Document:

Exhibit

Exhibit 10.8
FALCONSTOR SOFTWARE INC. 
KEY EMPLOYEE 
CHANGE IN CONTROL SEVERANCE AGREEMENT
This CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) is made and entered into as of the 28th day of October, 2015 (the “Effective Date”), by and between FalconStor Software, Inc., a Delaware corporation (the “Company”), and Alan Komet (“Key Employee”).
WHEREAS, Key Employee has made or is expected to make a major contribution to the profitability, growth and financial strength of the Company and the Company considers the continued availability of Key Employee's services to be in the best interest of the Company and desires to assure the continued services of Key Employee on behalf of the Company without the distraction occasioned by the possibility of a change in control of the Company; and
WHEREAS, Key Employee is willing to remain in the employ of the Company upon the understanding that in the event of certain terminations of employment following a Change in Control of the Company, the Company will provide Key Employee with equity, income security and health benefits as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:
1.    Term of Agreement.  This Agreement shall commence as of the Effective Date and shall continue until the third anniversary of the Effective Date (the “Term”); provided, however, that on the date of expiration of the Term, and on each anniversary of the date of expiration of the Term thereafter, the Term shall automatically be extended for one (1) year unless either the Key Employee or the Company shall give written notice to the other at least ninety (90) days prior thereto that the Term shall not be so extended; provided, further, however, that following the occurrence of a Change in Control, the Term shall not expire prior to the expiration of twelve (12) months after such occurrence.
2.    Definitions.  Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary:
2.1    “Base Salary” shall mean Key Employee's annual rate of base salary in effect on the date of Key Employee's termination of employment, excluding all bonuses, overtime, allowances, commissions, deferred compensation payments and any other extraordinary remuneration. 
2.2    “Board” shall mean the Board of Directors of the Company.
2.3    “Bonus” shall mean an amount equal to the Key Employee’s estimated bonus (using the target bonus as a guide) for the full fiscal year in which the termination occurs as adjusted to reflect the extent to which Key Employee has or has not met the performance criteria for any completed fiscal quarters in such year (and any interim period where determinable) as determined by the Committee, subject to adjustment by the Committee as it determines appropriate in its sole discretion. 
2.4    “Cause” shall mean, except as otherwise defined in an employment agreement or other written agreement between Key Employee and the Company dated on or after the Effective Date (which definition would control in the event of any conflict with the definition in this Section 2.4) each of the following as determined by the Board, (i) willful and repeated failure to perform duties or contravention in any material respect of specific written lawful directions related to a material duty or responsibility which is directed to be undertaken by the Board or the person to whom Key Employee reports (other than due to physical or mental illness); (ii) conviction of guilty or nolo contendere plea to, a misdemeanor which is materially and demonstrably injurious to the Company or any felony; (iii) commission of an act, or a failure to act, that constitutes fraud, gross negligence or willful misconduct (including without limitation, embezzlement, misappropriation or breach of fiduciary duty resulting or intending to result in personal gain at the expense of the Company); and (iv) violation of any applicable laws, rules or regulations or failure to comply with the ongoing confidentiality, non-solicitation and non-competition obligations to the Company, corporate code of business conduct or other material policies of the Company in connection with or during performance of the Key Employee’s duties to the Company that could, in the Committee’s opinion, cause material injury to the Company, which violation, if curable, is not cured within thirty (30) days after notice thereof to Key Employee.

2.5    “Change in Control” shall mean, unless the Board provides otherwise, the occurrence of any of the following events:
(a)    An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of (1) the then-outstanding shares of common stock of the Company (or any other securities into which such shares of common stock are changed or for which such shares of common stock are exchanged) (the “Shares”) or (2) the combined voting power of the Company’s then-outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred pursuant to this paragraph (a), the acquisition of Shares or Voting Securities in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute a Change in Control.  A “Non-Control Acquisition” shall mean an acquisition by (i) an Key Employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person the majority of the voting power, voting equity securities or equity interest of which is owned, directly or indirectly, by the Company (for purposes of this definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any Person in connection with a “Non-Control Transaction” (as hereinafter defined);
(b)    The individuals who, as of the Effective Date, are members of the board of directors of the Company (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the board of directors of the Company or, following a Merger (as hereinafter defined), the board of directors of (x) the corporation resulting from such Merger (the “Surviving Corporation”), if fifty percent (50%) or more of the combined voting power of the then-outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly, by another Person (a “Parent Corporation”) or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; provided, however, that, if the election, or nomination for election by the Company’s common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered a member of the Incumbent Board; and provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the board of directors of the Company (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Proxy Contest; or 
(c)    The consummation of:
(i)    A merger, consolidation or reorganization (1) with or into the Company or (2) in which securities of the Company are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.”  A “Non-Control Transaction” shall mean a Merger in which:
(A)    the stockholders of the Company immediately before such Merger own directly or indirectly immediately following such Merger at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the Surviving Corporation, if there is no Parent Corporation or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; 
(B)    the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at least a majority of the members of the board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; and 
(C)    no Person other than (1) the Company, (2) any Related Entity, or (3) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to the Merger, was maintained by the Company or any Related Entity, or (4) any Person who, immediately prior to the Merger had Beneficial Ownership of fifty percent (50%) or more of the then outstanding Shares or Voting Securities, has Beneficial Ownership, directly or indirectly, of fifty  percent (50%) or more of the combined voting power of the outstanding voting securities or common stock of (x) the Surviving Corporation, if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or indirectly by a Parent Corporation, or (y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation; or
(ii)    The sale or other disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole to any Person (other than (x) a transfer to a Related Entity, (y) a transfer under conditions that would constitute a Non-Control Transaction, with the disposition of assets being regarded as a Merger for this purpose or (z) the distribution to the Company’s stockholders of the stock of a Related Entity or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons; provided, that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the Company and, after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities and such Beneficial Ownership increases the percentage of the then outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.
2.6    “Pro-Rata Bonus” shall mean the pro-rata portion of Key Employee’s annual bonus for the fiscal year of termination based on performance (as determined by the Committee) through the date of termination, as may adjusted by determination of the Committee in its sole discretion. 
2.7    “Trigger Period” shall mean the period beginning ninety (90) days prior to a Change in Control and ending twelve (12) months following the consummation of a Change in Control.
3.    Payment of Severance Benefits Upon Termination Following a Change in Control.  In the event that Key Employee’s employment with the Company is terminated by the Company without Cause or Key Employee terminates his or her employment with the Company for Good Reason (each a “Qualified Termination”) during the Trigger Period, Key Employee shall be entitled to the following severance benefits, subject to the execution by Key Employee of a separation agreement including an effective release of claims and covenant not to compete with the business of the Company for a period of not less than one year following the date of the Qualified Termination  in favor of the Company in such form as the Company shall reasonably determine (the “Separation Agreement”) and Key Employee’s continuing compliance with such Separation Agreement (the “Severance Payments”): 
(a)    payments equal, in the aggregate, to [two (2)] times the sum of (i) Key Employee’s Base Salary and (ii) Key Employee’s Bonus, with half of the aggregate payable in a lump sum following the Qualified Termination (and after the Change in Control) and half payable in equal installments over  twelve (12) months on the Company’s regularly scheduled payroll dates; 
(b)     payments equal in the aggregate, to Key Employee’s Pro-Rata Bonus to the extent not previously paid, with half of the aggregate payable in a lump sum following the Qualified Termination (and after the Change in Control) and half payable in equal installments over twelve (12) months on the Company’s regularly scheduled payroll dates; and
(c)    reimbursement of premium costs in excess of active employee rates to continue COBRA or such other medical coverage for one (1) year following termination; provided, however, that such coverage shall not provide for benefits greater than what Key Employee was receiving prior to termination of employment;
The payments under this Section 3 are in lieu of (and not in addition to) any severance payments (including, without limitation, in lieu of any annual bonus payments or pro-rata bonus payments) Key Employee may have been entitled to receive under any other offer letter, agreement, plan or policy, and any payments under any such agreement, plan or policy shall offset dollar-for-dollar the amounts payable hereunder.  The benefits to be provided under Section 3(c) shall be reduced to the extent of the receipt of substantially equivalent health insurance coverage by Key Employee from any successor employer.  For the avoidance of doubt, the payments under this Section 3 are only in lieu of any severance payments payable in connection with a Change in Control.  Any other severance payments that Key Employee may be entitled to or receives in connection with a termination prior to a Change in Control shall reduce the amount of the Severance Payments (including, without limitation, in lieu of any annual bonus payments or pro-rata bonus payment) payable hereunder.
If Key Employee’s Qualified Termination occurs during the Trigger Period but prior to a Change in Control, the Severance Payments shall commence on the Company’s first regularly scheduled payroll date following the date of the Change in Control.  If Key Employee’s Qualified Termination occurs during the Trigger Period after a Change in Control payment of any severance benefit pursuant to this Section 3 shall commence on the Company’s first regularly scheduled payroll date after the 60th day following the date of Key Employee’s termination of employment from the Company and shall include a lump sum payment equal to any amounts that would have been paid to Key Employee prior to such date had all payments been made in accordance with Company’s general payroll practices immediately following termination. 
The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation and all payments under this Agreement shall be made net of amounts required to be paid or withheld for purposes of any federal, state and local taxes.

