Exhibit 4.6.8


 


Execution Copy  


 




 





DUKE
ENERGY CORPORATION


 


TO


 


JPMORGAN
CHASE BANK,


Trustee


 






 


EIGHTY-SECOND
SUPPLEMENTAL INDENTURE


 


Dated
as of March 21, 2003


 






 


CREATING
AN ISSUE OF FIRST AND REFUNDING


MORTGAGE
BONDS, 4 1⁄2 % SERIES DUE 2010


 






 


SUPPLEMENTAL
TO


FIRST
AND REFUNDING MORTGAGE


DATED
AS OF DECEMBER 1, 1927


 




 




















 


SUPPLEMENTAL INDENTURE,
bearing date as of the 21st day of March, 2003, made and entered into by and
between Duke Energy Corporation, formerly known as Duke Power Company, a
corporation duly organized and existing under the laws of the State of North
Carolina, hereinafter called the “Corporation,” party of the first part, and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank, formerly known
as Chemical Bank (successor to Morgan Guaranty Trust Company of New York, as
Trustee)), a New York banking corporation, having its principal place of
business in the Borough of Manhattan, City and State of New York, hereinafter
called the “Trustee,” as Trustee, party of the second part.


 


WHEREAS Duke Power Company,
a New Jersey corporation, hereinafter called the “New Jersey Company,” duly
executed and delivered its First and Refunding Mortgage, dated as of December 1, 1927, to Guaranty Trust Company of New
York, as Trustee, to secure its First and Refunding Mortgage Gold Bonds, to be
issued from time to time in series as provided in said Mortgage, and has from
time to time duly executed and delivered supplemental indentures, including
supplemental indentures dated as of September 1, 1947 and February 1,
1949, to Guaranty Trust Company of
New York (the corporate name of which has been changed to Morgan Guaranty Trust
Company of New York), as Trustee, and a supplemental indenture dated as of February 1,  1960 to Morgan Guaranty Trust Company of
New York, as Trustee, supplementing and modifying said Mortgage (said Mortgage,
as so supplemented and modified, being hereinafter referred to as the “original
indenture”); and


 


WHEREAS bonds of a series
known as the “First and Refunding Mortgage Bonds, 2.65% Series Due 1977”
(herein called “bonds of the 2.65% Series”), bonds of a series known as the “First
and Refunding Mortgage Bonds, 2 7/8% Series Due 1979” (herein called “bonds
of the 1979 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 6 3/8% Series Due 1998” (herein called “‘bonds of the 1998 Series”),
bonds of a series known as the “First and Refunding Mortgage Bonds, Pollution
Control Facilities Revenue Refunding Series Due 2014” (herein called ‘“bonds
of the 1990 Pollution Control Series”), bonds of a series known as the “First
and Refunding Mortgage Bonds, City of Greensboro Series Due 2027” (herein
called ‘“bonds of the 2027 City of Greensboro Series”), bonds of a series known
as the “First and Refunding Mortgage Bonds, Medium-Term Notes Series” (herein
called ‘“bonds of the Medium-Term Notes Series”), bonds of a series known as
the “First and Refunding Mortgage Bonds, 6 5/8% Series B Due 2003” (herein
called “bonds of the 2003 Series B”), bonds of a series known as the “First
and Refunding Mortgage Bonds, 6 3/8% Series Due 2008” (herein called ‘“bonds
of the 2008 Series”), bonds of a series known as the “First and Refunding
Mortgage Bonds, 5 7/8% Series C Due 2003” (herein called “bonds of the 2003
Series C”), bonds of a series known as the “First and Refunding Mortgage
Bonds, Pollution Control Facilities Revenue Refunding Series Due 2014”
(herein called ‘“bonds of the 1993 Pollution Control Series”), bonds of a
series known as the “First and Refunding Mortgage Bonds, 6 1/4% Series B
2004” (herein called ‘“bonds of the 2004 Series B”), bonds of a series
known as the “First and Refunding Mortgage Bonds, 7% Series Due 2033”
(herein called “bonds of the 2033 Series”), bonds of a series known as the “First
and Refunding Mortgage Bonds, 6 7/8% Series B Due 2023” (herein called “bonds
of the 2023 


 


1

















 


Series B”), bonds of a
series known as the “First and Refunding Mortgage Bonds, 6 3/4% Series Due
2025” (herein called “bonds of the 2025 Series”), bonds of a series known as
the “First and Refunding Mortgage Bonds, 7 7/8% Series Due 2024” (herein
called ‘“bonds of the 2024 Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 7 1/2% Series B Due 2025” (herein called “bonds
of the 2025 Series B”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 7 1/2% Series Due 1999” (herein called “bonds of
the 1999 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 7% Series Due 2000” (herein called “‘bonds of the 2000 Series”),
bonds of a series known as the “First and Refunding Mortgage Bonds, 7% Series B
Due 2000” (herein called ‘“bonds of the 2000 Series B”), bonds of a series
known as the “First and Refunding Mortgage Bonds, 6.625% Series due 2003”
(herein called “bonds of the 2003 Series”), bonds of a series known as the “First
and Refunding Mortgage Bonds, 9 5/8% Series due 2020” (herein called “bonds
of the 2020 Series”), bonds of a series known as the “First and Refunding
Mortgage Bonds, 8 3/4% Series due 2021” (herein called “bonds of the 2021
Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7% Series due
2005” (herein called “bonds of the 2005 Series”), bonds of a series known as “First
and Refunding Mortgage Bonds, 3.75% Series A due 2008” (herein called “bonds
of the 3.75% Series A”), bonds of series known as “First and Refunding
Mortgage Bonds, 3.75% Series B due 2008” (herein called “bonds of the
3.75% Series B”, and together with the bonds of the 3.75% Series A,
the “bonds of the 3.75% Series”), bonds of a series known as “First and
Refunding Mortgage Bonds, 7 3/8% Series Due 2023” (herein called “bonds of
the 7 3/8% Series”) and such other bonds that have heretofore been issued and
(except for bonds of the 2.65% Series, bonds of the 1979 Series, bonds of the
1998 Series, bonds of the 1999 Series, bonds of the 2000 Series, bonds of the
2000 Series B, bonds of the 2003 Series, bonds of the 2003 Series B,
bonds of the 2020 Series, bonds of the 2021 Series, bonds of the 2005 Series,
bonds of the 2025 Series B, bonds of the 7 3/8% Series and other such
bonds which have been redeemed or retired in their entirety) are the only bonds
now outstanding under the original indenture as heretofore supplemented; and


