Document:

Exhibit 4.1

 

Counterpart     of 75 Counterparts

 

 

DUKE ENERGY PROGRESS, LLC

(formerly Duke Energy Progress, Inc.)

 

TO

 

THE BANK OF NEW YORK MELLON

(formerly The Bank of New York (formerly Irving Trust Company))

 

AND

 

TINA D. GONZALEZ

(successor to Frederick G. Herbst, Richard H. West, J.A. Austin, E.J. McCabe,

G. White, D.W. May, J.A. Vaughan, Joseph J. Arney, Wafaa Orfy,

W.T. Cunningham, Douglas J. MacInnes and Ming Ryan)

 

	
 
    	
as Trustees under Duke Energy Progress, LLC’s Mortgage and   Deed of Trust, dated as of May 1,1940
    

 

 

Eighty-fifth Supplemental Indenture

 

Providing among other things for

First Mortgage Bonds, 3.25% Series due 2025 (Ninety-seventh Series)

First Mortgage Bonds, 4.20% Series due 2045 (Ninety-eighth Series)

Dated as of August 1, 2015

 

Prepared by and Return to:

Hunton & Williams LLP

421 Fayetteville Street, Suite 1400

Raleigh, North Carolina 27601

 

 

EIGHTY-FIFTH SUPPLEMENTAL INDENTURE

 

INDENTURE, dated as of August 1, 2015, by and between DUKE ENERGY PROGRESS, LLC (formerly Duke Energy Progress, Inc.), a limited liability company of the State of North Carolina, whose post office address is 410 South Wilmington Street, Raleigh, North Carolina 27601-1748 (hereinafter sometimes referred to as the “Company”), and THE BANK OF NEW YORK MELLON (formerly The Bank of New York (formerly Irving Trust Company)), a corporation of the State of New York, whose post office address is 101 Barclay Street, New York, New York 10286 (hereinafter sometimes referred to as the “Corporate Trustee”), and TINA D. GONZALEZ (successor to Frederick G. Herbst, Richard H. West, J.A. Austin, E.J. McCabe, G. White, D.W. May, J.A. Vaughan, Joseph J. Arney, Wafaa Orfy, W.T. Cunningham, Douglas J. MacInnes and Ming Ryan), whose post office address is 10161 Centurion Parkway, Jacksonville, Florida 32256 (hereinafter sometimes referred to as the “Individual Trustee”; the Corporate Trustee and the Individual Trustee being hereinafter together sometimes referred to as the “Trustees”), as Trustees under the Mortgage and Deed of Trust, dated as of May 1, 1940 (hereinafter referred to as the “Original Mortgage” and, as supplemented from time to time by the eighty-four supplemental indentures mentioned below, by this Indenture, and by all other indentures, if any, supplemental to the Original Mortgage, hereinafter referred to as the “Mortgage”), which Original Mortgage was executed and delivered by the Company to Irving Trust Company (now The Bank of New York Mellon) and Frederick G. Herbst to secure the payment of bonds issued or to be issued under and in accordance with the provisions of the Original Mortgage, reference to which Original Mortgage is hereby made, this Indenture (hereinafter sometimes referred to as the “Eighty-fifth Supplemental Indenture”) being supplemental thereto:

 

WHEREAS, the Original Mortgage was recorded in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, the Original Mortgage was indexed and cross-indexed in the real and chattel mortgage records in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, an instrument, dated as of June 25, 1945, was executed by the Company appointing Richard H. West as Individual Trustee in succession to said Frederick G. Herbst (deceased) under the Original Mortgage, as theretofore supplemented, and by Richard H. West accepting said appointment, which instrument was recorded in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, an instrument, dated as of December 12, 1957, was executed by the Company appointing J.A. Austin as Individual Trustee in succession to said Richard H. West (resigned) under the Original Mortgage, as theretofore supplemented, and by J.A. Austin accepting said appointment, which instrument was recorded in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, an instrument, dated as of April 15, 1966, was executed by the Company appointing E.J. McCabe as Individual Trustee in succession to said J.A. Austin (resigned) under the Original Mortgage, as theretofore supplemented, and by E.J. McCabe accepting said appointment, which instrument was recorded in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, by the Seventeenth Supplemental Indenture mentioned below, the Company, among other things, appointed G. White as Individual Trustee in succession to said E.J. McCabe (resigned), and G. White accepted said appointment; and

 

 

WHEREAS, by the Nineteenth Supplemental Indenture mentioned below, the Company, among other things, appointed D.W. May as Individual Trustee in succession to said G. White (resigned), and D.W. May accepted said appointment; and

 

WHEREAS, by the Thirty-fifth Supplemental Indenture mentioned below, the Company, among other things, appointed J.A. Vaughan as Individual Trustee in succession to said D.W. May (resigned), and J.A. Vaughan accepted said appointment; and

 

WHEREAS, an instrument, dated as of June 27, 1988, was executed by the Company appointing Joseph J. Arney as Individual Trustee in succession to said J.A. Vaughan (resigned) under the Original Mortgage, as theretofore supplemented, and by Joseph J. Arney accepting said appointment, which instrument was recorded in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, by the Forty-fifth Supplemental Indenture mentioned below, the Company, among other things, appointed Wafaa Orfy as Individual Trustee in succession to said Joseph J. Arney (resigned), and Wafaa Orfy accepted said appointment; and

 

WHEREAS, by the Forty-ninth Supplemental Indenture mentioned below, the Company, among other things, appointed W.T. Cunningham as Individual Trustee in succession to said Wafaa Orfy (resigned), and W.T. Cunningham accepted said appointment; and

 

WHEREAS, by the Sixty-sixth Supplemental Indenture mentioned below, the Company, among other things, appointed Douglas J. MacInnes as Individual Trustee in succession to said W.T. Cunningham (resigned), and Douglas J. MacInnes accepted said appointment; and

 

WHEREAS, by the Seventy-sixth Supplemental Indenture mentioned below, the Company, among other things, appointed Ming Ryan as Individual Trustee in succession to said Douglas J. MacInnes (resigned), and Ming Ryan accepted said appointment; and

 

WHEREAS, by the Seventy-ninth Supplemental Indenture mentioned below, the Company, among other things, appointed Tina D. Gonzalez as Individual Trustee in succession to said Ming Ryan (resigned), and Tina D. Gonzalez accepted said appointment; and

 

WHEREAS, such instruments were indexed and cross-indexed in the real and chattel mortgage records in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, effective January 1, 2003, the Company began doing business under the name Progress Energy Carolinas, Inc., without changing the legal name of the Company; and certificates of doing business by the Company under such name were recorded in all counties in the State of North Carolina and South Carolina in which this Eighty-fifth Supplemental Indenture is to be recorded and were filed and indexed and cross-indexed in the real property records in each of such counties; and

 

WHEREAS, effective April 29, 2013, the Company changed its name to Duke Energy Progress, Inc. and evidence of such name change was (i) recorded in all counties in the States of North Carolina and South Carolina in which this Eighty-fifth Supplemental Indenture is to be recorded and (ii) filed and indexed and cross-indexed in the real property records in each of such counties; and

 

WHEREAS, the Company converted its form of organization effective August 1, 2015 from a North Carolina corporation to a North Carolina limited liability company named “Duke Energy Progress, LLC,” and evidence of such conversion was (i) recorded in all counties in the States of North Carolina

 

2

 

and South Carolina in which this Eighty-fifth Supplemental Indenture is to be recorded and (ii) filed and indexed and cross-indexed in the real property records in each of such counties;

 

WHEREAS, by the Original Mortgage, the Company covenanted that it would execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Mortgage and to make subject to the lien of the Original Mortgage any property thereafter acquired intended to be subject to the lien thereof; and

 

WHEREAS, for said purposes, among others, the Company executed and delivered to the Trustees the following supplemental indentures:

 

	
Designation
    	
 
    	
Dated as of
    
	
First Supplemental Indenture
    	
 
    	
January 1, 1949
    
	
Second Supplemental Indenture
    	
 
    	
December 1, 1949
    
	
Third Supplemental Indenture
    	
 
    	
February 1, 1951
    
	
Fourth Supplemental Indenture
    	
 
    	
October 1, 1952
    
	
Fifth Supplemental Indenture
    	
 
    	
March 1, 1958
    
	
Sixth Supplemental Indenture
    	
 
    	
April 1, 1960
    
	
Seventh Supplemental Indenture
    	
 
    	
November 1, 1961
    
	
Eighth Supplemental Indenture
    	
 
    	
July 1, 1964
    
	
Ninth Supplemental Indenture
    	
 
    	
April 1, 1966
    
	
Tenth Supplemental Indenture
    	
 
    	
October 1, 1967
    
	
Eleventh Supplemental Indenture
    	
 
    	
October 1, 1968
    
	
Twelfth Supplemental Indenture
    	
 
    	
January 1, 1970
    
	
Thirteenth Supplemental Indenture
    	
 
    	
August 1, 1970
    
	
Fourteenth Supplemental Indenture
    	
 
    	
January 1, 1971
    
	
Fifteenth Supplemental Indenture
    	
 
    	
October 1, 1971
    
	
Sixteenth Supplemental Indenture
    	
 
    	
May 1, 1972
    
	
Seventeenth Supplemental Indenture
    	
 
    	
May 1, 1973
    
	
Eighteenth Supplemental Indenture
    	
 
    	
November 1, 1973
    
	
Nineteenth Supplemental Indenture
    	
 
    	
May 1, 1974
    
	
Twentieth Supplemental Indenture
    	
 
    	
December 1, 1974
    
	
Twenty-first Supplemental Indenture
    	
 
    	
April 15, 1975
    
	
Twenty-second Supplemental Indenture
    	
 
    	
October 1, 1977
    
	
Twenty-third Supplemental Indenture
    	
 
    	
June 1, 1978
    
	
Twenty-fourth Supplemental Indenture
    	
 
    	
