, such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement and any supplemental
remarketing agreement executed in connection therewith between the parties
thereto, on the third Business Day immediately preceding the Purchase Contract
Settlement Date. If a Tax Event Redemption or a Successful Initial Remarketing,
Successful Second Remarketing or Successful Third Remarketing has occurred, a
Holder of Corporate Units who does not elect to make an effective Early
Settlement on or prior to 5:00 p.m. New York City time, on the second Business
Day immediately preceding the Purchase Contract Settlement Date shall pay the
Purchase Price with the Proceeds at maturity of the Applicable Ownership
Interest (as defined in clause (A) of the definition of such term) of the
Treasury Portfolio.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate Purchase
Price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the pledged
Senior Notes. Upon receipt of notice of any meeting at which holders of Senior
Notes are entitled to vote or upon the solicitation of consents, waivers or
proxies of holders of Senior Notes, the Agent shall, as soon as practicable
thereafter, mail to the Corporate Units holders a notice (a) containing such
A-8
information as is contained in the notice or solicitation, (b) stating that each
Corporate Units holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Senior Notes entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Senior Notes
constituting a part of such holder's Corporate Units and (c) stating the manner
in which such instructions may be given. Upon the written request of the
Corporate Units Holders on such record date, the Agent shall endeavor insofar as
practicable to vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Senior Notes as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of a Corporate Unit, the Agent shall abstain from
voting the Senior Notes evidenced by such Corporate Units.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply, out of the aggregate Redemption Price for the
Senior Notes that are components of Corporate Units, an amount equal to the
aggregate Redemption Amount for the Senior Notes that are components of
Corporate Units to purchase on behalf of the Holders of Corporate Units, the
Treasury Portfolio and, after deducting the Remarketing Fee to the extent
permitted under the terms of the Remarketing Agreement, promptly remit the
remaining portion of such Redemption Price to the Agent for payment to the
Holders of such Corporate Units.
Upon the occurrence of a Successful Initial Remarketing, Successful
Second Remarketing or Successful Third Remarketing, pursuant to the terms of the
Remarketing Agreement, the Remarketing Agent will apply an amount equal to the
Treasury Portfolio Purchase Price to purchase on behalf of the Holders of
Corporate Units, the Treasury Portfolio, and, after deducting the Remarketing
Fee to the extent permitted under the terms of the Remarketing Agreement,
promptly remit the remaining portion of such Proceeds of the Successful Initial
Remarketing, Successful Second Remarketing or Successful Third Remarketing to
the Agent for payment to the Holders of such Corporate Units.
Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date or following a Successful Initial Remarketing,
Successful Second Remarketing or Successful Third Remarketing, the Holders of
Corporate Units and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Treasury Portfolio as the Holder of
Corporate Units and the Collateral Agent had in respect of the Senior Notes, as
the case may be, subject to the Pledge thereof as provided in Articles 2, 3, 4,
5 and 6 of the Pledge Agreement and any reference herein to the Senior Notes
shall be deemed to be a reference to such Treasury Portfolio and any reference
herein or in the Certificates to interest on the Senior Notes shall be deemed to
be a reference to corresponding distributions on the Treasury Portfolio.
The Corporate Units Certificates are issuable only in registered form
and only in denominations of a single Corporate Unit and any integral multiple
thereof. The transfer of any Corporate Units Certificate will be registered and
Corporate Units Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Corporate Units Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such
A-9
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A Holder who elects to substitute Treasury
Securities for Senior Notes or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, thereby creating Treasury Units, shall be responsible
for any fees or expenses payable in connection therewith. Except as provided in
the Purchase Contract Agreement, for so long as the Purchase Contract underlying
a Corporate Unit remains in effect, such Corporate Units shall not be separable
into its constituent parts, and the rights and obligations of the Holder of such
Corporate Units in respect of Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, and the
Purchase Contract constituting such Corporate Units may be transferred and
exchanged only as a Corporate Unit. A Holder of a Corporate Unit may create a
Treasury Unit by delivering to the Collateral Agent Treasury Securities in an
aggregate principal amount equal to the aggregate principal amount of the
pledged Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, in exchange for the release of such pledged
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. From and after such Collateral
Substitution, the Security for which such pledged Treasury Securities secures
the Holder's obligation under the Purchase Contract shall be referred to as a
"Treasury Unit." A Holder may make such Collateral Substitution only in integral
multiples of 40 Corporate Units for 40 Treasury Units; provided, however, that
-------- -------
if a Tax Event Redemption or a Successful Initial Remarketing has occurred and
the Treasury Portfolio has become a component of the Corporate Units, a Holder
may make such Collateral Substitutions only in integral multiples of 100,000
Corporate Units for 100,000 Treasury Units. Such Collateral Substitution may
cause the equivalent aggregate Stated Amount of this Certificate to be increased
or decreased; provided, however, the equivalent aggregate Stated Amount
-------- -------
outstanding under this Corporate Units Certificate shall not exceed
$[500,000,000] [250,000,000]. [All such adjustments to the equivalent aggregate
Stated Amount of this Corporate Units Certificate shall be duly recorded by
placing an appropriate notation on the Schedule attached hereto.]/1/