 


WHEREAS the Corporation has
duly executed and delivered a supplemental indenture, dated as of June 15,
1964, to Morgan Guaranty Trust Company of New York, as Trustee, for the purpose
of evidencing the succession by merger of the Corporation to the New Jersey
Company and the assumption by the Corporation of the covenants and conditions
of the New Jersey Company in the original indenture and to enable the
Corporation to have and exercise the powers and rights of the New Jersey
Company under the original indenture in accordance with the terms thereof and
whereby the Corporation assumed and agreed to pay duly and punctually the
principal of and interest on the bonds issued under the original indenture in
accordance with the provisions of said bonds and the coupons thereto
appertaining and the original indenture, and agreed to perform and fulfill all
the terms, covenants and conditions of the original indenture binding upon the
New Jersey Company; and


 


WHEREAS Morgan Guaranty
Trust Company of New York resigned as Trustee under the original indenture as
heretofore supplemented and Chemical Bank was appointed successor Trustee, said
resignation and appointment having taken effect on August 30, 1994 


 


2

















 


pursuant to an Instrument of
Resignation, Appointment and Acceptance dated as of August 30,1994 among
the Corporation, Morgan Guaranty Trust Company of New York, as Trustee, and
Chemical Bank (now known as JPMorgan Chase Bank), as successor Trustee; and


 


WHEREAS the Corporation
desires to create under the original indenture, as heretofore supplemented and
as to be supplemented by this supplemental indenture, a new series of bonds, to
be known as its “First and Refunding Mortgage Bonds, 4 1⁄2 % Series due 2010”
and to determine the terms and provisions and the form of the bonds of such
series; and


 


WHEREAS for the purposes
hereinabove recited, and pursuant to due corporate action, the Corporation has
duly determined to execute and deliver to the Trustee a supplemental indenture
in the form hereof supplementing the original indenture (the original
indenture, as supplemented by the aforesaid supplemental indenture dated as of June 15,
1964, by supplemental indentures dated as of February 1, 1968, March 1, 1990, May 15, 1990,
July 1, 1991, March 1,
1993, April 1, 1993, May 1, 1993, July 1,1993, August 1, 1993, August 20, 1993, May 1,
1994, February 25, 2003 and as hereby supplemented, being sometimes
hereinafter referred to as the “Indenture”); and


 


WHEREAS all conditions and
requirements necessary to make this supplemental indenture a valid, legal and
binding instrument in accordance with its terms have been done and performed,
and the execution and delivery hereof have been in all respects duly
authorized:


 


NOW, THEREFORE, THIS
INDENTURE WITNESSETH:


 


That in consideration of the
premises and of the sum of one dollar duly paid by the Corporation to the
Trustee at or before the execution and delivery of these presents, the receipts
whereof is hereby acknowledged, the Corporation hereby covenants and agrees
with the Trustee and its successors in the trust under the Indenture as
follows:


 


PART ONE.


 


BONDS
OF THE 4 1⁄2% SERIES DUE 2010


 


SECTION 1.  The Corporation hereby creates a new series
of bonds to be issued under and secured by the Indenture and known as its First
and Refunding Mortgage Bonds, 4 1⁄2% Series due 2010 (herein called “bonds
of 4 1⁄2 % Series”) and the Corporation hereby establishes, determines and fixes
the terms and provisions of the bonds of the 4 1⁄2% Series as hereinafter in
this Part One set forth.


 


Each bond of the 4 1⁄2% Series shall
be dated the date of its authentication (except that if any such bond shall be
authenticated on any interest payment date, it shall be dated the following
day) and interest shall be payable on the principal represented thereby
commencing October 1, 2003, from the April 1 or October 1, as
the case may be, next preceding the date thereof to which interest has been
paid, unless such date of authentication is prior to October 1, 2003, in which
case interest shall be payable from March 21, 2003; 


 


3

















 


provided, however, that
interest shall be payable on each bond of the 4 1⁄2% Series authenticated
after the record date (as defined in the next succeeding paragraph of this Section 1)
with respect to any interest payment date and prior to such interest payment
date, only from such interest payment date.


 


Interest on any bond of the
4 1⁄2% Series shall be paid to the person who, according to the bond register
of the Corporation, is the registered holder of such bond of the 4 1⁄2% Series at
the close of business on the applicable record date, and such interest payments
shall be made by check mailed to such registered holder at his last address
shown on such bond register or, at the option of the Corporation, by wire
transfer at such place and to such account at a banking institution in the
United States as may be designated in writing to the Trustee at least sixteen
(16) days prior to the date of payment by the Person entitled thereto
(provided, that if the bonds of the 4 1⁄2%  Series are
represented by Global Securities held by the Depositary, payment may be made
pursuant to the procedures of the Depositary); provided, however, that, if the
Corporation shall default in the payment of the interest due on any interest
payment date on any bond of the 4 1⁄2% Series, such defaulted interest shall
be paid to the registered holder of such bond (or any bond or bonds of the 4 1⁄2%
Series issued upon transfer, exchange or substitution thereof) on the date
of subsequent payment of such defaulted interest or, at the election of the
Corporation, to the person in whose name such bond (or any bond or bonds of the
4 1⁄2% Series issued upon transfer, exchange or substitution thereof) is
registered on a subsequent record date established by notice given by mail by
or on behalf of the Corporation to the holders of all bonds of the 4 1⁄2% Series not
less than ten (10) days preceding such subsequent record date.  The term “record date” as used in this Section 1
shall mean, with respect to any semi-annual interest payment date, the close of
business on the March 15 and September 15 next preceding such
interest payment date or, in the case of a payment of defaulted interest, the
close of business on any subsequent record date established as provided above.