May 15, 1979
    
	
Twenty-fifth Supplemental Indenture
    	
 
    	
November 1, 1979
    
	
Twenty-sixth Supplemental Indenture
    	
 
    	
November 1, 1979
    
	
Twenty-seventh Supplemental Indenture
    	
 
    	
April 1, 1980
    
	
Twenty-eighth Supplemental Indenture
    	
 
    	
October 1, 1980
    
	
Twenty-ninth Supplemental Indenture
    	
 
    	
October 1, 1980
    
	
Thirtieth Supplemental Indenture
    	
 
    	
December 1, 1982
    
	
Thirty-first Supplemental Indenture
    	
 
    	
March 15, 1983
    
	
Thirty-second Supplemental Indenture
    	
 
    	
March 15, 1983
    
	
Thirty-third Supplemental Indenture
    	
 
    	
December 1, 1983
    
	
Thirty-fourth Supplemental Indenture
    	
 
    	
December 15, 1983
    
	
Thirty-fifth Supplemental Indenture
    	
 
    	
April 1, 1984
    
	
Thirty-sixth Supplemental Indenture
    	
 
    	
June 1, 1984
    
	
Thirty-seventh Supplemental Indenture
    	
 
    	
June 1, 1984
    
	
Thirty-eighth Supplemental Indenture
    	
 
    	
June 1, 1984
    
	
Thirty-ninth Supplemental Indenture
    	
 
    	
April 1, 1985
    
	
Fortieth Supplemental Indenture
    	
 
    	
October 1, 1985
    
	
Forty-first Supplemental Indenture
    	
 
    	
March 1, 1986
    
	
Forty-second Supplemental Indenture
    	
 
    	
July 1, 1986
    

 

3

 

	
Designation
    	
 
    	
Dated as of
    
	
Forty-third Supplemental Indenture
    	
 
    	
January 1, 1987
    
	
Forty-fourth Supplemental Indenture
    	
 
    	
December 1, 1987
    
	
Forty-fifth Supplemental Indenture
    	
 
    	
September 1, 1988
    
	
Forty-sixth Supplemental Indenture
    	
 
    	
April 1, 1989
    
	
Forty-seventh Supplemental Indenture
    	
 
    	
August 1, 1989
    
	
Forty-eighth Supplemental Indenture
    	
 
    	
November 15, 1990
    
	
Forty-ninth Supplemental Indenture
    	
 
    	
November 15, 1990
    
	
Fiftieth Supplemental Indenture
    	
 
    	
February 15, 1991
    
	
Fifty-first Supplemental Indenture
    	
 
    	
April 1, 1991
    
	
Fifty-second Supplemental Indenture
    	
 
    	
September 15, 1991
    
	
Fifty-third Supplemental Indenture
    	
 
    	
January 1, 1992
    
	
Fifty-fourth Supplemental Indenture
    	
 
    	
April 15, 1992
    
	
Fifty-fifth Supplemental Indenture
    	
 
    	
July 1, 1992
    
	
Fifty-sixth Supplemental Indenture
    	
 
    	
October 1, 1992
    
	
Fifty-seventh Supplemental Indenture
    	
 
    	
February 1, 1993
    
	
Fifty-eighth Supplemental Indenture
    	
 
    	
March 1, 1993
    
	
Fifty-ninth Supplemental Indenture
    	
 
    	
July 1, 1993
    
	
Sixtieth Supplemental Indenture
    	
 
    	
July 1, 1993
    
	
Sixty-first Supplemental Indenture
    	
 
    	
August 15, 1993
    
	
Sixty-second Supplemental Indenture
    	
 
    	
January 15, 1994
    
	
Sixty-third Supplemental Indenture
    	
 
    	
May 1, 1994
    
	
Sixty-fourth Supplemental Indenture
    	
 
    	
August 15, 1997
    
	
Sixty-fifth Supplemental Indenture
    	
 
    	
April 1, 1998
    
	
Sixty-sixth Supplemental Indenture
    	
 
    	
March 1, 1999
    
	
Sixty-seventh Supplemental Indenture
    	
 
    	
March 1, 2000
    
	
Sixty-eighth Supplemental Indenture
    	
 
    	
April 1, 2000
    
	
Sixty-ninth Supplemental Indenture
    	
 
    	
June 1, 2000
    
	
Seventieth Supplemental Indenture
    	
 
    	
July 1, 2000
    
	
Seventy-first Supplemental Indenture
    	
 
    	
February 1, 2002
    
	
Seventy-second Supplemental Indenture
    	
 
    	
September 1, 2003
    
	
Seventy-third Supplemental Indenture
    	
 
    	
March 1, 2005
    
	
Seventy-fourth Supplemental Indenture
    	
 
    	
November 1, 2005
    
	
Seventy-fifth Supplemental Indenture
    	
 
    	
March 1, 2008
    
	
Seventy-sixth Supplemental Indenture
    	
 
    	
January 1, 2009
    
	
Seventy-seventh Supplemental Indenture
    	
 
    	
June 18, 2009
    
	
Seventy-eighth Supplemental Indenture
    	
 
    	
September 1, 2011
    
	
Seventy-ninth Supplemental Indenture
    	
 
    	
May 1, 2012
    
	
Eightieth Supplemental Indenture
    	
 
    	
March 1, 2013
    
	
Eighty-first Supplemental Indenture
    	
 
    	
June 1, 2013
    
	
Eighty-second Supplemental Indenture
    	
 
    	
March 1, 2014
    
	
Eighty-third Supplemental Indenture
    	
 
    	
November 1, 2014
    
	
Eighty-fourth Supplemental Indenture
    	
 
    	
August 1, 2015
    

 

which supplemental indentures (other than said Sixty-fifth Supplemental Indenture and said Sixty-seventh Supplemental Indenture) were recorded in various Counties in the States of North Carolina and South Carolina, and were indexed and cross-indexed in the real and chattel mortgage or security interest records in various Counties in the States of North Carolina and South Carolina; and

 

WHEREAS, no recording or filing of said Sixty-fifth Supplemental Indenture in any manner or place is required by law in order to fully preserve and protect the security of the bondholders and all rights of the Trustees or is necessary to make effective the lien intended to be created by the Original Mortgage or said Sixty-fifth Supplemental Indenture; and said Sixty-seventh Supplemental Indenture was recorded only in Rowan County, North Carolina to make subject to the lien of the Mortgage certain

 

4

 

property of the Company located in said County intended to be subject to the lien of the Original Mortgage, all in accordance with Section 42 of the Mortgage; and

 

WHEREAS, the Original Mortgage and said First through Eighty-fourth Supplemental Indentures (other than said Sixty-fifth and said Sixty-seventh Supplemental Indentures) were or are to be recorded in all Counties in the States of North Carolina and South Carolina in which this Eighty-fifth Supplemental Indenture is to be recorded; and

 

WHEREAS, in addition to the property described in the Original Mortgage, as heretofore supplemented, the Company has acquired certain other property, rights and interests in property; and

 

WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Original Mortgage, as from time to time then supplemented, the following series of First Mortgage Bonds:

 

	
Series
    	
 
    	
Principal
   Amount
   Issued
    	
 
    	
Principal
   Amount
   Outstanding
    	
 
    
	
3-3/4%   Series due 1965
    	
 
    	
$
    	
46,000,000
    	
 
    	
None
    	
 
    
	
3-1/8%   Series due 1979
    	
 
    	
20,100,000
    	
 
    	
None
    	
 
    
	
3-1/4%   Series due 1979
    	
 
    	
43,930,000
    	
 
    	
None
    	
 
    
	
2-7/8%   Series due 1981
    	
 
    	
15,000,000
    	
 
    	
None
    	
 
    
	
3-1/2%   Series due 1982
    	
 
    	
20,000,000
    	
 
    	
None
    	
 
    
	
4-1/8%   Series due 1988
    	
 
    	
20,000,000
    	
 
    	
None
    	
 
    
	
4-7/8%   Series due 1990
    	
 
    	
25,000,000
    	
 
    	
None
    	
 
    
	
4-1/2%   Series due 1991
    	
 
    	
25,000,000
    	
 
    	
None
    	
 
    
	
4-1/2%   Series due 1994
    	
 
    	
30,000,000
    	
 
    	
None
    	
 
    
	
5-1/8%   Series due 1996
    	
 
    	
30,000,000
    	
 
    	
None
    	
 
    
	
6-3/8%   Series due 1997
    	
 
    	
40,000,000
    	
 
    	
None
    	
 
    
	
6-7/8%   Series due 1998
    	
 
    	
40,000,000
    	
 
    	
None
    	
 
    
	
8-3/4%   Series due 2000
    	
 
    	
40,000,000
    	
 
    	
None
    	
 
    
	
8-3/4%   Series due August 1, 2000
    	
 
    	
50,000,000
    	
 
    	
None
    	
 
    
	
7-3/8%   Series due 2001
    	
 
    	
65,000,000
    	
 
    	
None
    	
 
    
	
7-3/4%   Series due October 1, 2001
    	
 
    	
70,000,000
    	
 
    	
None
    	
 
    
	
7-3/4%   Series due 2002
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
7-3/4% Series due   2003
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-1/8%   Series due November 1, 2003
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
9-3/4%   Series due 2004
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
11-1/8%   Series due 1994
    	
 
    	
50,000,000
    	
 
    	
None
    	
 
    
	
11%   Series due April 15, 1984
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-1/2%   Series due October 1, 2007
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
9-1/4%   Series due June 1, 2008
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
10-1/2%   Series due May 15, 2009
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
12-1/4%   Series due November 1, 2009
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series A
    	
 
    	
63,000,000
    	
 
    	
None
    	
 
    
	
14-1/8% Series due   April 1, 1987
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series B
    	
 
    	
50,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series C
    	
 
    	
6,000,000
    	
 
    	
None
    	
 
    