4.    Treatment of Equity.  
Notwithstanding any provision in the Company’s 2006 Incentive Stock, or any other Company Incentive or Non-Qualified Stock Option Plan, or in this Plan, in the event there is a Change of Control, all restrictions on all shares of restricted Company stock previously granted to each Participant, including, without limitation, those relating to the Participant’s tenure with the Company, shall lapse and the shares shall have no further restrictions.
5.    No Employment Contract.  This Agreement, including the recitals hereto, shall not be deemed to create a contract of employment between the Company and Key Employee and shall create no right in Key Employee to continue in the Company's employment for any specific period of time, or to create any other rights in Key Employee or obligations on the part of the Company or its affiliates, except as expressly set forth herein. Except as expressly set forth herein, this Agreement shall not restrict the right of the Company to terminate Key Employee's employment at any time for any reason or no reason, or restrict the right of Key Employee to terminate his or her employment.
6.    Limitations on Benefits
6.1    Excise Taxes.  In the event that any benefits payable to Key Employee pursuant to this Agreement (“Payments”) (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code, as amended (the “Code”), and (ii) but for this Section 6.1 would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then Key Employee’s Payments hereunder shall be either (i) provided to Key Employee in full, or (ii) provided to Key Employee as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Key Employee, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax, as determined by the Company with the input of accounting advisors and confirmed by the Committee.    In the event that the payments and/or benefits are to be reduced pursuant to this Section 6.1, such payments and benefits shall be reduced such that the reduction of compensation to be provided to Key Employee as a result of this Section 6.1 is minimized.  In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A (as defined below) and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.  For purposes of making the calculations required by this Section 6.1, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority.  The Company and the applicable Key Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6.1.
6.2    Section 409A. 
(a)    Notwithstanding anything herein to the contrary, this Agreement intended to comply with the requirements of Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (“Section 409A”) or an exemption from Section 409A.  The Company shall undertake to administer, interpret, and construe this Agreement in a manner that does not result in the imposition on Key Employee of any additional tax, penalty, or interest under Section 409A; provided, however, in no event shall the Company be liable to Key Employee for or with respect to any taxes, penalties or interest which may be imposed upon Key Employee pursuant to Section 409A.  Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A.  
(b)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  
(c)    Notwithstanding anything herein to the contrary, in the event that Key Employee is a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Internal Revenue Code, then with regard to any payment or the provision of any benefit (whether under this Agreement or otherwise) that is considered deferred compensation under Section 409A payable on account of a “separation from service,” and that is not exempt from Section 409A as involuntary separation pay or a short-term deferral (or otherwise), to the extent necessary to avoid the imposition of excise taxes under Section 409A, such payment or benefit shall be made or provided at the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of Key Employee or (B) the date of Key Employee’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 6.2 (whether 

they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Key Employee in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
7.    Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT TO ANY CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF.  KEY EMPLOYEE ACKNOWLEDGES THAT HE HAS BEEN INFORMED BY THE COMPANY THAT THIS SECTION 7 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THE COMPANY IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
8.    Dispute Resolution.  
Any dispute by Key Employee with respect to the interpretation or performance of this Agreement shall be resolved solely by arbitration. Notice of demand for arbitration will be made in writing to the Board within thirty (30) days after the applicable decision by the Board.  The arbitrator will be selected by mutual agreement of the Board and Key Employee.  If the Board and Key Employee are unable to agree on an arbitrator, the arbitrator will be selected by the American Arbitration Association.  The arbitrator, no matter how selected, must be neutral within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association.  The arbitrator will administer and conduct the arbitration pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration Association.  Each side will bear its own fees and expenses, including its own attorney’s fees, and each side will bear one half of the arbitrator’s fees and expenses; provided, however, that the arbitrator will have the discretion to award the prevailing party its fees and expenses.  The arbitrator will have no authority to award exemplary, punitive, special, indirect, consequential, or other extracontractual damages.  The decision of the arbitrator on the issue(s) presented for arbitration will be final and conclusive and any court of competent jurisdiction may enforce it.
9.    Miscellaneous.
9.1    Entire Agreement.  This Agreement constitutes the entire understanding and sole and entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and discussions between the parties hereto and/or their respective counsel and representatives with respect to the subject matter covered hereby.  
9.2    Amendments.  This Agreement may be changed, amended or modified only by a written instrument executed by Key Employee and an authorized representative of the Company other than Key Employee. Notwithstanding anything herein to the contrary, the Board or the Committee may amend this Agreement (which amendment shall be effective upon its adoption or at such other time designated by the Board or the Committee, as applicable) at any time as may be necessary to comply with any law or regulation, including, but not limited to, to avoid the imposition of any additional taxes or penalties under Section 409A.
9.3    Assignment and Binding Effect.  Neither this Agreement nor the rights or obligations hereunder shall be assignable by Key Employee or the Company except that this Agreement shall be assignable to, binding upon and inure to the benefit of any successor of the Company, and any successor shall be deemed substituted for the Company upon the terms and subject to the conditions hereof.  
9.4    No Waiver.  No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or be construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement.
9.5    Key Employee Acknowledgment.  Key Employee acknowledges that Key Employee has consulted with or has had the opportunity to consult with independent counsel of Key Employee’s choice concerning this Agreement, and that Key Employee has read and understands this Agreement and is fully aware of its legal effect.
9.6    Governing Law.  This Agreement has been negotiated and executed in, and shall be governed by and construed in accordance with the laws of, the State of Delaware.  

9.7    Severability; Headings.  If any portion of this Agreement is held invalid or inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. The Section headings herein are for reference purposes only and are not intended in any way to describe, interpret, define or limit the extent or intent of the Agreement or of any part hereof.
9.8    Notices.  Any notice required or permitted by this Agreement shall be in writing, delivered by hand, or sent by registered or certified mail, return receipt requested, or by recognized courier service (regularly providing proof of delivery), addressed to the Chief Executive Officer of the Company at the Company's then principal office, or to the address set forth under Company’s signature below, as the case may be, or to such other address or addresses as any party hereto may from time to time specify in writing.  Notices shall be deemed given when received.
9.9    Counterparts.  This Agreement may be executed simultaneously in two (2) or more counterparts and delivered by facsimile or other means of electronic communication, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

[Signature page follows]

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first above written.
	
				
	FALCONSTOR SOFTWARE, INC.
	 