 


SECTION 2.  All bonds of the 4 1⁄2% Series shall
mature as to principal on April 1, 2010, and shall bear interest at a rate
of 4 1⁄2% per annum, payable semi-annually on the first day of April and October in
each year.


 


SECTION 3.  The bonds of the 4 1⁄2% Series shall be
fully registered bonds, without coupons, in denominations of one thousand
dollars ($1,000) and any integral multiple of one thousand dollars ($1,000),
all such bonds to be numbered, and shall be transferable and exchangeable as
provided in the form of bond set forth in this supplemental indenture.  The provisions of §1.19 and any other
provision in the Indenture in respect of coupon bonds or reservation of coupon
bond numbers shall be inapplicable to the bonds of the 4 1⁄2% Series.


 


SECTION 4.  The bonds of the 4 1/2 % Series may be
redeemed at the option of the Corporation, in whole or in part at any time and
from time to time, at a redemption price equal to the greater of (1) 100%
of the principal amount of the bonds of the 4 1⁄2% Series to be redeemed and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest on such bonds of the 4 1⁄2%  Series (exclusive of interest accrued to the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-


 


4

















 


day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in
either case, accrued and unpaid interest on the principal amount being redeemed
to such redemption date.


 


The bonds of the 4 1⁄2% Series are
also subject to redemption through the operation of the Replacement Fund
provided in Part Two of this supplemental indenture or through the
application of moneys paid to the Trustee pursuant to the provisions of §5.05
of the Indenture, at any time or from time to time prior to maturity, upon
prior notice as hereinafter provided, at the redemption prices specified in the
fourth paragraph of the reverse side of the form of bond set forth in this
supplemental indenture, together with interest accrued thereon to the date
fixed for redemption thereof.


 


All such redemptions of
bonds of the 4 1⁄2% Series shall be effected as provided in Article 3
of the Indenture except that, in case a part only  of the bonds of the 4 1⁄2% Series is to be paid and
redeemed, the particular bonds or part thereof shall be selected by the Trustee
in such manner as the Trustee in its uncontrolled discretion shall determine to
be fair and in any case where several bonds are registered in the same name,
the Trustee may treat the aggregate principal amount so registered as if it
were represented by one bond and except that when bonds are redeemed in part
only  the notice given to any
particular holder need state only  the
principal amount of the bonds of that holder which are to be redeemed and
except that notice to the holders of bonds to be redeemed shall be given by
mailing to such holders a notice of such redemption, first class mail postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth
day, before the date fixed for redemption, at their last addresses as they
shall appear upon the bond register of the Corporation.  Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder receives such notice; and failure duly to give such notice by
mail, or any defect in such notice, to the holder of any bond designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other bond.  No publication of notice of such redemption
shall be required.


 


SECTION 5.  The limit upon the aggregate principal amount
of the bonds of the 4 1⁄2 % Series which may be authenticated and delivered
pursuant to this Eighty-Second Supplemental Indenture shall be $200,000,000.


 


SECTION 6.  The place or places of payment (as to
principal and premium, if any, and interest), redemption, transfer, exchange
and registration of the bonds of the 4 1⁄2% Series shall be the office or
offices or the agency or agencies of the Corporation in the Borough of
Manhattan, The City of New York, designated from time to time by the Board of
Directors of the Corporation (provided, that if the bonds of the 4 1⁄2% Series are
represented by Global Securities held by or on behalf of the Depositary, the
procedures of the Depositary may be followed for any action under this Section 6
of Part One).


 


SECTION 7.  The form of the bonds of the 4 1⁄2% Series and
the certificate of the Trustee to be endorsed on such bonds, respectively,
shall be in substantially the form set forth in Exhibit A hereto.


 


5

















 


PART TWO.


 


REPLACEMENT
FUND.


 


SECTION 1.  So long as any of the bonds of the 4 1⁄2% Series are
outstanding, the Corporation will continue to maintain the Replacement Fund set
forth in, and in accordance with the applicable terms and conditions now
contained in, Part Two of the supplemental indenture dated as of February 1,
1949, and the covenants on the part of the Corporation contained in such Part Two
shall continue and remain in full force and effect, whether or not bonds of the
1979 Series are outstanding and to the same extent as though the words “or
any bonds of the 4 1⁄2% Series” were inserted after the word “Series” appearing
in the second line of Section 1 and the second line of Section 4 of said Part Two
of said supplemental indenture dated as of February 1, 1949.


 


SECTION 2.  If at anytime (a) bonds of the 4 1⁄2% Series are
outstanding and (b) no bonds of the Medium-Term Notes Series, of the 2008
Series, of the 2003 Series C, of the 2004 Series B, of the 3.75%
Series, of the 2033 Series, of the 2023 Series B, of the 2025 Series or
of the 2024 Series are outstanding and (c) cash which shall have been
deposited with the Trustee pursuant to such Replacement Fund shall not within
five years from the date of deposit thereof have been paid out, or used or set
aside by the Trustee for the payment, purchase or redemption of bonds, pursuant
to such Replacement Fund, such cash shall, if in excess of fifty thousand
dollars ($50,000), be applied to the redemption of bonds of the 4 1⁄2% Series in
an aggregate principal amount sufficient to exhaust as nearly as possible the
full amount of such cash.  Anything in Section 5
of Part Two of the aforesaid supplemental indenture dated as of February 1,
1949, in Section 3 of Part Two of the supplemental indentures dated
as of May 1, 1993, July 1, 1993, August 1, 1993, August 20,
1993, May 1, 1994 and February 25, 2003, in Section 3 of Part Three
of the supplemental indenture dated as of March 1, 1990 and in Section 5
of Part Four of the supplemental indenture dated as of March 1, 1993
to the contrary notwithstanding, no cash shall be paid over to the Corporation
thereunder if at the time any bonds of the 4 1⁄2% Series are then
outstanding, and such cash shall in such event be applied as in this Part Two
set forth.