	
11-5/8%   Series due December 1, 1992
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series D
    	
 
    	
48,485,000
    	
 
    	
None
    	
 
    
	
Pollution Control   Series E
    	
 
    	
5,970,000
    	
 
    	
None
    	
 
    
	
12-7/8%   Series due December 1, 2013
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series F
    	
 
    	
34,700,000
    	
 
    	
None
    	
 
    
	
13-3/8%   Series due April 1, 1994
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series G
    	
 
    	
122,615,000
    	
 
    	
None
    	
 
    
							

 

5

 

	
Series
    	
 
    	
Principal
   Amount
   Issued
    	
 
    	
Principal
   Amount
   Outstanding
    	
 
    
	
Pollution   Control Series H
    	
 
    	
70,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series I
    	
 
    	
70,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series J
    	
 
    	
6,385,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series K
    	
 
    	
2,580,000
    	
 
    	
None
    	
 
    
	
Extendible   Series due April 1, 1995
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
11-3/4%   Series due October 1, 2015
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-7/8%   Series due March 1, 2016
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-1/8%   Series due July 1, 1996
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
8-1/2%   Series due January 1, 2017
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
9.174%   Series due December 1, 1992
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
9%   Series due September 1, 1993
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
9.60%   Series due April 1, 1991
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Secured Medium-Term   Notes, Series A
    	
 
    	
200,000,000
    	
 
    	
None
    	
 
    
	
8-1/8%   Series due November 15, 1993
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Secured   Medium-Term Notes, Series B
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-7/8%   Series due February 15, 2021
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
9%   Series due April 1, 2022
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
8-5/8%   Series due September 15, 2021
    	
 
    	
100,000,000
    	
 
    	
$
    	
100,000,000
    	
 
    
	
5.20%   Series due January 1, 1995
    	
 
    	
125,000,000
    	
 
    	
None
    	
 
    
	
7-7/8%   Series due April 15, 2004
    	
 
    	
150,000,000
    	
 
    	
None
    	
 
    
	
8.20%   Series due July 1, 2022
    	
 
    	
150,000,000
    	
 
    	
None
    	
 
    
	
6-3/4% Series due   October 1, 2002
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
6-1/8%   Series due February 1, 2000
    	
 
    	
150,000,000
    	
 
    	
None
    	
 
    
	
7-1/2%   Series due March 1, 2023
    	
 
    	
150,000,000
    	
 
    	
None
    	
 
    
	
5-3/8%   Series due July 1, 1998
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
Secured   Medium-Term Notes, Series C
    	
 
    	
200,000,000
    	
 
    	
None
    	
 
    
	
6-7/8%   Series due August 15, 2023
    	
 
    	
100,000,000
    	
 
    	
None
    	
 
    
	
5-7/8%   Series due January 15, 2004
    	
 
    	
150,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series L
    	
 
    	
72,600,000
    	
 
    	
72,600,000
    	
 
    
	
Pollution   Control Series M
    	
 
    	
50,000,000
    	
 
    	
50,000,000
    	
 
    
	
6.80%   Series due August 15, 2007
    	
 
    	
200,000,000
    	
 
    	
None
    	
 
    
	
5.95% Senior   Note Series due March 1, 2009
    	
 
    	
400,000,000
    	
 
    	
None
    	
 
    
	
7.50% Senior   Note Series due April 1, 2005
    	
 
    	
300,000,000
    	
 
    	
None
    	
 
    
	
Pollution   Control Series N
    	
 
    	
67,300,000
    	
 
    	
67,300,000
    	
 
    
	
Pollution   Control Series O
    	
 
    	
55,640,000
    	
 
    	
55,640,000
    	
 
    
	
Pollution   Control Series P
    	
 
    	
50,000,000
    	
 
    	
50,000,000
    	
 
    
	
Pollution   Control Series Q
    	
 
    	
50,000,000
    	
 
    	
50,000,000
    	
 
    
	
Pollution   Control Series R
    	
 
    	
45,600,000
    	
 
    	
45,600,000
    	
 
    
	
Pollution   Control Series S
    	
 
    	
41,700,000
    	
 
    	
41,700,000
    	
 
    
	
Pollution   Control Series T
    	
 
    	
50,000,000
    	
 
    	
50,000,000
    	
 
    
	
Pollution   Control Series U
    	
 
    	
50,000,000
    	
 
    	
50,000,000
    	
 
    
	
Pollution   Control Series V
    	
 
    	
87,400,000
    	
 
    	
87,400,000
    	
 
    
	
Pollution   Control Series W
    	
 
    	
48,485,000
    	
 
    	
None
    	
 
    
	
5.125%   Series due 2013
    	
 
    	
400,000,000
    	
 
    	
None
    	
 
    
	
6.125%   Series due 2033
    	
 
    	
200,000,000
    	
 
    	
200,000,000
    	
 
    
	
5.15%   Series due 2015
    	
 
    	
300,000,000
    	
 
    	
None
    	
 
    
	
5.70%   Series due 2035
    	
 
    	
200,000,000
    	
 
    	
200,000,000
    	
 
    
	
5.25%   Series due 2015
    	
 
    	
400,000,000
    	
 
    	
400,000,000
    	
 
    
	
6.30%   Series due 2038
    	
 
    	
325,000,000
    	
 
    	
325,000,000
    	
 
    
	
5.30%   Series due 2019
    	
 
    	
600,000,000
    	
 
    	
600,000,000
    	
 
    
	
3.00%   Series due 2021
    	
 
    	
500,000,000
    	
 
    	
500,000,000
    	
 
    
	
2.80%   Series due 2022
    	
 
    	
500,000,000
    	
 
    	
500,000,000
    	
 
    
	
4.10%   Series due 2042
    	
 
    	
500,000,000
    	
 
    	
500,000,000
    	
 
    
							

 

6

 

	
Series
    	
 
    	
Principal
   Amount
   Issued
    	
 
    	
Principal
   Amount
   Outstanding
    	
 
    
	
4.10%   Series due 2043
    	
 
    	
500,000,000
    	
 
    	
500,000,000
    	
 
    
	
Pollution   Control Series X
    	
 
    	
48,485,000
    	
 
    	
48,485,000
    	
 
    
	
Floating Rate   Series due 2017
    	
 
    	
250,000,000
    	
 
    	
250,000,000
    	
 
    
	
4.375%   Series due 2044
    	
 
    	
400,000,000
    	
 
    	
400,000,000
    	
 
    
	
Second Floating   Rate Series due 2017
    	
 
    	
200,000,000
    	
 
    	
200,000,000
    	
 
    
	
4.15%   Series due 2044
    	
 
    	
500,000,000
    	
 
    	
500,000,000
    	
 
    

 

which bonds are herein sometimes referred to as bonds of the First through Ninety-sixth Series, respectively; and

 

WHEREAS, Section 8 of the Original Mortgage, as heretofore supplemented, provides that the form of each series of bonds (other than the First Series) issued thereunder and of the coupons to be attached to coupon bonds of such series shall be established by Resolution of the Board of Directors of the Company and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Mortgage as said Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Mortgage; and

 

WHEREAS, Section 120 of the Original Mortgage, as heretofore supplemented, provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Mortgage, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or the Company may cure any ambiguity contained therein, or in any supplemental indenture, or may establish the terms and provisions of any series of bonds other than said First Series, by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to record in all of the states in which any property at the time subject to the lien of the Mortgage shall be situated; and

 

WHEREAS, the Company now desires to create two new series of bonds and to add to its covenants and agreements contained in the Original Mortgage, as heretofore supplemented, certain other covenants and agreements to be observed by it; and

 

WHEREAS, the execution and delivery by the Company of this Eighty-fifth Supplemental Indenture, and the terms of the bonds of the Ninety-seventh Series and Ninety-eighth Series, hereinafter referred to, have been duly authorized by the Board of Directors of the Company by appropriate resolutions of said Board of Directors;

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

That the Company, in consideration of the premises and of One Dollar to it duly paid by the Trustees at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustees and in order further to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Mortgage, according to their tenor and effect and the performance of all the provisions of the Original Mortgage (including any instruments supplemental thereto and any modification made as in the Mortgage provided) and of said bonds, hereby grants, bargains, sells,

 

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releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Original Mortgage, as heretofore supplemented) unto The Bank of New York Mellon and Tina D. Gonzalez, as Trustees under the Mortgage, and to their successor or successors in said trust, and to said Trustees and their successors and assigns forever, all the following described properties of the Company:

 

All electric generating plants, stations, transmission lines, and electric distribution systems, including permanent improvements, extensions or additions to or about such electrical plants, stations, transmission lines and distribution systems of the Company; all dams, power houses, power sites, buildings, generators, reservoirs, pipe lines, flumes, structures and works; all substations, transformers, switchboards, towers, poles, wires, insulators, and other appliances and equipment, and the Company’s rights or interests in the land upon which the same are situated, and all other property, real or personal, forming a part of or appertaining to, or used, occupied or enjoyed in connection with said generating plants, stations, transmission lines, and distribution systems; together with all rights of way, easements, permits, privileges, franchises and rights for or related to the construction, maintenance, or operation thereof, through, over, under or upon any public streets or highways, or the public lands of the United States, or of any State or other lands; and all water appropriations and water rights, permits and privileges; including all property, real, personal, and mixed, acquired by the Company after the date of the execution and delivery of the Original Mortgage, in addition to property covered by the above-mentioned supplemental indentures (except any herein or in the Original Mortgage, as heretofore supplemented, expressly excepted), now owned or, subject to the provisions of Section 87 of the Mortgage, hereafter acquired by the Company and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing or of any general description contained in this Eighty-fifth Supplemental Indenture) all lands, power sites, flowage rights, water rights, flumes, raceways, dams, rights of way and roads; all steam and power houses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, steam heat and hot water plants, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, street and interurban railway systems, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, electric and gas machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam, heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture, chattels and choses in action; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Original Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Original Mortgage, as heretofore supplemented, described.