	KEY EMPLOYEE

	 
	 
	 

	By:
	/s/ Louis J. Petrucelly
	 
	Alan Komet

	Name:
	Louis J. Petrucelly
	 
	c/o FalconStor Software 2 Huntington Quadrangle

	Title:
	EVP & CFO
	 
	Street Address

	 
	 
	 
	Melville, NY 11747

	 
	 
	 
	City, State Zip Code

[Signature page to Change in Control Severance Agreement]Exhibit 4.1

 

	
 
    

 

DUKE ENERGY CAROLINAS, LLC

 

TO

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

Trustee

 

NINETY-SEVENTH SUPPLEMENTAL INDENTURE

 

Dated as of March 11, 2016

 

 

CREATING TWO SERIES OF FIRST AND REFUNDING

MORTGAGE BONDS

$500,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 2.500% SERIES DUE 2023

$500,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 3.875% SERIES DUE 2046

 

 

SUPPLEMENTAL TO

FIRST AND REFUNDING MORTGAGE 
 DATED AS OF DECEMBER 1, 1927

 

	
 
    

 

Drawn By and Return To:

Hunton & Williams LLP
 Bank of America Plaza, Suite 3500

101 South Tryon St

Charlotte, North Carolina 28280

Attention:  A. Vandiver

 

 

SUPPLEMENTAL INDENTURE, bearing date as of the 11th day of March, 2016, made and entered into by and between Duke Energy Carolinas, LLC, a limited liability company duly organized and existing under the laws of the State of North Carolina, hereinafter called the “Company”, party of the first part, and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.), a national banking association, having a corporate trust office at 10161 Centurion Parkway N., Jacksonville, Florida 32256, hereinafter called the “Trustee”, as Trustee, party of the second part. The Trustee is the successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank, formerly known as Chemical Bank (successor to Morgan Guaranty Trust Company of New York)), as Trustee.

 

WHEREAS the Company’s predecessor is Duke Energy Corporation (formerly known as Duke Power Company), a corporation organized under the laws of the State of North Carolina, which converted its form of organization on April 3, 2006 from a North Carolina corporation to a North Carolina limited liability company named “Duke Power Company LLC,” which changed its name to Duke Energy Carolinas, LLC on October 1, 2006; and

 

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

 

WHEREAS bonds of a series known as the “First and Refunding Mortgage Bonds, 2.65% Series Due 1977” (herein called “bonds of the 2.65% Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 2 7/8% Series Due 1979” (herein called “bonds of the 1979 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 3/8% Series Due 1998” (herein called “bonds of the 1998 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, Pollution Control Facilities Revenue Refunding Series Due 2014” (herein called “bonds of the 1990 Pollution Control Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, City of Greensboro Series Due 2027” (herein called “bonds of the 2027 City of Greensboro Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, Medium-Term Notes Series” (herein called “bonds of the Medium-Term Notes Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 5/8% Series B Due 2003” (herein called “bonds of the 2003 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 3/8% Series Due 2008” (herein called “bonds of the 2008 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 5 7/8% Series C Due 2003” (herein called “bonds of the 2003 Series C”), bonds of a series known as the “First and Refunding Mortgage Bonds, Pollution Control Facilities Revenue Refunding Series Due 2014” (herein called “bonds of the 1993 Pollution Control Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 1/4% Series B 2004” (herein called “bonds of the 2004 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 7% Series Due 2033” (herein called “bonds of the 2033 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 7/8% Series B Due 2023” (herein called “bonds of the 2023 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 6 3/4% Series Due 2025” (herein called “bonds of the 2025 Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 7 7/8% Series Due 2024” (herein called “bonds of the 2024 Series”), bonds of a series known as the “First and Refunding Mortgage

 

1

 

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 9 5/8% Series due 2020”), bonds of a series known as the “First and Refunding Mortgage Bonds, 8 3/4% Series Due 2021” (herein called “bonds of the 2021 Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7% Series Due 2005” (herein called “bonds of the 2005 Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 3.75% Series A Due 2008” (herein called “bonds of the 3.75% Series A”), bonds of series known as “First and Refunding Mortgage Bonds, 3.75% Series B Due 2008” (herein called “bonds of the 3.75% Series B,” and together with the bonds of the 3.75% Series A, the “bonds of the 3.75% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7 3/8% Series Due 2023” (herein called “bonds of the 7 3/8% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 4 1/2% Series Due 2010” (herein called “bonds of the 4 1/2% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 5.30% Series Due 2015” (herein called “bonds of the 5.30% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 5.25% Series Due 2018” (herein called “bonds of the 5.25% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 6.00% Series Due 2038” (herein called “bonds of the 6.00% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 2007A Pledge Series Due 2040” (herein called “bonds of the 2007A Pledge Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 2007B Pledge Series Due 2040” (herein called “bonds of the 2007B Pledge Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 5.10% Series B Due 2018” (herein called “bonds of the 5.10% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 6.05% Series B Due 2038” (herein called “bonds of the 6.05% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 7.00% Series C Due 2018 (herein called “bonds of the 2018 Series C”), bonds of a series known as “First and Refunding Mortgage Bonds, Pollution Control Facilities Revenue Refunding Series Due 2017” (herein called “bonds of the 2009 Pollution Control Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 5.30% Series Due 2040” (herein called “bonds of the 2040 Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 4.30% Series due 2020”(herein called “bonds of the 2020 Series”), bonds of a series known as “First and Refunding Mortgage Bonds, Solid Waste Disposal Revenue Bonds Series 2010A Due 2031” (herein called “bonds of the 2010A Solid Waste Disposal Series”), bonds of a series known as “First and Refunding Mortgage Bonds, Solid Waste Disposal Revenue Bonds Series 2010B Due 2031” (herein called “bonds of the 2010B Solid Waste Disposal Series”), bonds of a series known as “First and Refunding Mortgage Bonds, Solid Waste Disposal Revenue Bonds Series 2010C Due 2040” (herein called “bonds of the 2010C Solid Waste Disposal Series”), bonds of a series known as “First and Refunding Mortgage Bonds, Solid Waste Disposal Revenue Bonds Series 2010D Due 2040 (herein called “bonds of the 2010D Solid Waste Disposal Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 3.90% Series due 2021” (herein called “bonds of the 3.90% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 1.75% Series due 2016” (herein called “bonds of the 1.75% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 4.25% Series due 2041” (herein called “bonds of the 4.25% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 4.00% Series due 2042” (herein called “bonds of the 4.00% Series”), bonds of a series known as “First and Refunding Mortgage Bonds, 3.75% Series due 2045” (herein called “bonds of the 3.75% Series due 2045”) 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 1990 Pollution Control Series, bonds of the Medium Term Notes Series, bonds of the 2003 Series B, bonds of the 2008 Series, bonds of the 2003 Series C, bonds of the 1993 Pollution Control Series, bonds of the 2004 Series B, bonds of the 2033 Series, bonds of the 2023 Series B, bonds of the 2025 Series, bonds of the 2024 Series,

 

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bonds of the 2025 Series B, bonds of the 1999 Series, bonds of the 2000 Series, bonds of the 2000 Series B, bonds of the 2003 Series, bonds of the 9 5/8% Series due 2020, bonds of the 2021 Series, bonds of the 2005 Series, bonds of the 3.75% Series, bonds of the 7 3/8% Series, bonds of the 2007A Pledge Series, bonds of the 2007B Pledge Series, bonds of the 4 1/2% Series, bonds of the 5.30% Series and other such bonds which have been redeemed or retired in their entirety) are the only bonds now outstanding under the original indenture as heretofore supplemented; and

 

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

 

WHEREAS Morgan Guaranty Trust Company of New York resigned as Trustee under the original indenture as heretofore supplemented and Chemical Bank was appointed successor Trustee, said resignation and appointment having taken effect on August 30, 1994 pursuant to an Instrument of Resignation, Appointment and Acceptance dated as of August 30, 1994 among the Company, Morgan Guaranty Trust Company of New York, as Trustee, and Chemical Bank (now known as JPMorgan Chase Bank, N.A.), as successor Trustee; and

 

WHEREAS JPMorgan Chase Bank, N.A. resigned as Trustee and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.) was appointed successor Trustee, said resignation and appointment having taken effect on September 24, 2007 pursuant to an Instrument of Resignation, Appointment and Acceptance dated as of September 24, 2007 among the Company, JPMorgan Chase Bank, N.A., as Trustee, and The Bank of New York Mellon Trust Company, N.A., as successor Trustee; and

 

WHEREAS the Company desires to create under the original indenture, as heretofore supplemented and as to be supplemented by this supplemental indenture, two new series of bonds, to be known as its “First and Refunding Mortgage Bonds, 2.500% Series due 2023” and its “First and Refunding Mortgage Bonds, 3.875% Series due 2046”, and to determine the terms and provisions and the form of the bonds of each such series; and

 

WHEREAS for the purposes hereinabove recited, and pursuant to due limited liability company action, the Company has duly determined to execute and deliver to the Trustee a supplemental indenture in the form hereof supplementing the original indenture (the original indenture, as previously supplemented by supplemental indentures and as hereby supplemented, being sometimes hereinafter referred to as the “Indenture”); and

 

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:

 

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

 

PART ONE.