 


SECTION 3. Whenever all
of the bonds of the 4 1⁄2% Series, the Medium-Term Notes Series, the 2003 Series B,
the 2008 Series, the 2003 Series C, the 2004 Series B, the 3.75%
Series, the 2033 Series, the 2025 Series and the 2024 Series shall
have been paid, purchased or redeemed, the Trustee shall, upon application of
the Corporation, pay to or upon the order of the Corporation all cash
theretofore deposited with the Trustee pursuant to the provisions of the
Replacement Fund and not previously disposed of pursuant to the provisions of
the Replacement Fund, and shall deliver to the Corporation any bonds which
shall theretofore have been deposited with the Trustee pursuant to the
provisions of the Replacement Fund or paid, purchased or redeemed pursuant to
the provisions of the Replacement Fund.


 


6

















 


PART THREE.


 


ADDITIONAL
COVENANTS OF THE CORPORATION.


 


SECTION 1.  Whether or not the covenants on the part of
the Corporation contained in Part Three of the supplemental indenture
dated as of February 1, 1949 are modified with the consent of the holders
of bonds of the 1990 Pollution Control Series, the 2027 City of Greensboro
Series, the Medium-Term Notes Series, the 2008 Series, the 2003 Series C,
the 1993 Pollution Control Series, the 2004 Series B, the 2033 Series, the
2023 Series B, the 2025 Series, the 2024 Series or the bonds of the
3.75% Series and whether or not the bonds of the 1990 Pollution Control
Series, the 2027 City of Greensboro Series, the Medium-Term Notes Series, the
2008 Series, the 2003 Series C, the 1993 Pollution Control Series, the
2004 Series B, the 2033 Series, the 2023 Series B, the 2025 Series,
the 2024 Series or the bonds of the 3.75% Series are outstanding,
such covenants on the part of the Corporation contained in said Part Three
shall continue and remain in full force and effect so long as any of the bonds
of the 4 1⁄2% Series are outstanding and to the same extent as though the
words “or so long as any bonds of the 4 1⁄2% Series are outstanding” were
inserted after the words “so long as any of the bonds of the 1979 Series or
any bonds of the 2.65% Series are outstanding” wherever such words appear
in said Part Three of the supplemental indenture dated as of February 1,
1949.


 


SECTION 2.  Whether or not the second sentence of
paragraph (a) of §2.08 of the original indenture (making certain
provisions for the definition of the term “net amount” applicable while bonds
of the 2.65% Series were outstanding and which was originally set forth in
Section 4 of Article One of the supplemental indenture dated as of September 1,
1947 and which is corrected and clarified by Section 2 of Part Four
of the supplemental indenture dated as of February1, 1968) is modified with the
consent of the holders of bonds of the 1990 Pollution Control Series, the 2027
City of Greensboro Series, the Medium-Term Notes Series, the 2008 Series, the
2003 Series C, the 1993 Pollution Control Series, the 2004 Series B,
the 2033 Series, the 2023 Series B, the 2025 Series, the 2024 Series or
the bonds of the 3.75% Series and whether or not bonds of the 1990 Pollution
Control Series, the 2027 City of Greensboro Series, the Medium-Term Notes
Series, the 2008 Series, the 2003 Series C, the 1993 Pollution Control
Series, the 2004 Series B, the 2033 Series, the 2023 Series B, the
2025 Series, the 2024 Series or the bonds of the 3.75% Series are
outstanding, said sentence shall continue and remain in full force and effect
so long as any bonds of the 4 1⁄2% Series are outstanding, and with the same
force and effect as though said sentence had stated that such provisions were
to be applicable so long as any of the bonds of the 4 1⁄2% Series are
outstanding.


 


PART FOUR.


 


GLOBAL
SECURITIES; TRANSFER AND EXCHANGE.


 


SECTION 1.  Global Securities. The bonds of the 4 1⁄2% Series shall
initially be issued in the form of one or more Global Securities registered in
the name of the 


 


7

















 


Depositary (which initially
shall be The Depository Trust Company) or its nominee.  Except under the limited circumstances
described below, bonds of the 4 1⁄2% Series represented by such Global
Security or Global Securities shall not be exchangeable for, and shall not
otherwise be issuable as, bonds of the 4 1⁄2% Series in definitive form. The
Global Securities described in this Part Four may not be transferred except
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or to a
successor Depositary or its nominee. 


 


None of the Corporation, the
Trustee nor any agent of the Corporation or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.


 


A Global Security shall be
exchangeable for bonds of the 4 1⁄2% Series registered in the names of
persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Corporation that it is unwilling or unable to continue
as a Depositary for such Global Security and no successor Depositary shall have
been appointed by the Corporation within 90 days of receipt by the Corporation
of such notification, or if at any time the Depositary ceases to be a clearing
agency registered under the Exchange Act at a time when the Depositary is
required to be so registered to act as such Depositary and no successor
Depositary shall have been appointed by the Corporation within 90 days after it
becomes aware of such cessation or (ii) the Corporation in its sole
discretion determines that such Global Security shall be so exchangeable.  Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for bonds of the 4 1⁄2% Series registered
in such names as the Depositary shall direct.


 


SECTION 2. Depository
Legend. Each of the Global Securities shall bear the following legend (the “Depository
Legend”) on the face thereof:


 


“UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE CORPORATION OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


TRANSFERS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND 


 


8

















 


TRANSFERS OF PORTIONS OF
THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”


 


SECTION 3. Transfer and
Exchange. (a) Every bond of the 4 1⁄2% Series presented or surrendered
for registration of transfer or for exchange shall (if so required by the
Corporation or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Trustee
du1y executed, by the Holder thereof or his attorney duly authorized in
writing.


 


(b) No service charge
shall be made for any registration of transfer or exchange of bonds of the 4 1⁄2%
Series, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration or transfer or exchange of bonds of the 4 1⁄2% Series.