A Holder of Treasury Units may recreate Corporate Units by delivering
to the Collateral Agent Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, with an aggregate principal amount, in the
case of such Senior Notes, or with the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, in the case of such appropriate Applicable Ownership Interest of the
Treasury Portfolio, equal to the aggregate principal amount of the pledged
Treasury Securities in exchange for the release of such pledged Treasury
Securities in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. Any such recreation of a Corporate Unit may be effected
only in multiples of 40 Treasury Units for 40 Corporate Units; provided,
however, that if a Tax Event Redemption or a Successful Initial Remarketing,
Successful Second Remarketing or Successful Third Remarketing has occurred and
the Treasury Portfolio has become a component
_______________________________
/1/ To be inserted in Global Certificates only.
A-10
of the Corporate Units, a Holder may make such substitution only in integral
multiples of 100,000 Treasury Units for $100,000 Corporate Units.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Corporate Units
Certificate evidencing such Purchase Contract is registered at the close of
business on the Record Date for such Payment Date. Contract Adjustment Payments,
if any, will be payable at the Corporate Trust Office of the Agent and the New
York Office or, at the option of the Company, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Corporate Units
Register or by wire transfer to the account designated by such Person in
writing.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments, if any, so
deferred shall, to the extent permitted by law, bear additional Contract
Adjustment Payments thereon at the rate of 8.00% per annum (computed on the
basis of a 360-day year of twelve 30 day months), compounding on each succeeding
Payment Date, until paid in full (such deferred installments of Contract
Adjustment Payments, if any, together with the additional Contract Adjustment
Payments accrued thereon, are referred to herein as the "Deferred Contract
Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be
due on the next succeeding Payment Date except to the extent that payment is
deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment
Payments, if any, may be deferred to a date that is after the Purchase Contract
Settlement Date and no such deferral period may end other than on a Payment
Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
other than: (i) purchases, redemptions or acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of employees, officers or
directors or a stock purchase or dividend reinvestment plan, or the satisfaction
by the Company of its obligations pursuant to any contract or security
outstanding on the date of such event; (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock; (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or
A-11
exchange provisions of such capital stock or the security being converted or
exchanged; (iv) dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases, acquisitions or redemptions of
capital stock in connection with the issuance or exchange of capital stock (or
securities convertible into or exchangeable for shares of our capital stock);
(v) redemptions, exchanges or repurchases of any rights outstanding under a
shareholder rights plan or the declaration or payment thereunder of a dividend
or distribution of or with respect to rights in the future); or (vi) mandatory
sinking fund payments with respect to any series of preferred stock or preferred
stock A of the Company; provided that the aggregate stated value of all such
series outstanding at the time of such payment does not exceed 5% of the
aggregate of (1) the total principal amount of all then outstanding bonds or
other securities representing secured indebtedness issued or assumed by the
Company and (2) the Company's capital and surplus to be stated on the Company's
books of account after giving effect to such payment; provided however that any
moneys deposited into any sinking fund and not in violation of this clause (vi)
may thereafter be applied to the purchase or redemption of such preferred stock
or preferred stock A in accordance with the terms of such sinking fund without
regard to the foregoing restrictions.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or any Deferred Contract Adjustment Payments, and the rights
and obligations of Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Corporate Units
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from the Pledge in
accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holders thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement; provided, however, that if a Tax Event
Redemption or a Successful Initial Remarketing, Successful Second Remarketing or
Successful Third Remarketing has occurred and the Treasury Portfolio has become
a component of the Corporate Units, Holders may early settle Corporate Units
only in integral multiples of 100,000 Corporate Units. In order to exercise the
right to effect Early Settlement with respect to any Purchase Contracts
evidenced by this Corporate Units Certificate, the Holder of this Corporate
Units Certificate shall deliver this Corporate Units Certificate to the Agent at
the Corporate Trust Office or the New York Office duly endorsed for transfer to
the Company or in blank with the form of Election to Settle Early set forth
below duly completed and accompanied by payment in the form of immediately
available funds payable to the Company in an amount (the "Early Settlement
Amount") equal to (i) the product of (A) the Stated Amount times (B) the number
of Purchase Contracts with respect to which the Holder has elected to effect
Early
A-12
Settlement plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the Contract Adjustment Payments, if any, payable on such
Payment Date with respect to such Purchase Contracts; provided that no payment
shall be required pursuant to clause (ii) of this sentence if the Company shall
have elected to defer the Contract Adjustment Payments which would otherwise be
payable on such Payment Date. Upon Early Settlement of Purchase Contracts by a
Holder of the related Securities, the pledged Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio underlying such
Securities shall be released from the Pledge as provided in the Pledge Agreement
and the Holder shall be entitled to receive a number of shares of Common Stock