SECTION 1.                         BONDS OF THE 2.500% SERIES

 

Section 1.1.                                The Company hereby creates a new series of bonds to be issued under and secured by the Indenture and known as its First and Refunding Mortgage Bonds, 2.500% Series due 2023 (herein called “bonds of the 2.500% Series”) and the Company hereby establishes, determines and fixes the terms and provisions of the bonds of the 2.500% Series as hereinafter in this Section 1 set forth.

 

Each bond of the 2.500% 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 September 15, 2016, from March 15 or September 15, as the case may be, next preceding the date thereof to which interest has been paid, unless such date of authentication is prior to September 15, 2016, in which case interest shall be payable from March 11, 2016; provided, however, that interest shall be payable on each bond of the 2.500% Series authenticated after the record date (as defined in the next succeeding paragraph of this Section 1.1) 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 2.500% Series shall be paid to the person who, according to the bond register of the Company, is the registered holder of such bond of the 2.500% Series at the close of business on the applicable record date, and such interest payments shall be made by check mailed to such registered holder at his last address shown on such bond register or, at the option of the Company, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date of payment by the Person entitled thereto (provided, that if the bonds of the 2.500% Series are represented by Global Securities held by the Depositary, payment may be made pursuant to the procedures of the Depositary); provided, however, that, if the Company shall default in the payment of the interest due on any interest payment date on any bond of the 2.500% Series, such defaulted interest shall be paid to the registered holder of such bond (or any bond or bonds of the 2.500% Series issued upon transfer, exchange or substitution thereof) on the date of subsequent payment of such defaulted interest or, at the election of the Company, to the person in whose name such bond (or any bond or bonds of the 2.500% Series issued upon transfer, exchange or substitution thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of all bonds of the 2.500% Series not less than ten (10) days preceding such subsequent record date. The term “record date” as used in this Section 1.1 shall mean, with respect to any semi-annual interest payment date, the close of business on the March 1 or September 1, whether or not a business day, next preceding such interest payment date or, in the case of a payment of defaulted interest, the close of business on any subsequent record date established as provided above.

 

Section 1.2.                                All bonds of the 2.500% Series shall mature as to principal on March 15, 2023 and shall bear interest at a rate of 2.500% per annum, payable semi-annually on the fifteenth day of March and September in each year, commencing on the fifteenth day of September, 2016. Interest on the bonds of the 2.500% Series will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

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Section 1.3.                                The bonds of the 2.500% Series shall be fully registered bonds, without coupons, in denominations of two thousand dollars ($2,000) and integral multiples of one thousand dollars ($1,000) in excess thereof, all such bonds to be numbered, and shall be transferable and exchangeable as provided in the form of bond set forth as Exhibit A to this supplemental indenture. The provisions of §1.19 and any other provision in the Indenture in respect of coupon bonds or reservation of coupon bond numbers shall be inapplicable to the bonds of the 2.500% Series.

 

Section 1.4.                                At any time before January 15, 2023 (the “2023 Par Call Date”), the bonds of the 2.500% Series may be redeemed at the option of the Company, in whole or in part 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 2.500% Series to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the bonds of the 2.500% Series being redeemed that would be due if the bonds of the 2.500% Series matured on the 2023 Par Call Date (exclusive of interest accrued to the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in either case, accrued and unpaid interest on the principal amount of the bonds of the 2.500% Series being redeemed to, but excluding, the date of such redemption. The Company shall notify the Trustee of the redemption price with respect to any redemption pursuant to this paragraph promptly after the calculation thereof. The Trustee shall not be responsible for calculating said redemption price.

 

At any time on or after the 2023 Par Call Date, the bonds of the 2.500% Series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of the bonds of the 2.500% Series to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of such redemption.

 

The bonds of the 2.500% 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 fifth paragraph of the reverse side of the form of bond set forth as Exhibit A to this supplemental indenture, together with interest accrued thereon to the date fixed for redemption thereof.

 

In the event that any redemption date is not a Business Day, the Company shall pay the redemption price on the next Business Day without any interest or other payment due to the delay.

 

All such redemptions of bonds of the 2.500% Series shall be effected as provided in Article 3 of the Indenture except that, in case a part only of the bonds of the 2.500% Series is to be paid and redeemed, the particular bonds or part thereof shall be selected by the Trustee in such manner as the Trustee in its uncontrolled discretion shall determine to be fair and in any case where several bonds are registered in the same name, the Trustee may treat the aggregate principal amount so registered as if it were represented by one bond and except that when bonds are redeemed in part only the notice given to any particular holder need state only the principal amount of the bonds of that holder which is to be redeemed and except that notice to the holders of bonds to be redeemed shall be given by mailing to such holders a notice of such redemption, first class mail postage prepaid, not later than the thirtieth day, and not earlier than the sixtieth day, before the date fixed for redemption, at their last addresses as they shall appear upon the bond register of the Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice; and failure duly to give such notice by mail, or any defect in such notice, to the holder of any bond designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other bond. No publication of notice of such redemption shall be required.

 

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Section 1.5.                                The limit upon the aggregate principal amount of the bonds of the 2.500% Series which may be authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture shall be $500,000,000.  Notwithstanding the foregoing, the Company may, without the consent of the holders of the bonds of the 2.500% Series, reopen the bonds of the 2.500% Series and issue an unlimited amount of additional bonds having the same ranking, interest rate, maturity and other terms as the bonds of the 2.500% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture, other than, if applicable, the initial interest accrual date and interest payment date; provided, that, the Company may reopen the bonds of the 2.500% Series only if the additional bonds issued will be fungible for United States federal income tax purposes with the bonds of the 2.500% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture. Any such additional bonds will be consolidated with and form a single series of bonds under the Indenture with the bonds of the 2.500% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture.

 

Section 1.6.                                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 2.500% Series shall be the office or offices or the agency or agencies of the Company in the Borough of Manhattan, The City of New York, designated from time to time by the Board of Directors of the Company (provided, that if the bonds of the 2.500% 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 1.6 of Part One).

 

Section 1.7.                                The form of the bonds of the 2.500% 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.

 

SECTION 2.                         BONDS OF THE 3.875% SERIES

 

Section 2.1.                                The Company hereby creates a new series of bonds to be issued under and secured by the Indenture and known as its First and Refunding Mortgage Bonds, 3.875% Series due 2046 (herein called “bonds of the 3.875% Series”) and the Company hereby establishes, determines and fixes the terms and provisions of the bonds of the 3.875% Series as hereinafter in this Section 2 set forth.

 

Each bond of the 3.875% 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 September 15, 2016, from March 15 or September 15, as the case may be, next preceding the date thereof to which interest has been paid, unless such date of authentication is prior to September 15, 2016, in which case interest shall be payable from March 11, 2016; provided, however, that interest shall be payable on each bond of the 3.875% Series authenticated after the record date (as defined in the next succeeding paragraph of this Section 2.1) 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 3.875% Series shall be paid to the person who, according to the bond register of the Company, is the registered holder of such bond of the 3.875% Series at the close of business on the applicable record date, and such interest payments shall be made by check mailed to such registered holder at his last address shown on such bond register or, at the option of the Company, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date of payment by the Person entitled thereto (provided, that if the bonds of the 3.875% Series are represented by Global Securities held by the Depositary, payment may be made pursuant to the procedures of the Depositary); provided, however, that, if the Company shall default in the payment of the interest due on any interest payment date on any bond of the 3.875% Series, such defaulted interest shall be paid to the registered holder of such bond (or any bond or bonds of the 3.875% Series issued upon transfer, exchange or substitution

 

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thereof) on the date of subsequent payment of such defaulted interest or, at the election of the Company, to the person in whose name such bond (or any bond or bonds of the 3.875% Series issued upon transfer, exchange or substitution thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of all bonds of the 3.875% Series not less than ten (10) days preceding such subsequent record date. The term “record date” as used in this Section 2.1 shall mean, with respect to any semi-annual interest payment date, the close of business on the March 1 or September 1, whether or not a business day, next preceding such interest payment date or, in the case of a payment of defaulted interest, the close of business on any subsequent record date established as provided above.