 


SECTION 4.  Definitions. The following defined terms used
herein shall, unless the context otherwise requires, have the meanings
specified below.  Capitalized terms used
herein for which no definition is provided herein shall have the meanings set
forth in the Indenture.


 


“Business day” means any day
other than a day on which banks in New York City are required or authorized to
be closed.


 


“Comparable Treasury Issue”
means the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term of the bonds of the
4 1⁄2% Series to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of such bonds of the 4 1⁄2% Series.


 


“Comparable Treasury Price”
means with respect to any redemption date for bonds of the 4 1⁄2% Series, the
average of two Reference Treasury Dealer Quotations for such redemption date.


 


“Depositary” means a
clearing agency registered under the Exchange Act that is designated to act as
Depositary for the bonds of the 4 1⁄2%  Series,
which Depositary shall initially be The Depository Trust Company.


 


“Depository Legend” means a
legend set forth in Section 2 of this Part Four.


 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended.


 


“Global Security” means a
bond of the 4 1⁄2% Series in global form.


 


“Holder” means a Person in
whose name a bond of the 4 1⁄2% Series is registered in the registration
books maintained by the Trustee.


 


9














 


“Person” means any
individual, corporation, partnership, limited liability company or corporation,
joint venture, trust, unincorporated organization or government or any agency
or political subdivision thereof.


 


“Quotation Agent” means a
Reference Treasury Dealer appointed by the Corporation.


 


“Reference Treasury Dealers”
means ABN AMRO Incorporated and J.P. Morgan Securities Inc., and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in the United States (a
“Primary Treasury Dealer”), the Corporation shall substitute therefor another
Primary Treasury Dealer.


 


“Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
business day preceding such redemption date.


 


“Treasury Rate” means, with
respect to any redemption date, (1) the yield, under the heading which
represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15 (519)” or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption “Treasury
Constant Maturities,” for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the maturity date
of the bonds of the 4 1⁄2% Series to be redeemed, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined, and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the nearest
month) or (2) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date. The Treasury Rate will be
calculated on the third business day preceding the redemption date.


 


PART FIVE.


 


MISCELLANEOUS.


 


SECTION 1.  (a) For the purposes of §2.10 of the
Indenture and for the purposes of any modification of the provisions of the
Replacement Fund referred to in Part Two of this supplemental indenture,
the covenants and provisions on the part of the Corporation which 


 


10

















 


are set forth or
incorporated in Part Two of this supplemental indenture shall be for the
benefit only of the holders of the bonds of the 4 1⁄2% Series.  Such covenants and provisions shall remain in
force and be applicable only so long as any bonds of the 4 1⁄2%  Series shall be outstanding, and,
subject to the provisions of paragraph (2) of subdivision (c) of
§10.01 of the Indenture, any such covenants and provisions may be modified with
the consent, in writing or by vote at a bondholders’ meeting, of the holders of
sixty-six and two-thirds percent (66 2/3%) of the principal amount of the bonds
of the 4 1⁄2% Series at the time outstanding and without the consent of the
holders of any other bonds then outstanding under the Indenture; provided that
no such consent shall be effective to waive any past default under such
covenants and provisions, and its consequences, unless the consent of the holders
of at least a majority in principal amount of all bonds then outstanding under
the Indenture is obtained. Such covenants shall be deemed to be additional
covenants and none of them shall affect or derogate from, or relieve the
Corporation from, its obligation to comply with any of the other covenants,
conditions, requirements or provisions of the Indenture or any other
supplemental indenture.


 


(b) For the purposes of
§2.10 of the Indenture and for the purposes of any modification of the
provisions of Part Three of this supplemental indenture, the covenants and
provisions on the part of the Corporation which are set forth or incorporated
in said Part Three shall be for the benefit only of the holders of the
bonds of the 4 1⁄2% Series.  Such covenants
and provisions shall remain in force and be applicable only so long as any
bonds of the 4 1⁄2% Series shall be outstanding, and, subject to the
provisions of paragraph (2) of subdivision (c) of §10.01 of the Indenture,
any such covenants and provisions may be modified with the consent, in writing
or by vote at a bondholders’ meeting, of the holders of sixty-six and
two-thirds percent (66 2/3%) of the principal amount of the bonds of the 4 1⁄2% Series at
the time outstanding and without the consent of the holders of any other bonds
then outstanding under the Indenture; provided that no such consent shall be
effective to waive any past default under such covenants and provisions, and
its consequences, unless the consent of the holders of at least a majority in
principal amount of all bonds then outstanding under the Indenture is
obtained.  Such covenants shall be deemed
to be additional covenants and none of them shall affect or derogate from, or
relieve the Corporation from, its obligation to comply with any of the other covenants,
conditions, requirements or provisions of the Indenture or any other
supplemental indenture.


 


SECTION 2. All terms
contained in this supplemental indenture shall, except as specifically provided
herein or except as the context may otherwise require, have the meanings given
to such terms in the Indenture.


 


SECTION 3.  In case any one or more of the provisions
contained in this supplemental indenture should be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision contained in this supplemental indenture,
and, to the extent, but only to the extent, that such provision is invalid,
illegal or unenforceable, this supplemental indenture shall be construed as if
such provision had never been contained herein.


 


11

















 


SECTION 4.  The Trustee hereby accepts the trusts herein
declared and provided upon the terms and conditions in the Indenture set forth.


 


SECTION 5.  This supplemental indenture may be executed
in several counterparts, each of which shall be an original, and all
collectively but one instrument.


 


SECTION 6.  In addition to the amendment provisions of
the Indenture, the terms and conditions of this supplemental indenture and the
bonds of the 4 1⁄2% Series may be modified, amended or supplemented by the
Corporation and the Trustee, without the consent of the holders of the bonds of
the 4 1⁄2% Series, and if not inconsistent with the Indenture, to cure
ambiguities in this supplemental indenture or the bonds of the 4 1⁄2% Series, or
correct defects or inconsistencies in the provisions of this supplemental
indenture or the bonds of the 4 1⁄2% Series or to provide for such
appropriate additional provisions in this supplemental indenture or the bonds
of the 4 1⁄2% Series as are necessary for certificated bonds to be issued in
lieu of Global Securities or to reflect additional provisions related to the
issuance of Global Securities (including changes in the procedures of the
Depositary).