on account of each Purchase Contract forming part of a Corporate Units as to
which Early Settlement is effected equal to the Early Settlement Rate; provided,
however, that upon the Early Settlement of the Purchase Contracts, the Holder of
such related Securities will forfeit the right to receive any Deferred Contract
Adjustment Payments and any future Contract Adjustment Payments, except to the
extent that the Early Settlement Date is after the close of business on a Record
Date and prior to the opening of business on the corresponding Payment Date. The
Early Settlement Rate shall initially be equal to .5258 shares of Common Stock
and shall be adjusted in the same manner and at the same time as the Settlement
Rate is adjusted as provided in the Purchase Contract Agreement.
Upon registration of transfer of this Corporate Units Certificate in
accordance with the Purchase Contract Agreement, the transferee shall be bound
(without the necessity of any other action on the part of such transferee,
except as may be required by the Agent pursuant to the Purchase Contract
Agreement) under the terms of the Purchase Contract Agreement, the Pledge
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contract Agreement, the
Pledge Agreement and the Purchase Contracts evidenced by this Corporate Units
Certificate. The Company covenants and agrees, and the Holder, by its acceptance
hereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.
The Holder of this Corporate Units Certificate, by its acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Corporate Units evidenced hereby on his behalf as
his attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Senior Notes or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, underlying this Corporate Units
Certificate pursuant to the Pledge Agreement and to all other provisions of the
Pledge Agreement. The Holder further covenants and agrees, that, to the extent
and in the manner provided in the Purchase Contract Agreement and the Pledge
Agreement, but subject to the terms thereof, Proceeds of the pledged Senior
Notes or the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio on the Purchase
Contract Settlement Date shall be paid by the Collateral Agent to the Company in
A-13
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such Proceeds.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts then outstanding.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Corporate Units Certificate
is registered as the owner of the Corporate Units evidenced hereby for the
purpose of receiving payments of interest payable quarterly on the Senior Notes
or on the maturing quarterly interest strips of the Treasury Portfolio, as
applicable, receiving payments of Contract Adjustment Payments, if any, and any
Deferred Contract Adjustment Payments, performance of the Purchase Contracts and
for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Agent nor any such agent shall be affected by notice to the
contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
A-14
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------ Custodian -----------
(cust) (minor)
Under Uniform Gifts to Minors Act
----------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
_________________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ____________
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
___________________
Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Corporate Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing
________________________________________________________________________________
attorney to transfer said Corporate Units Certificates on the books of Duke
Energy Corporation with full power of substitution in the premises.
Dated: ________________________ ___________________________________________
Signature
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Corporate Units
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee: ___________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, 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 Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-15
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Corporate Units
evidenced by this Corporate Units Certificate be registered in the name of, and
delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated: _____________________________________
Signature
Signature Guarantee:_________________
(if assigned to another person)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, 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 Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
If shares are to be registered in the
name of and delivered to a Person
other than the Holder, please (i) REGISTERED HOLDER
print such Person's name and address
and (ii) provide a guarantee of your
signature:
Please print name and address of
Registered Holder:
________________________________________________________________________________
Name Name
________________________________________________________________________________
Address Address
______________________________________ _____________________________________
______________________________________ _____________________________________
______________________________________ _____________________________________
Social Security or other
Taxpayer Identification
Number, if any
A-16
ELECTION TO SETTLE EARLY
The undersigned Holder of this Corporate Units Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Corporate Units evidenced by this Corporate
Units Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Corporate Units
with an aggregate Stated Amount equal to $1,000 or an integral multiple thereof;
provided, however, that if a Tax Event Redemption or a Successful Initial
Remarketing has occurred and the Treasury Portfolio has become a component of
the Corporate Units, Holders may early settle Corporate Units only in integral
multiples of 100,000 Corporate Units. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early Settlement be
registered in the name of, and delivered, together with a check in payment for
any fractional share and any Corporate Units Certificate representing any
Corporate Units evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the address indicated
below unless a different name and address have been indicated below. Pledged
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, deliverable upon such Early Settlement will be
transferred in accordance with the transfer instructions set forth below. If
shares are to be registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident thereto.