 

Section 2.2.                                All bonds of the 3.875% Series shall mature as to principal on March 15, 2046 and shall bear interest at a rate of 3.875% per annum, payable semi-annually on the fifteenth day of March and September in each year, commencing on the fifteenth day of September, 2016. Interest on the bonds of the 3.875% Series will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

Section 2.3.                                The bonds of the 3.875% Series shall be fully registered bonds, without coupons, in denominations of two thousand dollars ($2,000) and integral multiples of one thousand dollars ($1,000) in excess thereof, all such bonds to be numbered, and shall be transferable and exchangeable as provided in the form of bond set forth as Exhibit B to this supplemental indenture. The provisions of §1.19 and any other provision in the Indenture in respect of coupon bonds or reservation of coupon bond numbers shall be inapplicable to the bonds of the 3.875% Series.

 

Section 2.4.                                At any time before September 15, 2045 (the “2046 Par Call Date”), the bonds of the 3.875% Series may be redeemed at the option of the Company, in whole or in part 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 3.875% Series to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the bonds of the 3.875% Series being redeemed that would be due if the bonds of the 3.875% Series matured on the 2046 Par Call Date (exclusive of interest accrued to the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points, plus, in either case, accrued and unpaid interest on the principal amount of the bonds of the 3.875% Series being redeemed to, but excluding, the date of such redemption. The Company shall notify the Trustee of the redemption price with respect to any redemption pursuant to this paragraph promptly after the calculation thereof. The Trustee shall not be responsible for calculating said redemption price.

 

At any time on or after the 2046 Par Call Date, the bonds of the 3.875% Series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of the bonds of the 3.875% Series to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of such redemption.

 

The bonds of the 3.875% 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 fifth paragraph of the reverse side of the form of bond set forth as Exhibit B to this supplemental indenture, together with interest accrued thereon to the date fixed for redemption thereof.

 

In the event that any redemption date is not a Business Day, the Company shall pay the redemption price on the next Business Day without any interest or other payment due to the delay.

 

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All such redemptions of bonds of the 3.875% Series shall be effected as provided in Article 3 of the Indenture except that, in case a part only of the bonds of the 3.875% Series is to be paid and redeemed, the particular bonds or part thereof shall be selected by the Trustee in such manner as the Trustee in its uncontrolled discretion shall determine to be fair and in any case where several bonds are registered in the same name, the Trustee may treat the aggregate principal amount so registered as if it were represented by one bond and except that when bonds are redeemed in part only the notice given to any particular holder need state only the principal amount of the bonds of that holder which is to be redeemed and except that notice to the holders of bonds to be redeemed shall be given by mailing to such holders a notice of such redemption, first class mail postage prepaid, not later than the thirtieth day, and not earlier than the sixtieth day, before the date fixed for redemption, at their last addresses as they shall appear upon the bond register of the Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice; and failure duly to give such notice by mail, or any defect in such notice, to the holder of any bond designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other bond. No publication of notice of such redemption shall be required.

 

Section 2.5.                                The limit upon the aggregate principal amount of the bonds of the 3.875% Series which may be authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture shall be $500,000,000.  Notwithstanding the foregoing, the Company may, without the consent of the holders of the bonds of the 3.875% Series, reopen the bonds of the 3.875% Series and issue an unlimited amount of additional bonds having the same ranking, interest rate, maturity and other terms as the bonds of the 3.875% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture, other than, if applicable, the initial interest accrual date and interest payment date; provided, that, the Company may reopen the bonds of the 3.875% Series only if the additional bonds issued will be fungible for United States federal income tax purposes with the bonds of the 3.875% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture. Any such additional bonds will be consolidated with and form a single series of bonds under the Indenture with the bonds of the 3.875% Series authenticated and delivered pursuant to this Ninety-Seventh Supplemental Indenture.

 

Section 2.6.                                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 3.875% Series shall be the office or offices or the agency or agencies of the Company in the Borough of Manhattan, The City of New York, designated from time to time by the Board of Directors of the Company (provided, that if the bonds of the 3.875% 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 2.6 of Part One).

 

Section 2.7.                                The form of the bonds of the 3.875% Series and the certificate of the Trustee to be endorsed on such bonds, respectively, shall be in substantially the form set forth in Exhibit B hereto.

 

PART TWO.

 

REPLACEMENT FUND.

 

SECTION 1.                         So long as any of the bonds of the 2.500% Series or the 3.875% Series are outstanding, the Company will continue to maintain the Replacement Fund set forth in, and in accordance with the applicable terms and conditions now contained in, Part Two of the supplemental indenture dated as of February 1, 1949, and the covenants on the part of the Company contained in such Part Two shall continue and remain in full force and effect, whether or not bonds of the 1979 Series are outstanding and to the same extent as though the words “or any bonds of the 2.500% Series or the 3.875% Series” were

 

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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 any time (a) any of the bonds of the 2.500% Series or the 3.875% Series are outstanding and (b) no Outstanding Mortgage Bonds (as defined in Section 1 of Part Three of this supplemental indenture) entitled to the benefit of the Replacement Fund are outstanding and (c) cash which shall have been deposited with the Trustee pursuant to such Replacement Fund shall not within five years from the date of deposit thereof have been paid out, or used or set aside by the Trustee for the payment, purchase or redemption of bonds, pursuant to such Replacement Fund, such cash shall, if in excess of fifty thousand dollars ($50,000), be applied to the redemption of bonds of the 2.500% Series and the 3.875% Series on a pro rata basis as between such series in an aggregate principal amount sufficient to exhaust as nearly as possible the full amount of such cash. Anything in Section 5 of Part Two of the aforesaid supplemental indenture dated as of February 1, 1949, in Section 3 of Part Two of the supplemental indentures dated as of May 1, 1993, July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994, February 25, 2003, March 21, 2003 and September 23, 2003, in Section 3 of Part Three of the supplemental indenture dated as of March 1, 1990 and in Section 5 of Part Four of the supplemental indenture dated as of March 1, 1993 to the contrary notwithstanding, no cash shall be paid over to the Company thereunder if at the time any bonds of the 2.500% Series or the 3.875% 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 2.500% Series or the 3.875% Series and all of the Outstanding Mortgage Bonds entitled to the benefit of the Replacement Fund shall have been paid, purchased or redeemed, the Trustee shall, upon application of the Company, pay to or upon the order of the Company all cash theretofore deposited with the Trustee pursuant to the provisions of the Replacement Fund and not previously disposed of pursuant to the provisions of the Replacement Fund, and shall deliver to the Company any bonds which shall theretofore have been deposited with the Trustee pursuant to the provisions of the Replacement Fund or paid, purchased or redeemed pursuant to the provisions of the Replacement Fund.

 

PART THREE.

 

ADDITIONAL COVENANTS OF THE COMPANY

 

SECTION 1.                         Whether or not the covenants on the part of the Company contained in Part Three of the supplemental indenture dated as of February 1, 1949 are modified with the consent of the holders of bonds of the 2027 City of Greensboro Series, the 5.30% Series, the 5.25% Series, the 6.00% Series, the 5.10% Series, the 6.05% Series, the 2013 Series C, the 2018 Series C, the 2009 Pollution Control Series, the 2040 Series, the 2020 Series, the 2010A Solid Waste Disposal Series, the 2010B Solid Waste Disposal Series, the 2010C Solid Waste Disposal Series, the 2010D Solid Waste Disposal Series, the 3.90% Series, the 1.75% Series, the 4.25% Series or the 4.00% Series (collectively, the “Outstanding Mortgage Bonds”), such covenants on the part of the Company contained in said Part Three shall continue and remain in full force and effect so long as any of the bonds of the 2.500% Series or the 3.875% Series are outstanding and to the same extent as though the words “or so long as any bonds of the 2.500% Series or the 3.875% 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 February 1, 1968) is modified with the consent of the holders of any of the Outstanding Mortgage Bonds, said sentence shall continue and remain in full

 

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force and effect so long as any bonds of the 2.500% Series or the 3.875% 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 2.500% Series or the 3.875% Series are outstanding.