 


12

















 


IN WITNESS WHEREOF, Duke
Energy Corporation, the party of the first part hereto, has caused this
supplemental indenture to be signed in its name by one of its Vice Presidents
and its corporate seal to be hereunto affixed, and the same to be attested by
one of its Assistant Secretaries, and JPMorgan Chase Bank, the party of the
second part hereto, in token of its acceptance of the trust hereby created, has
caused this supplemental indenture to be signed in its name by one of its Vice
Presidents and its corporate seal to be hereunto affixed, all as of the day and
year first above written.


 


	
   

  	
   

  	
  DUKE ENERGY CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David L. Hauser

  
	
   

  	
   

  	
  Name: David L. Hauser

  
	
   

  	
   

  	
  Title: Senior Vice
  President and Treasurer

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Robert T. Lucas III

  	
   

  	
   

  
	
  Name: Robert T. Lucas III

  	
   

  	
   

  
	
  Title: Assistant Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed, sealed, executed,
  acknowledged

  and delivered by Duke Energy

  Corporation, in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Delcia S. Dunlap

  	
   

  	
   

  
	
  Delcia S. Dunlap

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Sue C. Harrington

  	
   

  	
   

  
	
  Sue C. Harrington

  	
   

  	
   

  



 


13

















 


	
   

  	
   

  	
  JP MORGAN CHASE BANK,

  
	
   

  	
   

  	
  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Carol Ng

  
	
   

  	
   

  	
  Name: Carol Ng

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Diane Darconte

  	
   

  	
   

  
	
  Name: Diane Darconte

  	
   

  	
   

  
	
  Title: Trust Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed, sealed, executed,
  acknowledged

  and delivered by JPMorgan Chase Bank,

  in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Timothy E. Burke

  	
   

  	
   

  
	
  Timothy E. Burke

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Walter I.
  Johnson, III

  	
   

  	
   

  
	
  Walter I.
  Johnson, III

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  State of New York

  	
  )

  	
   

  	
   

  
	
   

  	
  ) ss.:

  	
   

  	
   

  
	
  County of New York

  	
  )

  	
   

  	
   

  



 


Personally appeared before
me, Timothy E. Burke, and made oath that he saw Carol Ng, a Vice President, and
Diane Darconte, a Trust Officer, respectively, of JPMorgan Chase Bank, sign,
attest and affix hereto the corporate seal of said JPMorgan Chase Bank, and, as
the act and deed of said corporation, deliver the within written and foregoing
deed, and that he, with Walter E. Johnson, III, witnessed the execution thereof.


 


	
   

  	
  /s/ Timothy E. Burke

  
	
   

  	
  Timothy E. Burke

  



 


14

















 


	
  Sworn and subscribed
  before me

  	
   

  	
   

  
	
  this 21st day of March,
  2003.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Emily Fayan

  	
   

  	
   

  
	
  Emily Fayan

  	
   

  	
   

  
	
  Notary Public, State of
  New York

  	
   

  	
   

  
	
  No. 01FA4737006

  	
   

  	
   

  
	
  Qualified in Kings County

  	
   

  	
   

  
	
  Certificate Filed in New
  York County

  	
   

  	
   

  
	
  Commission Expires
  December 31, 2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  State of New York 

  	
  )

  	
   

  	
   

  
	
   

  	
  ) ss.:

  	
   

  	
   

  
	
  County of New York 

  	
  )

  	
   

  	
   

  



 


I, Emily Fayan, a Notary
Public in and for the State and County aforesaid, certify that Diane Darconte
personally came before me this day and acknowledged that she is a Trust Officer
of JPMorgan Chase Bank, a New York corporation, and that, by authority duly
given and as the act of the corporation, the foregoing instrument was signed in
its name by one of its Vice Presidents, sealed with its corporate seal, and
attested by herself as one of its Trust Officers.


 


Witness may hand and
official seal, this 21st day of March, 2003.


 


 


	
   

  	
   

  	
  /s/ Emily Fayan

  
	
   

  	
   

  	
  Emily Fayan

  
	
   

  	
   

  	
  Notary Public, State of
  New York

  
	
   

  	
   

  	
  No. 01FA4737006

  
	
   

  	
   

  	
  Qualified in Kings County

  
	
   

  	
   

  	
  Certificate Filed in New
  York County

  
	
   

  	
   

  	
  Commission Expires
  December 31, 2005

  



 


15

















 


	
  State of North Carolina

  	
  )

  	
   

  	
   

  
	
   

  	
  ) ss.:

  	
   

  	
   

  
	
  County of Mecklenburg

  	
  )

  	
   

  	
   

  



 


Personally appeared before
me Delcia S. Dunlap and made oath that she saw David L. Hauser, a Senior Vice
President, and Robert T. Lucas III, an Assistant Secretary, respectively, of
Duke Energy Corporation, sign, attest and affix hereto the corporate seal of
said Duke Energy Corporation, and, as the act and deed of said corporation,
deliver the within written and foregoing deed, and that she, with Sue C.
Harrington, witnessed the execution thereof.


 


	
   

  	
   

  	
  /s/ Delcia S. Dunlap

  
	
   

  	
   

  	
  Delcia S. Dunlap

  
	
   

  	
   

  	
   

  
	
  Sworn and subscribed
  before me

  	
   

  	
   

  
	
  this 21st day of March,
  2003.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Phoebe P. Elliott

  	
   

  	
   

  
	
  Phoebe P. Elliott

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  Mecklenburg County, N.C.

  	
   

  	
   

  
	
  My Commission expires
  June 26, 2006.