Dated:_________________ _____________________________________
Signature
Signature Guarantee
(if assigned to another person):_____________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, 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 Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-17
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares of Common Stock or Corporate Units REGISTERED HOLDER
Certificates are to be registered in the name
of and delivered to, and pledged Senior
Notes, or an Applicable Ownership Interest in
the Treasury Portfolio, as the case may be,
are to be transferred to, a Person other than
the Holder, please (i) print such Person's
name and address and (ii) provide a guarantee
of your signature:
Please print name and address
of Registered Holder:
______________________________________________ _____________________________
Name Name
______________________________________________ _____________________________
Address Address
______________________________________________ _____________________________
______________________________________________ _____________________________
______________________________________________ _____________________________
Social Security or other
Taxpayer Identification
Number, if any ____________________________
A-18
Transfer Instructions for pledged Senior Notes, or the Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, Transferable Upon Early
Settlement or a Termination Event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
A-19
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
======================================================================================================================
Stated Amount of this Signature
Amount of decrease in Amount of increase in Global Certificate of authorized officer
Stated Amount of the Stated Amount of the following such of Purchase Contract
Date Global Certificate Global Certificate decrease or increase Agent
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
A-20
EXHIBIT B
(Form of Face of Treasury Units, Series B Certificate)
[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, 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 SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]/1/
No. ________ CUSIP NO. [_]
Number of Treasury Units, Series B _____
Treasury Units, Series B
This Treasury Units, Series B Certificate ("Treasury Units
Certificate") certifies that ____________ is the registered Holder of the number
of Treasury Units, Series B ("Treasury Units") set forth above (or such other
number as is set forth in Schedule of Increases or Decreases in Global
Certificate annexed hereto). Each Treasury Unit represents (i) a 1/40, or 2.5 %,
undivided beneficial ownership interest in a Treasury Security having a
principal amount at maturity equal to $1,000, subject to the Pledge of such
Treasury Security by such Holder pursuant to the Pledge Agreement, and (ii) the
rights and obligations of the Holder under one Purchase Contract with Duke
Energy Corporation, a North Carolina corporation (the "Company," which term, as
used herein, includes its successors pursuant to the Purchase Contract
Agreement). All capitalized terms used herein which are defined in the Purchase
Contract Agreement have the meaning set forth therein.
______________________
/1/ To be inserted in Global Certificates only.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Treasury Unit evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Treasury Units.
The Pledge Agreement provides that all payments of principal of any
Treasury Securities received by the Collateral Agent shall be paid by the
Collateral Agent by wire transfer in same day funds (i) in the case of any
principal payments with respect to any Treasury Securities that have been
released from the Pledge pursuant to the Pledge Agreement, to the Holders of the
applicable Treasury Units to the accounts designated by the Holders by a prior
written notice for such purpose no later than 2:00 p.m., New York City time, on
the Business Day such payment is received by the Collateral Agent (provided that
in the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New York City time, on
the next succeeding Business Day), and (ii) in the case of the principal of any
pledged Treasury Securities, to the Company on the Purchase Contract Settlement
Date (as defined herein) in accordance with the terms of the Pledge Agreement,
in full satisfaction of the respective obligations of the Holders of the
Treasury Units of which such pledged Treasury Securities are a part under the
Purchase Contracts forming a part of such Treasury Units or by wire transfer to
the account designated by such Person by a prior written notice.
Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury Units Certificate to purchase, and the Company to sell, on November 16,
2004 (the "Purchase Contract Settlement Date"), at a price equal to $25 (the
"Stated Amount"), a number of newly issued shares of Common Stock, no par value
("Common Stock"), of the Company equal to the Settlement Rate, unless on or
prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Treasury Units of
which such Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the "Purchase Price") for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of the Proceeds from the
Treasury Securities pledged to secure the obligations under such Purchase
Contract in accordance with the terms of the Pledge Agreement.