 

PART FOUR.

 

GLOBAL SECURITIES; TRANSFER AND EXCHANGE

 

SECTION 1.                         The bonds of the 2.500% Series shall initially be issued in the form of one or more Global Securities registered in the name of the Depositary (which initially shall be The Depository Trust Company) or its nominee. Except under the limited circumstances described below, bonds of the 2.500% Series represented by such Global Security or Global Securities shall not be exchangeable for, and shall not otherwise be issuable as, bonds of the 2.500% Series in definitive form. The Global Securities described in this Part Four may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee.

 

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

 

A Global Security shall be exchangeable for bonds of the 2.500% Series registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company within 90 days of receipt by the Company of such notification, or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company within 90 days after it becomes aware of such cessation, (ii) an Event of Default has occurred and is continuing with respect to the bonds of the 2.500% Series or (iii) the Company in its sole discretion, and subject to the procedures of the Depositary, determines that such Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for bonds of the 2.500% Series registered in such names as the Depositary shall direct.

 

SECTION 2.                         The bonds of the 3.875% Series shall initially be issued in the form of one or more Global Securities registered in the name of the Depositary (which initially shall be The Depository Trust Company) or its nominee. Except under the limited circumstances described below, bonds of the 3.875% Series represented by such Global Security or Global Securities shall not be exchangeable for, and shall not otherwise be issuable as, bonds of the 3.875% Series in definitive form. The Global Securities described in this Part Four may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee.

 

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

 

A Global Security shall be exchangeable for bonds of the 3.875% Series registered in the names of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary

 

10

 

shall have been appointed by the Company within 90 days of receipt by the Company of such notification, or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company within 90 days after it becomes aware of such cessation, (ii) an Event of Default has occurred and is continuing with respect to the bonds of the 3.875% Series or (iii) the Company in its sole discretion, and subject to the procedures of the Depositary, determines that such Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for bonds of the 3.875% Series registered in such names as the Depositary shall direct.

 

SECTION 3.                         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 COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”

 

SECTION 4.                         Transfer and Exchange.

 

(a)                                 Every bond of the 2.500% Series or the 3.875% Series presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed, by the Holder thereof or his attorney duly authorized in writing.

 

(b)                                 No service charge shall be made for any registration of transfer or exchange of bonds of the 2.500% Series or the 3.875% Series, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration or transfer or exchange of bonds of the 2.500% Series or the 3.875% Series.

 

SECTION 5.                         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.

 

11

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the applicable bonds of the 2.500% Series or the 3.875% Series to be redeemed (assuming, for this purpose, that the bonds of the 2.500% Series matured on the 2023 Par Call Date and the bonds of the 3.875% Series matured on the 2046 Par Call Date), that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such bonds of the 2.500% Series or the 3.875% Series.

 

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Depositary” means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the bonds of the 2.500% Series or the 3.875% 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 2.500% Series or the 3.875% Series in global form.

 

“Holder” means a Person in whose name a bond of the 2.500% Series or the 3.875% Series is registered in the registration books maintained by the Trustee.

 

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

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of BNP Paribas Securities Corp., Citigroup Global Markets Inc., RBC Capital Markets, LLC, TD Securities (USA) LLC, and UBS Securities LLC, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

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

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date.

 

12

 

PART FIVE.

 

MISCELLANEOUS.

 

SECTION 1.

 

(a)                                 For the purposes of §2.10 of the Indenture and for the purposes of any modification of the provisions of the Replacement Fund referred to in Part Two of this supplemental indenture, the covenants and provisions on the part of the Company which are set forth or incorporated in Part Two of this supplemental indenture shall be for the benefit only of the holders of the bonds of the 2.500% Series and the 3.875% Series. Such covenants and provisions shall remain in force and be applicable only so long as any bonds of the 2.500% Series or the 3.875% Series shall be outstanding, and, subject to the provisions of paragraph (2) of subdivision (c) of §10.01 of the Indenture, any such covenants and provisions may be modified with respect to the bonds of the 2.500% Series or the 3.875% Series with the consent, in writing or by vote at a bondholders’ meeting of the holders of sixty-six and two-thirds per cent (66 2/3%) of the principal amount of the bonds of the 2.500% Series or the 3.875% Series, as the case may be, at the time outstanding and without the consent of the holders of any other bonds then outstanding under the Indenture; provided that no such consent shall be effective to waive any past default under such covenants and provisions, and its consequences, unless the consent of the holders of at least a majority in principal amount of all bonds then outstanding under the Indenture is obtained. Such covenants shall be deemed to be additional covenants and none of them shall affect or derogate from, or relieve the Company from, its obligation to comply with any of the other covenants, conditions, requirements or provisions of the Indenture or any other supplemental indenture.

 

(b)                                 For the purposes of §2.10 of the Indenture and for the purposes of any modification of the provisions of Part Three of this supplemental indenture, the covenants and provisions on the part of the Company which are set forth or incorporated in said Part Three shall be for the benefit only of the holders of the bonds of the 2.500% Series and the 3.875% Series. Such covenants and provisions shall remain in force and be applicable only so long as any bonds of the 2.500% Series or the 3.875% Series shall be outstanding, and, subject to the provisions of paragraph (2) of subdivision (c) of §10.01 of the Indenture, any such covenants and provisions may be modified with respect to the bonds of the 2.500% Series or the 3.875% Series with the consent, in writing or by vote at a bondholders’ meeting of the holders of sixty-six and two-thirds per cent (66 2/3 %) of the principal amount of the bonds of the 2.500% Series or the 3.875% Series, as the case may be, at the time outstanding and without the consent of the holders of any other bonds then outstanding under the Indenture; provided that no such consent shall be effective to waive any past default under such covenants and provisions, and its consequences, unless the consent of the holders of at least a majority in principal amount of all bonds then outstanding under the Indenture is obtained. Such covenants shall be deemed to be additional covenants and none of them shall affect or derogate from, or relieve the Company from, its obligation to comply with any of the other covenants, conditions, requirements or provisions of the Indenture or any other supplemental indenture.

 

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.

 

13

 

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 2.500% Series or the 3.875% Series may be modified, amended or supplemented by the Company and the Trustee, without the consent of the holders of the bonds of the 2.500% Series or the 3.875% Series, and if not inconsistent with the Indenture, to cure ambiguities in this supplemental indenture or the bonds of the 2.500% Series or the 3.875% Series, or correct defects or inconsistencies in the provisions of this supplemental indenture or the bonds of the 2.500% Series or the 3.875% Series or to provide for such appropriate additional provisions in this supplemental indenture or the bonds of the 2.500% Series or the 3.875% 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).

 

14

 

IN WITNESS WHEREOF, Duke Energy Carolinas, LLC, the party of the first part hereto, has caused this supplemental indenture to be signed in its name by one of its Senior Vice Presidents and its company seal to be hereunto affixed, and the same to be attested by one of its Assistant Secretaries, and The Bank of New York Mellon Trust Company, N.A., the party of the second part hereto, in token of its acceptance of the trust hereby created, has caused this supplemental indenture to be signed in its name by one of its Vice Presidents and its corporate seal to be hereunto affixed, and the same to be attested by one of its Vice Presidents, all as of the day and year first above written.