 

TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in any wise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Original Mortgage, as heretofore supplemented) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity,

 

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which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof.

 

IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 87 of the Original Mortgage, as heretofore supplemented, all the property, rights, and franchises acquired by the Company after the date hereof (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted) shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof and the lien of the Original Mortgage as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby.

 

PROVIDED THAT the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of this Eighty-fifth Supplemental Indenture and from the lien and operation of the Mortgage, namely: (1) cash, shares of stock and obligations (including bonds, notes and other securities) not hereafter specifically pledged, paid, deposited or delivered under the Mortgage or covenanted so to be; (2) merchandise, equipment, materials or supplies held for the purpose of sale in the usual course of business and fuel, oil and similar materials and supplies consumable in the operation of any properties of the Company; rolling stock, buses, motor coaches, vehicles and automobiles; (3) bills, notes and accounts receivable, and all contracts, leases and operating agreements not specifically pledged under the Mortgage or this Eighty-fifth Supplemental Indenture or covenanted so to be; (4) electric energy and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; (5) any property which does not constitute Property Additions, Funded Property or Funded Cash (each as defined in the Original Mortgage as supplemented) and (6) any property and rights heretofore released from the lien of the Original Mortgage, as heretofore supplemented; provided, however, that the property and rights expressly excepted from the lien and operation of the Original Mortgage, as heretofore supplemented, and this Eighty-fifth Supplemental Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that either or both of the Trustees or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XII of the Mortgage by reason of the occurrence of a Default as defined in said Article XII.

 

TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto the Trustees, their successors and assigns forever.

 

IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Original Mortgage, as heretofore supplemented, this Eighty-fifth Supplemental Indenture being supplemental to the Original Mortgage.

 

AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Mortgage, as heretofore supplemented, shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of the Company and the Trustees and the beneficiaries of the trust with respect to said property, and to the Trustees and their successors as Trustees of said property in the same manner and with the same effect as if the said property had been owned by the Company at the time of the execution of the Original Mortgage and had been specifically and at length described in and conveyed to the Trustees by the Original Mortgage as a part of the property therein stated to be conveyed.

 

9

 

The Company further covenants and agrees to and with the Trustees and their successor or successors in such trust under the Mortgage as follows:

 

ARTICLE I

NINETY-SEVENTH SERIES OF BONDS

 

SECTION 1.  (A) There shall be a series of bonds designated “3.25% Series due 2025” (herein sometimes referred to as the “Ninety-seventh Series”), each of which shall also bear the descriptive title “First Mortgage Bond”, and the form thereof, which shall be established by Resolution of the Board of Directors of the Company, shall contain suitable provisions with respect to the matters hereinafter in this Section specified. Bonds of the Ninety-seventh Series shall be initially issued in the aggregate principal amount of $500,000,000, mature on August 15, 2025, bear interest at the rate of 3.25% per annum, payable from August 13, 2015, if the date of said bonds is on or prior to February 15, 2016, or, if the date of said bonds is after February 15, 2016, from the February 15 or August 15 next preceding the date of said bonds, semi-annually on February 15 and August 15 of each year commencing on February 15, 2016, be issued as fully registered bonds in the denominations of Two Thousand Dollars and in any integral multiple of One Thousand Dollars in excess thereof and be dated as in Section 10 of the Mortgage provided, the principal of and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts.

 

Interest on bonds of the Ninety-seventh Series will be computed on the basis of a 360-day year comprised of twelve 30-day months. If a due date for the payment of interest, principal or any Redemption Price (as defined below) on the bonds of the Ninety-seventh Series, falls on a day that is not a Business Day, then the payment will be made on the next succeeding Business Day, and no interest will accrue on the amounts payable for the period from and after the original due date and until the next Business Day. The term “Business Day” means any day other than a Saturday or Sunday or day on which banking institutions in The City of New York are required or authorized to close.

 

(B)                               At any time on or after May 15, 2025, the bonds of the Ninety-seventh Series shall be redeemable at the option of the Company, or with the Proceeds of Released Property (as contemplated by clause (4) of Section 61 of the Mortgage), in whole or in part and from time to time, prior to maturity, upon notice as provided in Sections 52 and 54 of the Mortgage (given by mail or, if the bonds of the Ninety-seventh Series are represented by one or more Ninety-seventh Series Global Bonds (as hereinafter defined),  given in accordance with the procedures of DTC (as hereinafter defined), not less than 30 days and not more than 90 days prior to the date fixed for redemption), at a redemption price equal to 100% of the principal amount of the bonds then Outstanding to be redeemed, plus in each case accrued but unpaid interest on such principal amount to, but excluding, such date fixed for redemption. At any time prior to May 15, 2025, the bonds of the Ninety-seventh Series shall be redeemable at the option of the Company, or with the Proceeds of Released Property (as contemplated by clause (4) of Section 61 of the Mortgage), in whole or in part and from time to time, upon notice as provided in Sections 52 and 54 of the Mortgage (given by mail or, if the bonds of the Ninety-seventh Series are represented by one or more Ninety-seventh Series Global Bonds (as hereinafter defined),  given in accordance with the procedures of DTC (as hereinafter defined), not less than 30 days and not more than 90 days prior to the date fixed for redemption (together with the date fixed for redemption referred to in the preceding sentence, each a “Redemption Date”)), at a redemption price (hereinafter sometimes referred to as the “Make-Whole Redemption Price” and, together with the redemption price referred to in the preceding sentence, each a “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the bonds then Outstanding to be redeemed and (ii) 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 such bonds matured on May

 

10

 

15, 2025, computed by discounting such payments, in each case, to such Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus in either case accrued but unpaid interest on such principal amount to, but excluding, such Redemption Date. On and after any Redemption Date, if sufficient cash shall have been deposited with the Corporate Trustee (and/or if the Company has irrevocably directed the Corporate Trustee to apply, from moneys held by it available to be used for the redemption of bonds, sufficient cash) to redeem all of the bonds of the Ninety-seventh Series called for redemption, interest on the bonds of the Ninety-seventh Series, or the portions of them so called for redemption, shall cease to accrue.

 

“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.

 

“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 the Ninety-seventh Series to be redeemed (assuming, for this purpose, that the bonds of the Ninety-seventh Series matured on May 15, 2025), 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 Ninety-seventh 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.

 

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

 

“Reference Treasury Dealer” means each of Credit Suisse Securities (USA) LLC, RBC Capital Markets, LLC, UBS Securities LLC, a Primary Treasury Dealer (as defined below) selected by SunTrust Robinson Humphrey, Inc. and a Primary Treasury Dealer selected by Wells Fargo 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 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.

 

In case of a redemption of only a part of the bonds of the Ninety-seventh Series, absent any written agreement of the registered holders of all of the bonds of the Ninety-seventh Series satisfactory to the Corporate Trustee specifying the particular bonds of the Ninety-seventh Series to be redeemed, the Corporate Trustee shall draw by lot, according to such method as it shall deem proper in its discretion, the particular bonds of the Ninety-seventh Series, or portions of them, to be redeemed, provided, that if the bonds of the Ninety-seventh Series are represented by one or more Ninety-seventh Series Global Bonds, interests in the bonds of the Ninety-seventh Series shall be selected for redemption by DTC in accordance with its standard procedures therefor.

 

11

 

In case of any bonds of the Ninety-seventh Series called for redemption in whole or in part prior to May 15, 2025, the Company shall deliver to the Corporate Trustee promptly upon its calculation thereof, but in any event prior to the related Redemption Date, a Treasurer’s Certificate setting forth its calculation of the Make-Whole Redemption Price applicable to such redemption. The Corporate Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in relying upon the Company’s calculation of any Make-Whole Redemption Price of the bonds of the Ninety-seventh Series.

 

In lieu of stating any Make-Whole Redemption Price, notices of redemption of the bonds of the Ninety-seventh Series called for redemption in whole or in part shall state substantially the following: “The redemption price of the bonds to be redeemed shall equal the greater of (i) 100% of the principal amount of the bonds then Outstanding to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would be due if such bonds matured on May 15, 2025, computed by discounting such payments, in each case, to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Eighty-fifth Supplemental Indenture) plus 20 basis points, plus in each case accrued but unpaid interest on the principal amount thereof called for redemption to, but excluding, the Redemption Date.”

 

Except as provided herein, Article X of the Mortgage shall apply to redemptions of bonds of the Ninety-seventh Series.

 

(C)                               Subject to the provisions set forth below with respect to Ninety-seventh Series Global Bonds, at the option of the registered owner, any bonds of the Ninety-seventh Series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations. The bonds of the Ninety-seventh Series may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage or agreement with respect thereto.

 

Subject to the provisions set forth below with respect to Ninety-seventh Series Global Bonds, bonds of the Ninety-seventh Series shall be transferable upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York.

 

Upon any exchange or transfer of bonds of the Ninety-seventh Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Company, as provided in Section 12 of the Mortgage, but the Company hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of said Series.

 

(D)                               The bonds of the Ninety-seventh Series shall be issued in registered form without coupons and shall be issued initially in the form of one or more global bonds (each such global bond hereinafter sometimes referred to as a “Ninety-seventh Series Global Bond”) to or on behalf of The Depository Trust Company (hereinafter sometimes referred to as “DTC”), as depositary therefor, and registered in the name of such depositary or its nominee. Any bonds of the Ninety-seventh Series to be issued or transferred to, or to be held by or on behalf of DTC as such depositary or such nominee (or any successor of such depositary or nominee) for such purpose shall bear the depositary legends as required or otherwise agreed to by the Corporate Trustee and the Company, and in the case of a successor depositary, such legend or legends as such depositary and/or the Company shall require and to which each shall agree, in each case such agreement to be confirmed in writing to the Corporate Trustee. Notwithstanding

 

12

 

any other provision in this Eighty-fifth Supplemental Indenture, payment of interest on the bonds of the Ninety-seventh Series may be made at the option of the Company by check mailed to the registered holders thereof at their registered address, and, with respect to a Ninety-seventh Series Global Bond, the Company may make payments of principal of, any Redemption Price and interest on such Ninety-seventh Series Global Bond pursuant to and in accordance with such arrangements as are agreed upon by the Company and the depositary for such Ninety-seventh Series Global Bond.