The Company shall pay on each Payment Date in respect of each Purchase
Contract forming part of a Treasury Unit evidenced hereby an amount (the
"Contract Adjustment Payments") equal to 3.68 % per annum of the Stated Amount,
computed on the basis of a 360-day year of twelve 30 day months, subject to
deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. Such Contract
Adjustment Payments, if any, shall be payable to the Person in whose name this
Treasury Units Certificate (or a Predecessor Treasury Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments, if any, will be payable at the Corporate
Trust Office of the Agent and at the New York Office or, at the option of the
Company, by check mailed to the
B-2
address of the Person entitled thereto as such address appears on the Treasury
Units Register or by wire transfer to the account designated by such Person by a
prior written notice.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Treasury Units Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
B-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
DUKE ENERGY CORPORATION
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: JPMORGAN CHASE BANK, not
individually but solely as
attorney-in-fact of such Holder
By:_____________________________________
Name:
Title:
Dated
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Treasury Units Certificates referred to in the
within-mentioned Purchase Contract Agreement.
By: JPMORGAN CHASE BANK,
as Purchase Contract Agent
By:_____________________________________
Authorized Officer
(Form of Reverse of Treasury Units Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of November 19, 2001 (as may be supplemented from
time to time, the "Purchase Contract Agreement"), between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
thereunder, herein called the "Agent"), to which the Purchase Contract Agreement
and supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Agent, the Company and the Holders and of the terms
upon which the Treasury Units Certificates are, and are to be, executed and
delivered. In the case of any inconsistency between this Certificate and the
terms of the Purchase Contract Agreement, the terms of the Purchase Contract
Agreement shall prevail.
Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury Units Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at the Purchase Price, a number of newly issued shares
of Common Stock of the Company equal to the Settlement Rate, unless, on or prior
to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event or an Early Settlement with respect to the Security of which
such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the
Applicable Market Value (as defined below) is equal to or greater than $47.5481
(the "Threshold Appreciation Price"), .5258 shares of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $40.125, the number of shares of Common
Stock per Purchase Contract equal to the Stated Amount divided by the Applicable
Market Value and (c) if the Applicable Market Value is less than or equal to
$40.125, .6231 shares of Common Stock per Purchase Contract, in each case
subject to adjustment as provided in the Purchase Contract Agreement. No
fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby which is settled through Early
Settlement shall obligate the Holder of the related Treasury Units to purchase
at the Purchase Price, and the Company to sell, a number of newly issued shares
of Common Stock equal to the Early Settlement Rate.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date or, for purposes of determining cash payable in lieu of fractional shares
in connection with an Early Settlement, the third Trading Day immediately
preceding the relevant Early Settlement Date. The "Closing Price" of the Common
Stock on any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common Stock on
The New York Stock Exchange, Inc. (the "NYSE") on such date or, if the Common
Stock is not listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which the Common Stock is so listed, or if the Common Stock is not so listed on
a United States national or regional securities exchange, the last sale price on
and as reported by the Nasdaq National Market or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the over-the-counter
market as reported by the
B-5
National Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of the Common Stock on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Treasury Units Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting either an Early Settlement of each such Purchase Contract or
by applying a principal amount of the pledged Treasury Securities underlying
such Holder's Treasury Units equal to the Stated Amount to the purchase of the
Common Stock. A Holder of Treasury Units who does not elect, on or prior to 5:00
p.m., New York City time, on the second Business Day immediately preceding the
Purchase Contract Settlement Date, to make an Early Settlement, shall pay the
Purchase Price for the shares of Common Stock to be issued under the related
Purchase Contract by applying a principal amount of the pledged Treasury
Securities as aforesaid.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate Purchase
Price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
The Treasury Units Certificates are issuable only in registered form
and only in denominations of a single Treasury Unit and any integral multiple
thereof. The transfer of any Treasury Units Certificate will be registered and
Treasury Units Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Treasury Units Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A Holder who elects to
substitute Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, for Treasury Securities, thereby
recreating Corporate Units, shall be responsible for any fees or expenses
payable in connection therewith. Except as provided in the Purchase Contract
Agreement, for so long as the Purchase Contract underlying a Treasury Units
remains in effect, such Treasury Units shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Treasury
Units in respect of the Treasury Security and the Purchase Contract constituting
such Treasury Units may be transferred and exchanged only as a Treasury Units. A