 

	
 
    	
DUKE ENERGY CAROLINAS,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen G. De May
    
	
 
    	
 
    	
Name: Stephen G. De May
    
	
 
    	
 
    	
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
    	
 
    
	
Carolinas, LLC, in the   presence of:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Delcia S. Dunlap
    	
 
    
	
Delcia S. Dunlap
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Jacqueline Williams
    	
 
    
	
Jacqueline Williams
    	
 
    

 

[COMPANY’S SIGNATURE PAGE]

 

[NINETY-SEVENTH SUPPLEMENTAL INDENTURE DATED AS OF MARCH 11, 2016

TO THE DUKE ENERGY CAROLINAS, LLC FIRST AND REFUNDING MORTGAGE

DATED AS OF DECEMBER 1, 1927]

 

 

	
 
    	
The Bank of New York   Mellon Trust Company, N.A.,
    
	
 
    	
as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ R. Tarnas
    
	
 
    	
 
    	
Name:  R. Tarnas
    
	
 
    	
 
    	
Title:  Vice President
    

 

 

	
ATTEST:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Nissa Dell
    	
 
    	
 
    
	
Name:  Nissa Dell
    	
 
    	
 
    
	
Title: Vice President
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed,   sealed, executed,
    	
 
    
	
acknowledged   and delivered by The Bank of New York
    	
 
    
	
Mellon Trust Company,   N.A.,
    	
 
    	
 
    
	
in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Mietka Collins
    	
 
    	
 
    
	
Name:  Mietka Collins
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Emily Gigerich
    	
 
    	
 
    
	
Name: Emily Gigerich
    	
 
    	
 
    

 

[TRUSTEE’S SIGNATURE PAGE]

 

[NINETY-SEVENTH SUPPLEMENTAL INDENTURE DATED AS OF MARCH 11, 2016

TO THE DUKE ENERGY CAROLINAS, LLC FIRST AND REFUNDING MORTGAGE

DATED AS OF DECEMBER 1, 1927]

 

 

	
State of Illinois
    	
)
    
	
 
    	
) ss.:
    
	
County of Cook
    	
)
    

 

Personally appeared before me, Mietka Collins, and made oath that she saw R. Tarnas, a, Vice President and Nissa Dell, a Vice President, respectively, of The Bank of New York Mellon Trust Company, N.A., sign, attest and affix hereto the corporate seal of said The Bank of New York Mellon Trust Company, N.A., and, as the act and deed of said corporation, deliver the within written and foregoing deed, and that she, with Emily Gigerich, witnessed the execution thereof.

 

	
 
    	
/s/ Mietka Collins
    
	
 
    	
Name:  Mietka Collins
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Sworn and subscribed   before me
    
	
 
    	
this 9th day of March, 2016.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Colleen Sketch
    
	
 
    	
Name:  Colleen Sketch
    
	
 
    	
Notary Public — State   of Illinois
    
	
 
    	
Commission Expires May 20, 2017
    

 

	
State of Illinois 
    	
)
    
	
 
    	
) ss.:
    
	
County of Cook 
    	
)
    

 

I, Colleen Sketch, a Notary Public in and for the State aforesaid, certify that Nissa Dell personally came before me this day and acknowledged that she is a Vice President of The Bank of New York Mellon Trust Company, N.A., a national banking association, and that, by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by one of its Vice Presidents, sealed with its corporate seal, and attested by herself as one of its Vice Presidents.

 

Witness may hand and official seal, this 9th day of March, 2016.

 

	
 
    	
/s/ Colleen Sketch
    
	
 
    	
Name:  Colleen Sketch
    
	
 
    	
Notary Public — State   of Illinois
    
	
 
    	
Commission Expires May 20, 2017
    

 

 

	
State of North Carolina
    	
)
    
	
 
    	
) ss.:
    
	
County of Mecklenburg
    	
)
    

 

                                                              

 

I, Jennie M. Raine, a Notary Public in and for the State and County aforesaid, certify that Delcia S. Dunlap personally appeared before me this day, and being duly sworn, stated that in her presence Stephen G. De May executed the foregoing instrument, and that she, with Jacqueline Williams, witnessed the execution thereof.

 

Witness my hand and official seal, this 11th day of March, 2016.

 

	
 
    	
/s/ Delcia S. Dunlas
    
	
 
    	
Delcia S. Dunlap
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Jennie M. Raine
    
	
 
    	
Name:  Jennie M. Raine
    
	
 
    	
Notary Public, State of   North Carolina
    
	
 
    	
Mecklenburg County
    
	
 
    	
My Commission Expires: August 12, 2016
    

 

	
State of North Carolina
    	
)
    
	
 
    	
) ss.:
    
	
County of Mecklenburg
    	
)
    

 

I, Jennie M. Raine, a Notary Public in and for the State and County aforesaid, certify that Robert T. Lucas, III personally came before me this day and acknowledged that he is an Assistant Secretary of Duke Energy Carolinas, LLC, a North Carolina limited liability company, and that, by authority duly given and as the act of the company, the foregoing instrument was signed in its name by one of its Senior Vice Presidents, sealed with its seal, and attested by himself as one of its Assistant Secretaries.

 

Witness my hand and official seal, this 11th day of March, 2016.

 

	
 
    	
/s/ Jennie M. Raine
    
	
 
    	
Name:  Jennie M. Raine
    
	
 
    	
Notary Public, State of   North Carolina
    
	
 
    	
Mecklenburg County
    
	
 
    	
My Commission Expires: August 12, 2016
    

 

 

EXHIBIT A

 

FORM OF DUKE ENERGY CAROLINAS, LLC
 FIRST AND REFUNDING MORTGAGE BOND, 2.500% SERIES DUE 2023

 

[FACE SIDE OF BOND]

 

[DEPOSITORY LEGEND, IF APPLICABLE] 
 DUKE ENERGY CAROLINAS, LLC

 

FIRST AND REFUNDING MORTGAGE BOND, 
 2.500% SERIES DUE 2023

 

	
No.
    	
 
    	
$
    

CUSIP No.        26442C AQ7

ISIN                   US26442CAQ78

 

Duke Energy Carolinas, LLC, a North Carolina limited liability company (hereinafter called the “Company”), for value received, hereby promises to pay to                                   or registered assigns, the principal sum of                             Dollars on March 15, 2023 in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and to pay interest thereon at said office or agency from the interest payment date next preceding the date hereof to which interest on outstanding bonds of this series has been paid (unless the date hereof is prior to September 15, 2016, in which case from March 11, 2016, and unless the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding March 15 or September 15, in which case from the next succeeding March 15 or September 15, as the case may be), at the rate of 2.500% per annum, in like coin or currency, semi-annually on March 15 and September 15, in each year, commencing September 15, 2016, 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 1 or September 1, whether or not a business day, next preceding each semi-annual interest payment date (a “record date”) (subject to certain exceptions provided in the Indenture hereinafter mentioned), at his last address as it shall appear upon the bond register of the Company.

 

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

 

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

 

A-1

 

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

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DUKE ENERGY CAROLINAS,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
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.

 

	
 
    	
The Bank of New York   Mellon Trust Company, N.A.,
    
	
 
    	
as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

A-2

 

[REVERSE SIDE OF BOND]

 

This bond is one of the bonds of a series, designated specially as First and Refunding Mortgage Bonds, 2.500% Series due 2023, of an authorized issue of bonds of the Company, without limit as to aggregate principal amount, designated generally as First and Refunding Mortgage Bonds, all issued and to be issued under and equally and ratably secured by a First and Refunding Mortgage dated as of December 1, 1927, duly executed by Duke Power Company, a New Jersey corporation (hereinafter called the “New Jersey Company”), to Guaranty Trust Company of New York, as Trustee (The Bank of New York Mellon Trust Company, N.A., as successor trustee), as supplemented and modified by indentures supplemental thereto, including a supplemental indenture dated as of March 11, 2016 providing for said series (said First and Refunding Mortgage as so supplemented and modified being hereinafter referred to as the “Indenture”), to which Indenture reference is made for a description of the property mortgaged, the nature and extent of the security, the rights of the holders of the bonds in respect thereof, the terms and conditions upon which the bonds are secured and the restrictions subject to which additional bonds secured thereby may be issued. To the extent permitted by, and as provided in, the Indenture, modifications or alterations of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Company and of the holders of the bonds, may be made with the consent of the Company by the affirmative vote, or with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds then outstanding, and by the affirmative vote, or with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds of any series then outstanding and affected by such modification or alteration, in case one or more but less than all of the series of bonds then outstanding under the Indenture are so affected, evidenced, in each case, as provided in the Indenture; provided that any supplemental indenture may be modified in accordance with the provisions contained therein for its modification; and provided, further, that no such modification or alteration shall be made which will affect the terms of payment of the principal of, or interest or premium on, this bond, or the right of any bondholder to institute suit for the enforcement of any such payment on or after the respective due dates expressed in this bond, or reduce the percentage required for the taking of any such action. Any such affirmative vote of, or written consent given by, any holder of this bond is binding upon all subsequent holders hereof as provided in the Indenture.