 

Except under the limited circumstances described below, bonds of the Ninety-seventh Series represented by a Ninety-seventh Series Global Bond or Bonds shall not be exchangeable for, and shall not otherwise be issuable as, bonds of the Ninety-seventh Series in definitive form. The Ninety-seventh Series Global Bond or Bonds described in this Section 1(D) 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.

 

A Ninety-seventh Series Global Bond shall be exchangeable for bonds of the Ninety-seventh 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 Ninety-seventh Series Global Bond 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 Securities Exchange Act of 1934, as amended, 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) a Default has occurred and is continuing with respect to the bonds of the Ninety-seventh Series or (iii) the Company in its sole discretion, and subject to the procedures of the depositary, determines that such Ninety-seventh Series Global Bond shall be so exchangeable. Any Ninety-seventh Series Global Bond that is exchangeable pursuant to the preceding sentence shall be exchangeable for bonds of the Ninety-seventh Series registered in such names as the depositary shall direct.

 

In any exchange provided in the preceding paragraph the Company shall execute, and the Corporate Trustee, upon receipt of a Company request for the authentication and delivery of bonds of the Ninety-seventh Series in the form of definitive certificates in exchange in whole or in part for such Ninety-seventh Series Global Bond or Bonds, shall authenticate and deliver, without service charge, to each person specified by the depositary, bonds of the Ninety-seventh Series in the form of definitive certificates of like tenor and terms in an aggregate principal amount equal to the principal amount of such Ninety-seventh Series Global Bond or the aggregate principal amount of such Ninety-seventh Series Global Bonds in exchange for such Ninety-seventh Series Global Bond or Bonds. Upon the exchange of the entire principal amount of a Ninety-seventh Series Global Bond for bonds of the Ninety-seventh Series in the form of definitive certificates, such Ninety-seventh Series Global Bond shall be canceled by the Corporate Trustee. Bonds of the Ninety-seventh Series issued in exchange for a Ninety-seventh Series Global Bond shall be registered in such names and in such authorized denominations as the depositary for such Ninety-seventh Series Global Bond, acting pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Corporate Trustee. Provided that the Company and the Corporate Trustee have so agreed, the Corporate Trustee shall deliver such bonds of the Ninety-seventh Series to the persons in whose names the bonds of the Ninety-seventh Series are so to be registered.

 

Any endorsement of a Ninety-seventh Series Global Bond to reflect the principal amount thereof, or any increase or decrease in such principal amount, shall be made in such manner and by such person or persons as shall be specified in or pursuant to any applicable letter of representations or other arrangement entered into with, or procedures of, the depositary with respect to such Ninety-seventh Series Global Bond or in a Company request. Subject to the terms of the Mortgage, the Corporate Trustee shall deliver and redeliver any such Ninety-seventh Series Global Bond in the manner and upon instructions given by

 

13

 

the person or persons specified in or pursuant to any applicable letter of representations or other arrangement entered into with, or procedures of, the depositary with respect to such Ninety-seventh Series Global Bond or in any applicable Company request. If a Company request is so delivered, any instructions by the Company with respect to such Ninety-seventh Series Global Bond contained therein shall be in writing but need not be accompanied by or contained in a Treasurer’s Certificate and need not be accompanied by an opinion of counsel.

 

The depositary or, if there be one, its nominee, shall be the holder of a Ninety-seventh Series Global Bond for all purposes under the Mortgage and the bonds of the Ninety-seventh Series and beneficial owners with respect to such Ninety-seventh Series Global Bond shall hold their interests pursuant to applicable procedures of such depositary. The Company, the Corporate Trustee, any bond registrar, any paying agent and any other agent of the Company or the Corporate Trustee shall be entitled to deal with such depositary for all purposes of the Mortgage relating to such Ninety-seventh Series Global Bond (including the payment of principal, the Redemption Price, if applicable, and interest and the giving of instructions or directions by or to the beneficial owners of such Ninety-seventh Series Global Bond as the sole holder of such Ninety-seventh Series Global Bond and shall have no obligations to the beneficial owners thereof (including any direct or indirect participants in such depositary)). None of the Company, the Corporate Trustee, any paying agent, any bond registrar or any other agent of the Company or the Corporate Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a beneficial owner in or pursuant to any applicable letter of representations or other arrangement or transaction entered into with, or procedures of, the depositary with respect to such Ninety-seventh Series Global Bond or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any acts or omissions of a depositary.

 

ARTICLE II
 NINETY-EIGHTH SERIES OF BONDS

 

SECTION 2.  (A) There shall be a series of bonds designated “4.20% Series due 2045” (herein sometimes referred to as the “Ninety-eighth Series”), each of which shall also bear the descriptive title “First Mortgage Bond”, and the form thereof, which shall be established by Resolution of the Board of Directors of the Company, shall contain suitable provisions with respect to the matters hereinafter in this Section specified. Bonds of the Ninety-eighth Series shall be initially issued in the aggregate principal amount of $700,000,000, mature on August 15, 2045, bear interest at the rate of 4.20% per annum, payable from August 13, 2015, if the date of said bonds is on or prior to February 15, 2016, or, if the date of said bonds is after February 15, 2016, from the February 15 or August 15 next preceding the date of said bonds, semi-annually on February 15 and August 15 of each year commencing on February 15, 2016, be issued as fully registered bonds in the denominations of Two Thousand Dollars and in any integral multiple of One Thousand Dollars in excess thereof and be dated as in Section 10 of the Mortgage provided, the principal of and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts.

 

Interest on bonds of the Ninety-eighth Series will be computed on the basis of a 360-day year comprised of twelve 30-day months. If a due date for the payment of interest, principal or any Redemption Price (as defined below) on the bonds of the Ninety-eighth Series, falls on a day that is not a Business Day, then the payment will be made on the next succeeding Business Day, and no interest will accrue on the amounts payable for the period from and after the original due date and until the next Business Day. The term “Business Day” means any day other than a Saturday or Sunday or day on which banking institutions in The City of New York are required or authorized to close.

 

14

 

(B)                               At any time on or after February 15, 2045, the bonds of the Ninety-eighth Series shall be redeemable at the option of the Company, or with the Proceeds of Released Property (as contemplated by clause (4) of Section 61 of the Mortgage), in whole or in part and from time to time, prior to maturity, upon notice as provided in Sections 52 and 54 of the Mortgage (given by mail or, if the bonds of the Ninety-eighth Series are represented by one or more Ninety-eighth Series Global Bonds (as hereinafter defined), given in accordance with the procedures of DTC, not less than 30 days and not more than 90 days prior to the date fixed for redemption), at a redemption price equal to 100% of the principal amount of the bonds then Outstanding to be redeemed, plus in each case accrued but unpaid interest on such principal amount to, but excluding, such date fixed for redemption. At any time prior to February 15, 2045, the bonds of the Ninety-eighth Series shall be redeemable at the option of the Company, or with the Proceeds of Released Property (as contemplated by clause (4) of Section 61 of the Mortgage), in whole or in part and from time to time, upon notice as provided in Sections 52 and 54 of the Mortgage (given by mail or, if the bonds of the Ninety-eighth Series are represented by one or more Ninety-eighth Series Global Bonds (as hereinafter defined), given in accordance with the procedures of DTC, not less than 30 days and not more than 90 days prior to the date fixed for redemption (together with the date fixed for redemption referred to in the preceding sentence, each a “Redemption Date”)), at a redemption price (hereinafter sometimes referred to as the “Make-Whole Redemption Price” and, together with the redemption price referred to in the preceding sentence, each a “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the bonds then Outstanding to be redeemed and (ii) 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 such bonds matured on February 15, 2045, computed by discounting such payments, in each case, to such Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, plus in either case accrued but unpaid interest on such principal amount to, but excluding, such Redemption Date. On and after any Redemption Date, if sufficient cash shall have been deposited with the Corporate Trustee (and/or if the Company has irrevocably directed the Corporate Trustee to apply, from moneys held by it available to be used for the redemption of bonds, sufficient cash) to redeem all of the bonds of the Ninety-eighth Series called for redemption, interest on the bonds of the Ninety-eighth Series, or the portions of them so called for redemption, shall cease to accrue.

 

“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.

 

“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 the Ninety-eighth Series to be redeemed (assuming, for this purpose, that the bonds of the Ninety-eighth Series matured on February 15, 2045), 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 Ninety-eighth 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.

 

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

 

“Reference Treasury Dealer” means each of Credit Suisse Securities (USA) LLC, RBC Capital Markets, LLC, UBS Securities LLC, a Primary Treasury Dealer (as defined below) selected by SunTrust

 

15

 

Robinson Humphrey, Inc. and a Primary Treasury Dealer selected by Wells Fargo 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 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.

 

In case of a redemption of only a part of the bonds of the Ninety-eighth Series, absent any written agreement of the registered holders of all of the bonds of the Ninety-eighth Series satisfactory to the Corporate Trustee specifying the particular bonds of the Ninety-eighth Series to be redeemed, the Corporate Trustee shall draw by lot, according to such method as it shall deem proper in its discretion, the particular bonds of the Ninety-eighth Series, or portions of them, to be redeemed, provided, that if the bonds of the Ninety-eighth Series are represented by one or more Ninety-eighth Series Global Bonds, interests in the bonds of the Ninety-eighth Series shall be selected for redemption by DTC in accordance with its standard procedures therefor.