Holder of Treasury Units may recreate Corporate Units by delivering to the
Collateral Agent Senior Notes or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, with an aggregate principal amount, in the case of
such Senior Notes, or with the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, in the case of such appropriate Applicable Ownership Interest of the
Treasury Portfolio, equal to the aggregate principal amount
B-6
of the pledged Treasury Securities in exchange for the release of such pledged
Treasury Securities in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. From and after such substitution, the
Security for which such pledged Senior Notes or appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, secures the Holder's
obligation under the Purchase Contract shall be referred to as a "Corporate
Unit." A Holder may make such a substitution only in integral multiples of 40
Treasury Units for 40 Corporate Units; provided, however, that if a Tax Event
Redemption or a Successful Initial Remarketing has occurred and the Treasury
Portfolio has become a component of the Corporate Units, a Holder may make such
substitution only in integral multiples of 100,000 Treasury Units for 100,000
Corporate Units. Such substitution may cause the equivalent aggregate Stated
Amount of this Certificate to be increased or decreased; provided, however, the
-------- -------
equivalent aggregate Stated Amount outstanding under this Treasury Units
Certificate shall not exceed $[500,000,000] [250,000,000]. [All such adjustments
to the equivalent aggregate Stated Amount of this Treasury Units Certificate
shall be duly recorded by placing an appropriate notation on the Schedule
attached hereto.]/2/
A Holder of a Corporate Unit may create a Treasury Unit by delivering
to the Collateral Agent Treasury Securities in an aggregate principal amount of
the pledged Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, in exchange for the release of such pledged
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. Any such creation of a Treasury
Units may be effected only in multiples of 40 Corporate Units for 40 Treasury
Units; provided, however, if a Tax Event Redemption or a Successful Initial
Remarketing has occurred and the Treasury Portfolio has become a component of
the Corporate Unit, a Holder may make such Collateral Substitution only in
integral multiples of 100,000 Corporate Units for 100,000 Treasury Units.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Treasury Units
Certificate evidencing such Purchase Contract is registered at the close of
business on the Record Date for such Payment Date. Contract Adjustment Payments,
if any, will be payable at the Corporate Trust Office of the Agent and the New
York Office or, at the option of the Company, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Treasury Units
Register or by wire transfer to the account designated by such Person by a prior
written notice.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments, if any, otherwise payable on any Payment Date, but only if
the Company shall give the Holders and the Agent written notice of its election
to defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments, if any, so
__________________
/2/ To be inserted in Global Certificates only.
B-7
deferred shall, to the extent permitted by law, bear additional Contract
Adjustment Payments thereon at the rate of 8.00% per annum (computed on the
basis of a 360-day year of twelve 30 day months), compounding on each succeeding
Payment Date, until paid in full (such deferred installments of Contract
Adjustment Payments, if any, together with the additional Contract Adjustment
Payments accrued thereon, are referred to herein as the "Deferred Contract
Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be
due on the next succeeding Payment Date except to the extent that payment is
deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment
Payments, if any, may be deferred to a date that is after the Purchase Contract
Settlement Date and no such deferral period may end other than on a Payment
Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until a Payment Date
prior to the Purchase Contract Settlement Date, then all Deferred Contract
Adjustment Payments, if any, shall be payable to the registered Holders as of
the close of business on the Record Date immediately preceding such Payment
Date.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
other than: (i) purchases, redemptions or acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of employees, officers or
directors or a stock purchase or dividend reinvestment plan, or the satisfaction
by the Company of its obligations pursuant to any contract or security
outstanding on the date of such event; (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock; (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; (iv) dividends
or distributions in capital stock of the Company (or rights to acquire capital
stock) or repurchases, acquisitions or redemptions of capital stock in
connection with the issuance or exchange of capital stock (or securities
convertible into or exchangeable for shares of our capital stock); (v)
redemptions, exchanges or repurchases of any rights outstanding under a
shareholder rights plan or the declaration or payment thereunder of a dividend
or distribution of or with respect to rights in the future); or (vi) mandatory
sinking fund payments with respect to any series of preferred stock or preferred
stock A of the Company; provided that the aggregate stated value of all such
series outstanding at the time of such payment does not exceed 5% of the
aggregate of (1) the total principal amount of all then outstanding bonds or
other securities representing secured indebtedness issued or assumed by the
Company and (2) the Company's capital and surplus to be stated on the Company's
books of account after giving effect to such payment; provided however that any
moneys deposited into any sinking fund and not in violation of this clause (vi)
may thereafter be applied to the purchase or redemption of such preferred stock
or preferred stock A in accordance with the terms of such sinking fund without
regard to the foregoing restrictions.