  	
   

  	
   

  



 


	
  State of North Carolina

  	
  )

  	
   

  	
   

  
	
   

  	
  ) ss.:

  	
   

  	
   

  
	
  County of Mecklenburg

  	
  )

  	
   

  	
   

  



 


I, Phoebe P. Elliott, a
Notary Public in and for the State and County aforesaid, certify that Robert T.
Lucas III personally came before me this day and acknowledged that he is an
Assistant Secretary of Duke Energy Corporation, a North Carolina corporation,
and that, by authority duly given and as the act of the corporation, the
foregoing instrument was signed in its name by one of its Vice Presidents,
sealed with its corporate seal, and attested by himself as one of its Assistant
Secretaries.


 


My commission expires June 26,
2006.


 


Witness my hand and official
seal, this 21st day of March, 2003.


 


	
   

  	
   

  	
  /s/ Phoebe P. Elliott

  
	
   

  	
   

  	
  Phoebe P. Elliott

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
  Mecklenburg County, N.C. 

  



 


16














 


EXHIBIT A


 


FORM OF
DUKE ENERGY CORPORATION


FIRST
AND REFUNDING MORTGAGE BOND, 4 1⁄2% SERIES DUE 2010


 


[FACE
SIDE OF BOND]


 


[DEPOSITORY
LEGEND, IF APPLICABLE]


 


DUKE
ENERGY CORPORATION


 


FIRST
AND REFUNDING MORTGAGE BOND,


4
1⁄2% Series due 2010


 


	
  No.

  	
  $           

  
	
  CUSIP
  No. 264399EH5

  	
   

  



 


Duke Energy Corporation, a
North Carolina corporation (hereinafter called the “Corporation”), for value
received, hereby promises to pay to               
or registered assigns, the principal sum of            Dollars
on April 1, 2010, in any coin or currency of the United States of America
which at the time of payment shall be legal tender for the payment of public
and private debts, at the office or agency of the Corporation in the Borough of
Manhattan, The City of New York, and to pay interest thereon at said office or
agency from the interest payment date next preceding the date hereof to which
interest on outstanding bonds of this series has been paid (unless the date
hereof is prior to October 1, 2003, in which case from March 21,
2003, and unless the date hereof is subsequent to a record date (as defined
below) and prior to the next succeeding April 1 or October 1, in
which case from the next succeeding April 1 or October 1, as the case
may be), at the rate of 4 1⁄2%  per
cent per annum, in like coin or currency, semi-annually on April 1 and October 1
in each year, commencing October 1, 2003, until the principal hereof shall
become due and payable.  Such interest
payments shall be made to the person in whose name this bond is registered at
the close of business on the March 15 and September 15 preceding each
semi-annual interest payment date (a “record date”) (subject to certain
exceptions provided in the Indenture hereinafter mentioned), at his last
address as it shall appear upon the bond register of the Corporation.


 


The provisions of this bond
are continued on the reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth in this place.


 


This bond shall not become
or be valid or obligatory for any purpose until the Trustee shall have signed
the form of certificate endorsed hereon.


 


A-1

















 


IN WITNESS WHEREOF, the
Corporation has caused this instrument to be signed in its name by its
President or one of its Vice Presidents, manually or by facsimile signature,
and its corporate seal to be hereto affixed, or a facsimile thereof to be
hereon engraved, lithographed or printed, and to be attested by the manual or
facsimile signature of its Secretary or one of its Assistant Secretaries.


 


	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DUKE ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


CERTIFICATE
OF AUTHENTICATION


 


This bond is one of the
bonds, of the series designated therein, described in the within-mentioned
Indenture.


 


	
   

  	
   

  	
  JPMorgan Chase Bank,

  
	
   

  	
   

  	
  as
  Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  



 


A-2

















 


[REVERSE
SIDE OF BOND]


 


This bond is one of the
bonds of a series, designated specially as First and Refunding Mortgage Bonds,
4 1⁄2% Series due 2010, of an authorized issue of bonds of the Corporation,
without limit as to aggregate principal amount, designated generally as First
and Refunding Mortgage Bonds, all issued and to be issued under and equally and
ratably secured by an indenture dated as of December 1, 1927, duly
executed by Duke Power Company, a New Jersey corporation (hereinafter called
the “New Jersey Company”), to Guaranty Trust Company of New York (now Morgan Guaranty
Trust Company of New York), as Trustee (JPMorgan Chase Bank, formerly known as
The Chase Manhattan Bank, formerly known as Chemical Bank, successor Trustee),
as supplemented and modified by indentures supplemental thereto, including
supplemental indentures dated as of September 1, 1947, February 1,
1949, February 1, 1960, June 15, 1964 (under which the Corporation
succeeded to and was substituted for the New Jersey Company), February 1,
1968, March 1, 1990, May 15, 1990, July 1, 1991, March 1,
1993, April 1, 1993, May 1, 1993,
July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994, February 25, 2003 and March 21,
2003, the latter providing for said series (said indenture as so supplemented
and modified being hereinafter referred to as the “Indenture”), to which
Indenture reference is made for a description of the property mortgaged, the
nature and extent of the security, the rights of the holders of the bonds in
respect thereof, the terms and conditions upon which the bonds are secured and
the restrictions subject to which additional bonds secured thereby may be
issued.  To the extent permitted by, and
as provided in, the Indenture, modifications or alterations of the Indenture,
or of any indenture supplemental thereto, and of the rights and obligations of
the Corporation and of the holders of the bonds, may be made with the consent
of the Corporation by the affirmative vote, or with the written consent, of the
holders of not less than 66 2/3% in principal amount of the bonds then
outstanding, and by the affirmative vote, or with the written consent, of the
holders of not less than 66 2/3% in principal amount of the bonds of any series
then outstanding and affected by such modification or alteration, in case one
or more but less than all of the series of bonds then outstanding under the
Indenture are so affected, evidenced, in each case, as provided in the
Indenture; provided that any supplemental indenture may be modified in
accordance with the provisions contained therein for its modification; and provided,
further, that no such modification or alteration shall be made which will
affect the terms of payment of the principal of, or interest or premium on,
this bond, or the right of any bondholder to institute suit for the enforcement
of any such payment on or after the respective due dates expressed in this
bond, or reduce the percentage required for the taking of any such action.  Any such affirmative vote of, or written
consent given by, any holder of this bond is binding upon all subsequent
holders hereof as provided in the Indenture.