 

In case of any bonds of the Ninety-eighth Series called for redemption in whole or in part prior to February 15, 2045, the Company shall deliver to the Corporate Trustee promptly upon its calculation thereof, but in any event prior to the related Redemption Date, a Treasurer’s Certificate setting forth its calculation of the Make-Whole Redemption Price applicable to such redemption. The Corporate Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in relying upon the Company’s calculation of any Make-Whole Redemption Price of the bonds of the Ninety-eighth Series.

 

In lieu of stating any Make-Whole Redemption Price, notices of redemption of the bonds of the Ninety-eighth Series called for redemption in whole or in part shall state substantially the following: “The redemption price of the bonds to be redeemed shall equal the greater of (i) 100% of the principal amount of the bonds then Outstanding to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon being redeemed that would be due if such bonds matured on February 15, 2045, computed by discounting such payments, in each case, to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Eighty-fifth Supplemental Indenture) plus 20 basis points, plus in each case accrued but unpaid interest on the principal amount thereof called for redemption to, but excluding, the Redemption Date.”

 

Except as provided herein, Article X of the Mortgage shall apply to redemptions of bonds of the Ninety-eighth Series.

 

(C)                               Subject to the provisions set forth below with respect to Ninety-eighth Series Global Bonds, at the option of the registered owner, any bonds of the Ninety-eighth Series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations. The bonds of the Ninety-eighth Series may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage or agreement with respect thereto.

 

16

 

Subject to the provisions set forth below with respect to Ninety-eighth Series Global Bonds, bonds of the Ninety-eighth Series shall be transferable upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York.

 

Upon any exchange or transfer of bonds of the Ninety-eighth Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Company, as provided in Section 12 of the Mortgage, but the Company hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of said Series.

 

(D)                               The bonds of the Ninety-eighth Series shall be issued in registered form without coupons and shall be issued initially in the form of one or more global bonds (each such global bond hereinafter sometimes referred to as a “Ninety-eighth Series Global Bond”) to or on behalf of The Depository Trust Company (hereinafter sometimes referred to as “DTC”), as depositary therefor, and registered in the name of such depositary or its nominee. Any bonds of the Ninety-eighth Series to be issued or transferred to, or to be held by or on behalf of DTC as such depositary or such nominee (or any successor of such depositary or nominee) for such purpose shall bear the depositary legends as required or otherwise agreed to by the Corporate Trustee and the Company, and in the case of a successor depositary, such legend or legends as such depositary and/or the Company shall require and to which each shall agree, in each case such agreement to be confirmed in writing to the Corporate Trustee. Notwithstanding any other provision in this Eighty-fifth Supplemental Indenture, payment of interest on the bonds of the Ninety-eighth Series may be made at the option of the Company by check mailed to the registered holders thereof at their registered address, and, with respect to a Ninety-eighth Series Global Bond, the Company may make payments of principal of, any Redemption Price and interest on such Ninety-eighth Series Global Bond pursuant to and in accordance with such arrangements as are agreed upon by the Company and the depositary for such Ninety-eighth Series Global Bond.

 

Except under the limited circumstances described below, bonds of the Ninety-eighth Series represented by a Ninety-eighth Series Global Bond or Bonds shall not be exchangeable for, and shall not otherwise be issuable as, bonds of the Ninety-eighth Series in definitive form. The Ninety-eighth Series Global Bond or Bonds described in this Section 2(D) 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.

 

A Ninety-eighth Series Global Bond shall be exchangeable for bonds of the Ninety-eighth 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 Ninety-eighth Series Global Bond 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 Securities Exchange Act of 1934, as amended, 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) a Default has occurred and is continuing with respect to the bonds of the Ninety-eighth Series or (iii) the Company in its sole discretion, and subject to the procedures of the depositary, determines that such Ninety-eighth Series Global Bond shall be so exchangeable. Any Ninety-eighth Series Global Bond that is exchangeable pursuant to the preceding sentence shall be exchangeable for bonds of the Ninety-eighth Series registered in such names as the depositary shall direct.

 

In any exchange provided in the preceding paragraph the Company shall execute, and the Corporate Trustee, upon receipt of a Company request for the authentication and delivery of bonds of the

 

17

 

Ninety-eighth Series in the form of definitive certificates in exchange in whole or in part for such Ninety-eighth Series Global Bond or Bonds, shall authenticate and deliver, without service charge, to each person specified by the depositary, bonds of the Ninety-eighth Series in the form of definitive certificates of like tenor and terms in an aggregate principal amount equal to the principal amount of such Ninety-eighth Series Global Bond or the aggregate principal amount of such Ninety-eighth Series Global Bonds in exchange for such Ninety-eighth Series Global Bond or Bonds. Upon the exchange of the entire principal amount of a Ninety-eighth Series Global Bond for bonds of the Ninety-eighth Series in the form of definitive certificates, such Ninety-eighth Series Global Bond shall be canceled by the Corporate Trustee. Bonds of the Ninety-eighth Series issued in exchange for a Ninety-eighth Series Global Bond shall be registered in such names and in such authorized denominations as the depositary for such Ninety-eighth Series Global Bond, acting pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Corporate Trustee. Provided that the Company and the Corporate Trustee have so agreed, the Corporate Trustee shall deliver such bonds of the Ninety-eighth Series to the persons in whose names the bonds of the Ninety-eighth Series are so to be registered.

 

Any endorsement of a Ninety-eighth Series Global Bond to reflect the principal amount thereof, or any increase or decrease in such principal amount, shall be made in such manner and by such person or persons as shall be specified in or pursuant to any applicable letter of representations or other arrangement entered into with, or procedures of, the depositary with respect to such Ninety-eighth Series Global Bond or in a Company request. Subject to the terms of the Mortgage, the Corporate Trustee shall deliver and redeliver any such Ninety-eighth Series Global Bond in the manner and upon instructions given by the person or persons specified in or pursuant to any applicable letter of representations or other arrangement entered into with, or procedures of, the depositary with respect to such Ninety-eighth Series Global Bond or in any applicable Company request. If a Company request is so delivered, any instructions by the Company with respect to such Ninety-eighth Series Global Bond contained therein shall be in writing but need not be accompanied by or contained in a Treasurer’s Certificate and need not be accompanied by an opinion of counsel.

 

The depositary or, if there be one, its nominee, shall be the holder of a Ninety-eighth Series Global Bond for all purposes under the Mortgage and the bonds of the Ninety-eighth Series and beneficial owners with respect to such Ninety-eighth Series Global Bond shall hold their interests pursuant to applicable procedures of such depositary. The Company, the Corporate Trustee, any bond registrar, any paying agent and any other agent of the Company or the Corporate Trustee shall be entitled to deal with such depositary for all purposes of the Mortgage relating to such Ninety-eighth Series Global Bond (including the payment of principal, the Redemption Price, if applicable, and interest and the giving of instructions or directions by or to the beneficial owners of such Ninety-eighth Series Global Bond as the sole holder of such Ninety-eighth Series Global Bond and shall have no obligations to the beneficial owners thereof (including any direct or indirect participants in such depositary)). None of the Company, the Corporate Trustee, any paying agent, any bond registrar or any other agent of the Company or the Corporate Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a beneficial owner in or pursuant to any applicable letter of representations or other arrangement or transaction entered into with, or procedures of, the depositary with respect to such Ninety-eighth Series Global Bond or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any acts or omissions of a depositary.

 

ARTICLE III

DIVIDEND COVENANT

 

SECTION 3.  The Company covenants and agrees that, so long as any of the bonds of the Ninety-seventh Series or Ninety-eighth Series remain Outstanding, the Company will not declare or pay any

 

18

 

dividends upon its common stock (other than dividends in common stock) or make any other distributions on its common stock or purchase or otherwise retire any shares of its common stock, unless immediately after such declaration, payment, purchase, retirement or distribution (hereinafter in this Section referred to as “Restricted Payments”), and giving effect thereto, the amount arrived at by adding:

 

(a)                                 the aggregate amount of all such Restricted Payments (other than the dividend of fifty cents ($.50) per share declared on December 8, 1948 and paid on February 1, 1949 to holders of common stock) made by the Company during the period from December 31, 1948, to and including the effective date of the Restricted Payment in respect of which the determination is being made, plus

 

(b)                                 an amount equal to the aggregate amount of cumulative dividends for such period (whether or not paid) on all preferred stock of the Company from time to time outstanding during such period, at the rate or rates borne by such preferred stock, plus

 

(c)                                  an amount equal to the amount, if any, by which fifteen per centum (15%) of the Gross Operating Revenues of the Company for such period shall exceed the aggregate amount during such period expended and/or accrued on its books for maintenance and/or appropriated on its books out of income for property retirement, in each case in respect of the Mortgaged and Pledged Property and/or automotive equipment used primarily in the electric utility business of the Company (but excluding any provisions for amortization of any amounts included in utility plant acquisition adjustment accounts or utility plant adjustment accounts), will not exceed the amount of the aggregate net income of the Company for said period available for dividends (computed and ascertained in accordance with sound accounting practice, on a cumulative basis, including the making of proper deductions for any deficits occurring during any part of such period), plus $3,000,000.

 

The Company further covenants and agrees that not later than May 1 of each year beginning with the year 2016 it will furnish to the Corporate Trustee a Treasurer’s Certificate stating whether or not the Company has fully observed the restrictions imposed upon it by the covenant contained in this Section 3.

 

The terms (i) “dividend” shall be interpreted so as to include distributions and (ii) “common stock” and “shares of common stock” shall be interpreted so as to include membership interests.