B-8
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay Contract Adjustment
Payments, if any, or any Deferred Contract Adjustment Payments, and the rights
and obligations of Holders to purchase Common Stock shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Treasury Units
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Treasury Securities from the Pledge in accordance with
the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holders thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Treasury Units Certificate, the Holder of this Treasury Units Certificate shall
deliver this Treasury Units Certificate to the Agent at the Corporate Trust
Office or the New York Office duly endorsed for transfer to the Company or in
blank with the form of Election to Settle Early set forth below duly completed
and accompanied by payment in the form of immediately available funds payable to
the Company in an amount (the "Early Settlement Amount") equal to (i) the
product of(A) the Stated Amount times (B) the number of Purchase Contracts with
respect to which the Holder has elected to effect Early Settlement plus (ii) if
such delivery is made with respect to any Purchase Contracts during the period
from the close of business on any Record Date next preceding any Payment Date to
the opening of business on such Payment Date, an amount equal to the Contract
Adjustment Payments, if any, payable on such Payment Date with respect to such
Purchase Contracts; provided that no payment shall be required pursuant to
clause (ii) of this sentence if the Company shall have elected to defer the
Contract Adjustment Payments which would otherwise be payable on such Payment
Date. Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the pledged Treasury Securities underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Treasury Units as to which Early
Settlement is effected equal to the Early Settlement Rate; provided, however,
that upon the Early Settlement of the Purchase Contracts, the Holder of such
related Securities will forfeit the right to receive any Deferred Contract
Adjustment Payments and any future Contract Adjustment Payments, except to the
extent that the Early Settlement Date is after the close of business on a Record
Date and prior to the opening of business on the corresponding Payment Date. The
Early Settlement Rate shall initially be equal to .5258 shares of Common Stock
and shall be adjusted in the same manner and at the same time as the Settlement
Rate is adjusted as provided in the Purchase Contract Agreement.
Upon registration of transfer of this Treasury Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be
B-9
required by the Agent pursuant to the Purchase Contract Agreement) under the
terms of the Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts evidenced hereby and the transferor shall be released from the
obligations under the Purchase Contract Agreement, the Pledge Agreement and the
Purchase Contracts evidenced by this Treasury Units Certificate. The Company
covenants and agrees, and the Holder, by its acceptance hereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Treasury Units Certificate, by its acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Treasury Units evidenced hereby on his behalf as
its attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on its behalf as its attorney-in-fact, and consents to the
Pledge of the Treasury Securities underlying this Treasury Units Certificate
pursuant to the Pledge Agreement and to all other provisions of the Pledge
Agreement. The Holder further covenants and agrees, that, to the extent and in
the manner provided in the Purchase Contract Agreement and the Pledge Agreement,
but subject to the terms thereof, Proceeds of the pledged Treasury Securities on
the Purchase Contract Settlement Date shall be paid by the Collateral Agent to
the Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
Proceeds.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts then outstanding.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Treasury Units Certificate
is registered as the owner of the Treasury Units evidenced hereby for the
purpose of receiving payments on the Treasury Securities, receiving payments of
Contract Adjustment Payments, if any, and any Deferred Contract Adjustment
Payments, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
B-10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ----------------Custodian ---------
(cust) (minor)
Under Uniform Gifts to Minors Act
--------------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Corporate Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing
________________________________________________________________________________
attorney to transfer said Treasury Units Certificates on the books of Duke
Energy Corporation with full power of substitution in the premises.
Dated: ___________________________
Signature
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Treasury Units
Certificates in every
particular, without
alteration or enlargement
or any change whatsoever.
Signature Guarantee: ___________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, 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 Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-11
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Treasury Units evidenced
by this Treasury Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated: ___________________________ _______________________________________
Signature
Signature Guarantee:___________________
if assigned to another person)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, 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 Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
If shares are to be registered in the
name of and delivered to a Person other
than the Holder, please (i) print such
Person's name and address and (ii) provide REGISTERED HOLDER
a guarantee of your signature:
Please print name and address of Registered Holder:
_____________________________________________________ ____________________________________________________________
Name Name
_____________________________________________________ ____________________________________________________________
Address Address
_____________________________________________________ ____________________________________________________________
_____________________________________________________ ____________________________________________________________
_____________________________________________________ ____________________________________________________________
Social Security or other
Taxpayer Identification
Number, if any
______________________________________________________________
B-12
ELECTION TO SETTLE EARLY
The undersigned Holder of this Treasury Units Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Treasury Units evidenced by this Treasury
Units Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Treasury Units with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Treasury Units Certificate representing any Treasury Units evidenced hereby as
to which Early Settlement of the related Purchase Contracts is not effected, to
the undersigned at the address indicated below unless a different name and
address have been indicated below. Pledged Treasury Securities, deliverable upon
such Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:_________________ _____________________________________
Signature
Signature Guarantee:
(if assigned to another person):
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, 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 Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-13
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
________________________________________________________________________________
If shares of Common Stock or Treasury Units
Certificates are to be registered in the
name of and delivered to, and pledged Treasury
Securities are to be transferred to, a Person
other than the Holder, please (i) print such
Person's name and address and (ii) provide a
guarantee of your signature:
Please print name and address of Registered Holder:
_____________________________________________________ _____________________________________________________________
Name Name
_____________________________________________________ _____________________________________________________________
Address Address
_____________________________________________________ _____________________________________________________________
_____________________________________________________ _____________________________________________________________
_____________________________________________________ _____________________________________________________________
Social Security or other
Taxpayer Identification
Number, if any _____________________________________________
Transfer Instructions for pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
B-14
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
=============================================================================================================================
Stated Amount of this Signature
Amount of decrease in Amount of increase in Global Certificate of authorized officer
Stated Amount of the Stated Amount of the following such of Purchase Contract
Date Global Certificate Global Certificate decrease or increase Agent
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
B-15
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Bank One Trust Company, N.A.