 


In case an event of default
as defined in the Indenture shall occur, the principal of all the bonds
outstanding thereunder may become or be declared due and payable, at the time,
in the manner and with the effect provided in the Indenture.


 


The bonds of this series may
be redeemed at the option of the Corporation, in whole or in part at any time
and from time to time, at a redemption price equal to the greater of (1) 


 


A-3

















 


100% of the principal amount
of the bonds of this series to be redeemed and (2) the sum of the present
values of the remaining scheduled payments of principal and interest on such
bonds (exclusive of interest accrued to the redemption date) discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in
either case, accrued and unpaid interest on the principal amount being redeemed
to such redemption date.


 


“Business day” means any day
other than a day on which banks in New York City are required or authorized to
be closed.


 


“Comparable Treasury Issue”
means the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term of the bonds of this series
to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of such
bonds.


 


“Comparable Treasury Price”
means with respect to any redemption date for bonds of this series, the average
of two Reference Treasury Dealer Quotations for such redemption date.


 


“Quotation Agent” means a
Reference Treasury Dealer appointed by the Corporation.


 


“Reference Treasury Dealers”
means ABN AMRO Incorporated and J.P. Morgan Securities Inc., and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in the United States (a
“Primary Treasury Dealer”), the Corporation shall substitute therefor another
Primary Treasury Dealer.


 


“Reference Treasury Dealer
Quotation” means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
business day preceding such redemption date.


 


“Treasury Rate” means, with
respect to any redemption date, (1) the yield, under the heading which
represents the average for the immediately preceding week, appearing in the
most recently published statistical release designated “H.15 (519)” or any
successor publication which is published weekly by the Board of Governors of
the Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant Maturities,” for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the maturity date of the Bonds to be redeemed, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined, and the Treasury Rate shall be interpolated or
extrapolated from such yields on a 


 


A-4

















 


straight-line basis,
rounding to the nearest month) or (2) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per year equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.  The Treasury Rate will be
calculated on the third business day preceding the redemption date.


 


The bonds of this series are
also subject to redemption for the Replacement Fund for bonds of this series
provided for in the supplemental indenture dated as of March 21, 2003,
providing for this series, or upon application of certain moneys included in
the trust estate, at any time or from time to time prior to maturity, at 100%
of their principal amount, in each case together with accrued interest to the
date fixed for redemption.


 


Redemption is in every case
to be effected at the office or agency of the Corporation in the Borough of
Manhattan, The City of New York, upon at least thirty, but not more than sixty,
days’ prior notice, given by mail as more fully provided in the Indenture.


 


If this bond or any portion
hereof ($1,000 or a multiple thereof) is called for redemption and payment is
duly provided, this bond or such portion thereof shall cease to bear interest
from and after the date fixed for such redemption.


 


This bond is transferable,
as provided in the Indenture, by the registered owner hereof in person or by
duly authorized attorney, at the office or agency of the Corporation in the
Borough of Manhattan, The City of New York, upon surrender and cancellation of
this bond, and thereupon a new bond of the same series and of like aggregate
principal amount will be issued to the transferee in exchange herefor as
provided in the Indenture; or the registered owner of this bond, at his option,
may surrender the same for cancellation at said office or agency of the
Corporation and receive in exchange herefor the same aggregate principal amount
of bonds of the same series of authorized denominations; all subject to the
terms of the Indenture but without payment of any charges other than a sum
sufficient to reimburse the Corporation for any stamp taxes or other
governmental charges incident thereto.


 


This bond is a corporate
obligation only and no recourse whatsoever, either directly or through the
Corporation or any trustee, receiver, assignee or any other person, shall be
had for the payment of the principal of or premium, if any, or interest on this
bond, or for the enforcement of any claim based hereon, or otherwise in respect
hereof or of the Indenture, against any promoter, subscriber to the capital stock,
incorporator, or any past, present or future stockholder, officer or director
of the Corporation as such, or of any successor or predecessor corporation,
whether by virtue of any constitutional provision, statute or rule of law,
or by the enforcement of any assessment, penalty, subscription or otherwise,
any and all such liability of promoters, subscribers, incorporators,
stockholders, officers and directors being waived and released by each
successive holder hereof by the acceptance of this bond, and as a part of the
consideration for the issue hereof, and being likewise waived and released by
the terms of the Indenture.


 


[END
OF BOND FORM]


 


A-5

















 


ABBREVIATIONS


 


The following abbreviations,
when used in the inscription on the face of this instrument, shall be construed
as though they were written out in full according to applicable laws or
regulations:


 


	
  TEN COM—as tenants in
  common

  	
  UNIF
  GIFT MIN ACT- _____ Custodian _____

  	
   

  
	
   

  	
  (Cust)                   (Minor)

  	
   

  
	
   

  	
   

  	
   

  
	
  TEN ENT—as tenants by the
  entireties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JT TEN—as joint tenants
  with rights of 

  	
   

  	
  under Uniform Gifts to

  	
   

  
	
  survivorship and not as
  tenants in common 

  	
  Minors
  Act 

  	
   

  	
   

  
	
   

  	
  (State)

  	
   

  
					



 


Additional abbreviations may
also be used though not on the above list.


 


FOR VALUE RECEIVED,  the undersigned hereby sell(s) and
transfer(s) unto (please insert Social Security or other identifying
number of assignee)


 


PLEASE PRINT OR TYPEWRITE
NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE


 


the within Bond and all rights
thereunder, hereby irrevocably constituting and appointing


 


agent to transfer said Bond
on the books of the Corporation, with full power of substitution in the
premises.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE: The signature to
  this assignment must correspond with the name as written upon the face of the
  within instrument in every particular without alteration or enlargement, or
  any change whatever.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guarantee: 

  	
   

  



 


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SIGNATURE
GUARANTEE


 


Signatures must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Trustee, which requirements include membership
or participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Trustee in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.


 


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