 

ARTICLE IV
 CERTAIN PROVISIONS WITH RESPECT TO FUTURE ADVANCES

 

SECTION 4.  Upon the filing of this Eighty-fifth Supplemental Indenture for record in all counties in which the Mortgaged and Pledged Property is located, and until a further indenture or indentures supplemental to the Mortgage shall be executed and delivered by the Company to the Trustees pursuant to authorization by the Board of Directors of the Company and filed for record in all counties in which the Mortgaged and Pledged Property is located further increasing or decreasing the amount of future advances which may be secured by the Mortgage, the Mortgage may secure future advances and other indebtedness and sums not to exceed in the aggregate $2,500,000,000, in addition to $7,343,725,000 in aggregate principal amount of bonds to be Outstanding at the time of such filing, and all such advances and other indebtedness and sums shall be secured by the Mortgage, equally, to the same extent and with the same priority, as the amount originally advanced on the security of the Original Mortgage, namely, $46,000,000, and such advances and other indebtedness and sums may be made or become owing and may be repaid and again made or become owing and the amount so stated shall be considered only as the total amount of such advances and other indebtedness and sums as may be outstanding at one time.

 

19

 

ARTICLE V
 MISCELLANEOUS PROVISIONS

 

SECTION 5.  Subject to any amendments provided for in this Eighty-fifth Supplemental Indenture, the terms defined in the Original Mortgage, as heretofore supplemented, shall, for all purposes of this Eighty-fifth Supplemental Indenture, have the meanings specified in the Original Mortgage, as heretofore supplemented.

 

SECTION 6.  The Trustees hereby accept the trusts herein declared, provided, created or supplemented and agree to perform the same upon the terms and conditions herein and in the Original Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions:

 

The Trustees shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Eighty-fifth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. In general each and every term and condition contained in Article XVI of the Original Mortgage, as heretofore supplemented, shall apply to and form part of this Eighty-fifth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Eighty-fifth Supplemental Indenture.

 

SECTION 7.  Subject to the provisions of Article XV and Article XVI of the Mortgage, whenever in this Eighty-fifth Supplemental Indenture either of the parties hereto is named or referred to, this shall be deemed to include the successors or assigns of such party, and all the covenants and agreements in this Eighty-fifth Supplemental Indenture contained by or on behalf of the Company or by or on behalf of the Trustees shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not.

 

SECTION 8.  Nothing in this Eighty-fifth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the Outstanding bonds and coupons, any right, remedy or claim under or by reason of this Eighty-fifth Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Eighty-fifth Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the Outstanding bonds and coupons.

 

SECTION 9.  This Eighty-fifth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

 

[SIGNATURES ON THE FOLLOWING PAGES]

 

20

 

The laws of South Carolina provide that in any real estate foreclosure proceeding a defendant against whom a personal judgment is taken or asked may within thirty days after the sale of the mortgaged property apply to the court for an order of appraisal. The statutory appraisal value as approved by the court would be substituted for the high bid and may decrease the amount of any deficiency owing in connection with the transaction. THE COMPANY HEREBY WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL RIGHTS, WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL BE APPLIED TO THE DEBT REGARDLESS OF ANY APPRAISED VALUE OF THE MORTGAGED PROPERTY.

 

IN WITNESS WHEREOF, Duke Energy Progress, LLC has caused its name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents or its Treasurer and its company seal to be attested by its Secretary or one of its Assistant Secretaries, and The Bank of New York Mellon has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents, Senior Associates or Associates and its corporate seal to be attested by one of its Vice Presidents, Senior Associates or Associates, and Tina D. Gonzalez has hereunto set her hand and seal, all as of the day and year first above written.

 

	
 
    	
 
    	
DUKE ENERGY   PROGRESS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Stephen G.   De May
    
	
 
    	
 
    	
 
    	
Stephen G. De   May
    
	
 
    	
 
    	
 
    	
Senior Vice   President and Treasurer
    
	
 
    	
 
    	
 
    
	
Executed, sealed and   delivered by DUKE
    	
 
    	
 
    
	
ENERGY PROGRESS, LLC by   Stephen G.
    	
 
    	
 
    
	
De May, one of its   Senior Vice Presidents, and
    	
 
    	
 
    
	
attested by Robert T.   Lucas III, one of its
    	
 
    	
 
    
	
Assistant Secretaries,   in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
ATTEST:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Robert T.   Lucas III
    
	
 
    	
 
    	
Robert T. Lucas   III
    
	
 
    	
 
    	
Assistant   Secretary
    
	
 
    	
 
    	
 
    
	
/s/ Delcia S. Dunlap
    	
 
    	
 
    
	
Delcia S. Dunlap
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Jacqueline Williams
    	
 
    	
 
    
	
Jacqueline Williams
    	
 
    	
 
    

 

[COMPANY’S SIGNATURE PAGE]

 

[EIGHTY-FIFTH SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 1, 2015

TO THE DUKE ENERGY PROGRESS, LLC MORTGAGE AND DEED OF TRUST

DATED AS OF MAY 1, 1940]

 

 

	
 
    	
 
    	
THE BANK OF NEW YORK   MELLON,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Francine Kincaid
    
	
 
    	
 
    	
 
    	
Francine Kincaid
    
	
 
    	
 
    	
 
    	
Vice President
    
	
 
    	
 
    	
 
    
	
Executed, sealed and   delivered
    	
 
    	
 
    
	
by THE BANK OF NEW YORK
    	
 
    	
 
    
	
MELLON, as Trustee, by   Francine Kincaid,
    	
 
    	
 
    
	
one of its Vice   Presidents,
    	
 
    	
 
    
	
and attested by Stacey   Poindexter,
    	
 
    	
 
    
	
one of its Vice   Presidents, in the
    	
 
    	
 
    
	
presence of:
    	
 
    	
ATTEST:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Stacey Poindexter
    
	
 
    	
 
    	
Stacey Poindexter
    
	
 
    	
 
    	
Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Christopher Grose
    	
 
    	
 
    
	
Christopher Grose
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Arsala Kidwai
    	
 
    	
 
    
	
Arsala Kidwai
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Tina D. Gonzalez
    
	
 
    	
 
    	
TINA D. GONZALEZ, as Trustee
    
	
 
    	
 
    	
 
    
	
Executed, sealed and   delivered by TINA
    	
 
    	
 
    
	
D. GONZALEZ, as   Trustee, in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Scott Williams
    	
 
    	
 
    
	
Scott Williams
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Geraldine Creswell
    	
 
    	
 
    
	
Geraldine Creswell
    	
 
    	
 
    

 

[TRUSTEES’ SIGNATURE PAGE]

 

[EIGHTY- FIFTH SUPPLEMENTAL INDENTURE DATED AS OF AUGUST 1, 2015

TO THE CAROLINA POWER & LIGHT COMPANY MORTGAGE AND DEED OF TRUST

DATED AS OF MAY 1, 1940]

 

 

	
STATE OF NORTH   CAROLINA
    	
)
    
	
 
    	
) SS.:
    
	
COUNTY OF   MECKLENBURG
    	
)
    

 

This 13th day of August, A.D. 2015, personally came before me, Patricia C. Ross, a Notary Public, STEPHEN G. DE MAY, who, being by me duly sworn, acknowledged before me that he is Senior Vice President and Treasurer of DUKE ENERGY PROGRESS, LLC, and that the seal affixed to the foregoing instrument in writing is the company seal of said company, and that said writing was signed and sealed by him in behalf of said limited liability company by its authority duly given. And the said STEPHEN G. DE MAY acknowledged the said writing to be the act and deed of said limited liability company.

 

On the 13th day of August, in the year of 2015, before me personally came STEPHEN G. DE MAY, to me known, who, being by me duly sworn, did depose and say that he resides at 2023 Queens Road W, Charlotte, NC 28207-2707; that he is Senior Vice President and Treasurer of DUKE ENERGY PROGRESS, LLC, one of the limited liability companies described in and which executed the above instrument; that he knows the seal of said limited liability company; that the seal affixed to said instrument is such company seal; that it was so affixed by order of the Board of Directors of said limited liability company, and that he signed his name thereto by like order.

 

	
 
    	
/s/ Patricia C. Ross
    
	
 
    	
Patricia C. Ross
    
	
 
    	
NOTARY PUBLIC,   State of North Carolina
    
	
 
    	
Mecklenburg   County
    
	
 
    	
My Commission   Expires: October 17, 2019
    

 

	
STATE OF NORTH   CAROLINA
    	
)
    
	
 
    	
) SS.:
    
	
COUNTY OF   MECKLENBURG
    	
)
    

 

This 13th day of August, A.D. 2015, personally came before me, Patricia C. Ross, a Notary Public, ROBERT T. LUCAS III, who, being by me duly sworn, acknowledged before me that he is the Assistant Secretary of DUKE ENERGY PROGRESS, LLC, and that the seal affixed to the foregoing instrument in writing is the company seal of said company, and that said writing was signed and attested by him on behalf of said limited liability company by its authority duly given.

 

On the 13th day of August, in the year of 2015, before me personally came ROBERT T. LUCAS III, to me known, who, being by me duly sworn, did depose and say that he resides at 1650 Myers Park Drive, Charlotte, NC 28207; that he is the Assistant Secretary of DUKE ENERGY PROGRESS, LLC, one of the limited liability companies described in and which executed the above instrument; that he knows the seal of said limited liability company; that the seal affixed to said instrument is such company seal; that it was so affixed by order of the Board of Directors of said limited liability company, and that he signed and attested his name thereto by the authority of the Board of Directors of said limited liability company.

 

	
 
    	
/s/ Patricia C.   Ross
    
	
 
    	
Patricia C. Ross
    
	
 
    	
NOTARY PUBLIC,   State of North Carolina
    
	
 
    	
Mecklenburg   County
    
	
 
    	
My Commission   Expires: October 17, 2019
    

 

 

	
STATE OF NEW YORK
    	
)
    
	
 
    	
) SS.:
    
	
COUNTY OF NEW YORK
    	
)
    

 

On August 11th, 2015 before me, the undersigned, personally appeared FRANCINE KINCAID, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she signed the same in her capacity as a Vice President of THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee, and that by her signature on the instrument, the individual, or the person upon behalf of which the individual acted, signed the instrument.