One North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Services Division
Re: Equity Units of Duke Energy Corporation (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of
the Pledge Agreement, dated as of November 19, 2001, (the "Pledge Agreement")
among the Company, yourselves, as Collateral Agent, Custodial Agent and
Securities Intermediary and ourselves, as Purchase Contract Agent and as
attorney-in-fact for the holders of [Corporate Units, Series B] [Treasury Units,
Series B] from time to time, that the holder of the Securities listed below (the
"Holder") has elected to substitute [$______ aggregate principal amount of
Treasury Securities] [$________ aggregate principal amount of Senior Notes or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be,] in exchange for an equal Value of [Pledged Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,], and upon the payment
by such Holder of any applicable fees, to release the [Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Treasury Securities] related to such [Corporate Units, Series B]
[Treasury Units, Series B] to us in accordance with the Holder's instructions.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
Date: _______________________ ___________________________
By:________________________
Name:
Title:
Signature Guarantee:_______
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] for the [Pledged Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Pledged Treasury Securities]:
_____________________________________________________ ______________________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
_____________________________________________________
Address
_____________________________________________________
_____________________________________________________
_____________________________________________________
C-2
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
JPMorgan Chase Bank
450 West 33rd Street
New York, New York 10001
Attention: Institutional Trust Services
Re: Equity Units of Duke Energy Corporation (the "Company")
The undersigned Holder hereby notifies you that it has
delivered to , as Collateral Agent, [$________ aggregate principal amount
of Treasury Securities] [$ aggregate principal amount of Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] in exchange for an equal Value of [Pledged Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section [4.1], [4.2] of the Pledge Agreement, dated November 19,
2001 (the "Pledge Agreement"), between you, the Company and the Collateral
Agent. The undersigned Holder has paid the Collateral Agent all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio] [Pledged Treasury Securities] related to
such [Corporate Units, Series B] [Treasury Units, Series B]. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Dated:_______________ ________________________________
Signature
Signature Guarantee:_______________
Please print name and address of Registered Holder:
_____________________________________________________ ______________________________________________________
Name Social Security or other
Taxpayer Identification
Number, if any
_____________________________________________________
Address
_____________________________________________________
_____________________________________________________
_____________________________________________________
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
JPMorgan Chase Bank
450 West 33rd Street
New York, New York 10001
Attention: Institutional Trust Services
Re: Equity Units of Duke Energy Corporation (the "Company")
The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.4 of the Purchase Contract Agreement dated as of November 19,
2001 among the Company and yourselves, as Purchase Contract Agent and as
attorney-in-fact for the Holders of the Purchase Contracts, that such Holder has
elected to pay to the Collateral Agent, on or prior to 11:00 a.m., New York City
time, on the fourth Business Day immediately preceding the Purchase Contract
Settlement Date, (in lawful money of the United States by [certified or cashiers
check or] wire transfer, in each case in immediately available funds),
$__________ as the Purchase Price for the shares of Common Stock issuable to
such Holder by the Company under the related Purchase Contract on the Purchase
Contract Settlement Date. The undersigned Holder hereby instructs you to notify
promptly the Collateral Agent of the undersigned Holders election to make such
cash settlement with respect to the Purchase Contracts related to such Holder's
Corporate Units.
Dated:________________________ ___________________________________________
Signature
Signature Guarantee:_______________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, 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 Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
_____________________________________________________ _______________________________________________
Please print name and address of Registered Holder Social Security or other Taxpayer
Identification Number, if any
_____________________________________________________
Name
_____________________________________________________
Address
_____________________________________________________