 

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

 

At any time before January 15, 2023 (the “2023 Par Call Date”), the bonds of this series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the bonds of this series to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on such bonds being redeemed that would be due if the bonds of this series matured on the 2023 Par Call Date (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 of the bonds of this series being redeemed to, but excluding, the date of such redemption.

 

At any time on or after the 2023 Par Call Date, the bonds of this series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of the bonds of this series to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of such redemption.

 

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

 

A-3

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the bonds of this series to be redeemed (assuming, for this purpose, that the bonds of this series matured on the 2023 Par Call Date), that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such bonds.

 

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of BNP Paribas Securities Corp., Citigroup Global Markets Inc., RBC Capital Markets, LLC, TD Securities (USA) LLC, and UBS Securities LLC, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

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

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

The bonds of this series are also subject to redemption for the Replacement Fund for bonds of this series provided for in the supplemental indenture dated as of March 11, 2016, providing for this series, or upon application of moneys arising from a taking of any of the mortgaged property by eminent domain or similar action, at any time or from time to time prior

 

A-4

 

to maturity, at 100% of their principal amount, in each case together with accrued and unpaid interest to, but excluding, the date fixed for redemption.

 

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

 

If this bond or any portion hereof ($2,000 and integral multiples of $1,000 in excess thereof) is called for redemption and payment is duly provided, this bond or such portion thereof shall cease to bear interest from and after the date fixed for such redemption.

 

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

 

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

 

[END OF BOND FORM]

 

A-5

 

ABBREVIATIONS

 

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

 

	
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 Company, with full power of substitution in the premises.

 

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

 

A-6

 

SIGNATURE GUARANTEE

 

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

 

A-7

 

EXHIBIT B

 

FORM OF DUKE ENERGY CAROLINAS, LLC
 FIRST AND REFUNDING MORTGAGE BOND, 3.875% SERIES DUE 2046

 

[FACE SIDE OF BOND]

 

[DEPOSITORY LEGEND, IF APPLICABLE] 
 DUKE ENERGY CAROLINAS, LLC

 

FIRST AND REFUNDING MORTGAGE BOND, 
 3.875% SERIES DUE 2046

 

	
No.
    	
 
    	
$
    
	
CUSIP No.
    	
 
    	
26442C AR5
    
	
ISIN
    	
 
    	
US26442CAR51
    
					

 

Duke Energy Carolinas, LLC, a North Carolina limited liability company (hereinafter called the “Company”), for value received, hereby promises to pay to                                   or registered assigns, the principal sum of                             Dollars on March 15, 2046 in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and to pay interest thereon at said office or agency from the interest payment date next preceding the date hereof to which interest on outstanding bonds of this series has been paid (unless the date hereof is prior to September 15, 2016, in which case from March 11, 2016, and unless the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding March 15 or September 15, in which case from the next succeeding March 15 or September 15, as the case may be), at the rate of 3.875% per annum, in like coin or currency, semi-annually on March 15 and September 15, in each year, commencing September 15, 2016, 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 1 or September 1, whether or not a business day, next preceding each semi-annual interest payment date (a “record date”) (subject to certain exceptions provided in the Indenture hereinafter mentioned), at his last address as it shall appear upon the bond register of the Company.

 

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

 

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

 

B-1

 

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

 

Dated:

 

	
 
    	
DUKE ENERGY CAROLINAS,   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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.

 

	
 
    	
The Bank of New York   Mellon Trust Company, N.A.,
    
	
 
    	
as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

B-2

 

[REVERSE SIDE OF BOND]

 

This bond is one of the bonds of a series, designated specially as First and Refunding Mortgage Bonds, 3.875% Series due 2046, of an authorized issue of bonds of the Company, without limit as to aggregate principal amount, designated generally as First and Refunding Mortgage Bonds, all issued and to be issued under and equally and ratably secured by a First and Refunding Mortgage dated as of December 1, 1927, duly executed by Duke Power Company, a New Jersey corporation (hereinafter called the “New Jersey Company”), to Guaranty Trust Company of New York, as Trustee (The Bank of New York Mellon Trust Company, N.A., as successor trustee), as supplemented and modified by indentures supplemental thereto, including a supplemental indenture dated as of March 11, 2016 providing for said series (said First and Refunding Mortgage as so supplemented and modified being hereinafter referred to as the “Indenture”), to which Indenture reference is made for a description of the property mortgaged, the nature and extent of the security, the rights of the holders of the bonds in respect thereof, the terms and conditions upon which the bonds are secured and the restrictions subject to which additional bonds secured thereby may be issued. To the extent permitted by, and as provided in, the Indenture, modifications or alterations of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Company and of the holders of the bonds, may be made with the consent of the Company by the affirmative vote, or with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds then outstanding, and by the affirmative vote, or with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds of any series then outstanding and affected by such modification or alteration, in case one or more but less than all of the series of bonds then outstanding under the Indenture are so affected, evidenced, in each case, as provided in the Indenture; provided that any supplemental indenture may be modified in accordance with the provisions contained therein for its modification; and provided, further, that no such modification or alteration shall be made which will affect the terms of payment of the principal of, or interest or premium on, this bond, or the right of any bondholder to institute suit for the enforcement of any such payment on or after the respective due dates expressed in this bond, or reduce the percentage required for the taking of any such action. Any such affirmative vote of, or written consent given by, any holder of this bond is binding upon all subsequent holders hereof as provided in the Indenture.

 

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

 

At any time before September 15, 2045 (the “2046 Par Call Date”), the bonds of this series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the bonds of this series to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on such bonds being redeemed that would be due if the bonds of this series matured on the 2046 Par Call Date (exclusive of interest accrued to the redemption date), discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points, plus, in either case, accrued and unpaid interest on the principal amount of the bonds of this series being redeemed to, but excluding, the date of such redemption.

 

At any time on or after the 2046 Par Call Date, the bonds of this series may be redeemed at the option of the Company, in whole or in part and from time to time, at a redemption price equal to 100% of the principal amount of the bonds of this series to be redeemed plus accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of such redemption.

 

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

 

B-3

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the bonds of this series to be redeemed (assuming, for this purpose, that the bonds of this series matured on the 2046 Par Call Date), that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such bonds.

 

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than four of such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

 

“Reference Treasury Dealer” means each of BNP Paribas Securities Corp., Citigroup Global Markets Inc., RBC Capital Markets, LLC, TD Securities (USA) LLC, and UBS Securities LLC, or their respective affiliates or successors, each of which is a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing or their affiliates or successors shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

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

 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 

The bonds of this series are also subject to redemption for the Replacement Fund for bonds of this series provided for in the supplemental indenture dated as of March 11, 2016, providing for this series, or upon application of moneys arising from a taking of any of the mortgaged property by eminent domain or similar action, at any time or from time to time prior

 

B-4

 

to maturity, at 100% of their principal amount, in each case together with accrued and unpaid interest to, but excluding, the date fixed for redemption.

 

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

 

If this bond or any portion hereof ($2,000 and integral multiples of $1,000 in excess thereof) is called for redemption and payment is duly provided, this bond or such portion thereof shall cease to bear interest from and after the date fixed for such redemption.

 

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

 

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

 

[END OF BOND FORM]

 

B-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 Company, with full power of substitution in the premises.

 

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

 

B-6

 

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.

 

B-7

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