 

I, Christopher J. Traina, a Notary Public of the State of New York, certify that FRANCINE KINCAID personally came before me this day and acknowledged that she is a Vice President of THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee, and that she, as Vice President, being authorized to do so, signed the foregoing on behalf of the corporation.

 

Witness my hand and official seal, this the 11th day of August, 2015.

 

	
 
    	
/s/ Christopher J.   Traina
    
	
 
    	
Christopher J. Traina
    
	
 
    	
Notary Public, State of   New York
    
	
 
    	
No. 01TR6297825
    
	
 
    	
Qualified in Queens   County
    
	
 
    	
Certified in New York   County
    
	
 
    	
Commission Expires   March 03, 2018
    

 

	
STATE OF NEW YORK
    	
)
    
	
 
    	
) SS.:
    
	
COUNTY OF NEW YORK
    	
)
    

 

On August 11th, 2015 before me, the undersigned, personally appeared STACEY POINDEXTER, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she signed and attested the same in her capacity as a Vice President of THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee, and that by her signature on the instrument, the individual, or the person upon behalf of which the individual acted, signed and attested the instrument.

 

I, Christopher J. Traina, a Notary Public of the State of New York, certify that STACEY POINDEXTER personally came before me this day and acknowledged that she is a Vice President of THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee, and that she, as Vice President, being authorized to do so, signed and attested the foregoing on behalf of the corporation.

 

Witness my hand and official seal, this the 11th day of August, 2015.

 

	
 
    	
/s/ Christopher J.   Traina
    
	
 
    	
Christopher J. Traina
    
	
 
    	
Notary Public, State of   New York
    
	
 
    	
No. 01TR6297825
    
	
 
    	
Qualified in Queens   County
    
	
 
    	
Certified in New York   County
    
	
 
    	
Commission Expires   March 03, 2018
    

 

 

	
STATE OF FLORIDA
    	
)
    
	
 
    	
) SS.:
    
	
COUNTY OF DUVAL
    	
)
    

 

On August 11, 2015 before me, the undersigned, personally appeared TINA D. GONZALEZ, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity as successor Individual Trustee, and that by her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

I, David J. Clendenin, a Notary Public of the State of Florida, do hereby certify that TINA D. GONZALEZ, as successor Individual Trustee, personally appeared before me this day and acknowledged the due execution of the foregoing instrument.

 

Witness my hand and official seal, this the 11th day of August, 2015.

 

 

	
 
    	
/s/ David J. Clendenin
    
	
 
    	
David J. Clendenin
    
	
 
    	
Notary Public, State of   Florida
    
	
 
    	
No. EE 118551
    
	
 
    	
My Commission expires: September 3,   2015
    

 

 

THIS SECURITY IS A NINETY-SEVENTH SERIES GLOBAL BOND WITHIN THE MEANING OF THE MORTGAGE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE MORTGAGE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO DUKE ENERGY PROGRESS, LLC (FORMERLY DUKE ENERGY PROGRESS, INC.) 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.

 

THIS FIRST MORTGAGE BOND, 3.25% SERIES DUE 2025 MAY, UNDER CONDITIONS PROVIDED IN THE MORTGAGE, BE EXCHANGED FOR FIRST MORTGAGE BONDS, 3.25% SERIES DUE 2025 IN THE FORM OF DEFINITIVE CERTIFICATES OF LIKE TENOR AND OF AN EQUAL AGGREGATE PRINCIPAL AMOUNT, IN AUTHORIZED DENOMINATIONS, REGISTERED IN THE NAMES OF SUCH PERSONS AS THE DEPOSITARY SHALL INSTRUCT THE CORPORATE TRUSTEE. ANY SUCH EXCHANGE SHALL BE MADE UPON RECEIPT BY THE CORPORATE TRUSTEE OF A REQUEST BY DUKE ENERGY PROGRESS, LLC THEREFOR AND A WRITTEN INSTRUCTION FROM THE DEPOSITARY SETTING FORTH THE NAME OR NAMES IN WHICH THE CORPORATE TRUSTEE IS TO REGISTER SUCH FIRST MORTGAGE BONDS, 3.25% SERIES DUE 2025 IN THE FORM OF DEFINITIVE CERTIFICATES.

 

	
REGISTERED BOND
    	
CUSIP: 26442U   AA2
    

 

DUKE ENERGY PROGRESS, LLC

First Mortgage Bond,

3.25% Series due 2025

 

	
No. R-1
    	
$500,000,000
    

 

 

DUKE ENERGY PROGRESS, LLC, a North Carolina limited liability company (the “Company”), for value received, hereby promises to pay to

 

Cede & Co.

 

or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York,

 

FIVE HUNDRED MILLION DOLLARS ($500,000,000)

 

on August 15, 2025, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts, and to pay to the registered owner hereof interest thereon from August 13, 2015, if the date of this bond is on or prior to February 15, 2016, or, if the date of this bond is after February 15, 2016, from the February 15 or August 15 next preceding the date of this bond, at the rate of 3.25% per annum (with interest on overdue principal and overdue installments of interest payable in accordance with the terms of the Mortgage (as hereinafter defined)) in like coin or currency semi-annually at said office or agency, on February 15 and August 15 in each year until the principal of this bond shall have become due and payable (each an “Interest Payment Date”). If the date of this bond is on or prior to February 15, 2016, such payments shall commence on February 15, 2016.  Interest on this bond will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Any interest on this bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name this bond (or one or more predecessor bonds) is registered at the close of business on the tenth calendar day next preceding such Interest Payment Date (i.e., February 5 and August 5, respectively) (each a “Regular Record Date”), provided, however, that so long as this bond is registered in the name of The Depository Trust Company, a New York corporation, its nominee or a successor depositary, the Regular Record Date shall be the close of business on the business day (as defined in the Eighty-fifth Supplemental Indenture mentioned below) immediately preceding such Interest Payment Date.

 

Any interest on this bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the registered holder on the relevant Regular Record Date solely by virtue of such holder having been such holder; and such interest, together with any interest thereon as provided in the Mortgage (collectively, “Defaulted Interest”), may be paid by the Company, at its election in each case, as provided in Subsection A or B below:

 

A.            The Company may elect to make payment of any Defaulted Interest on the bonds of this series (as defined below) to the persons in whose names such bonds (or their respective predecessor bonds) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner (a “Special Record Date”). The Company shall notify the Corporate Trustee referred to below in writing of the amount of Defaulted Interest proposed to be paid on each bond and the date of the proposed payment (which date shall be such as will enable the Corporate Trustee to comply with the next two sentences hereof), and at the same time the Company shall deposit with the Corporate Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Corporate Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this Subsection provided and not to be deemed otherwise part of the trust estate or trust moneys. Thereupon the Corporate Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 or less than 10 days prior to the date of the proposed payment and not less than

 

 

10 days after the receipt by the Corporate Trustee of the notice of the proposed payment. The Corporate Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each holder of a bond of this series at such holder’s address as it appears in the bond register not less than 10 days prior to such Special Record Date. The Corporate Trustee may, in its discretion in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper approved by the Company in each place of payment of the bonds of this series, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the bonds of this series (or their respective predecessor bonds) are registered on such Special Record Date and shall no longer be payable pursuant to the following Subsection B.

 

B.            The Company may make payment of any Defaulted Interest on the bonds of this series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such bonds may be listed and upon such notice as may be required by such exchange, if, after notice given by the Company to the Corporate Trustee of the proposed payment pursuant to this Subsection, such payment shall be deemed practicable by the Corporate Trustee.

 

Subject to the foregoing, each bond of this series delivered under the Mortgage hereinafter mentioned upon transfer of or in exchange for or in lieu of any other bond of this series shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other bond.

 

This bond is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 3.25% Series due 2025 (the “bonds of this series”), all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust (together with any indenture supplemental thereto, including the Eighty-fifth Supplemental Indenture, dated as of August 1, 2015, the “Mortgage”), dated as of May 1, 1940, executed by the Company to The Bank of New York Mellon (formerly Irving Trust Company), as Corporate Trustee, and Tina D. Gonzalez (successor to Frederick G. Herbst), as Individual Trustee. Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustees in respect thereof, the duties and immunities of the Trustees and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage may be modified or altered by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding under the Mortgage and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected, then also by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding of each series of bonds so to be affected (excluding in any case bonds disqualified from voting by reason of the Company’s interest therein as provided in the Mortgage); provided that, without the consent of the holder hereof, no such modification or alteration, among other things, shall impair or affect the right of the holder to receive payment of the principal of and interest on this bond, on or after the respective due dates expressed herein, or permit the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of a lien on the mortgaged and pledged property.

 

 

The principal hereof may be declared or may become due prior to the maturity date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a default as in the Mortgage provided.

 

This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his 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 fully registered temporary or definitive bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. The Company and the Trustees may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes.

 

In the manner prescribed in the Mortgage, any bonds of this series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.

 

At any time on or after May 15, 2025, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, prior to maturity, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption), at a redemption price equal to 100% of the principal amount of the bonds then outstanding to be redeemed, plus in each case accrued interest on such principal amount to, but excluding, such date fixed for redemption. At any time prior to May 15, 2025, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption (together with the date fixed for redemption referred to in the preceding sentence, each a “Redemption Date”)), at a redemption price (together with the redemption price referred to in the preceding sentence, each a “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the bonds then outstanding to be redeemed and (ii) 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 such bonds matured on May 15, 2025, computed by discounting such payments, in each case, to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Eighty-fifth Supplemental Indenture mentioned above) plus 20 basis points, plus in either case accrued but unpaid interest on such principal amount to, but excluding, the Redemption Date.  On and after any Redemption Date, if sufficient cash shall have been deposited with Corporate Trustee (and/or if the Company has irrevocably directed the Corporate Trustee to apply, from moneys held by it available to be used for the redemption of bonds, sufficient cash) to redeem all of the bonds of this series called for redemption, interest on the bonds of this series, or the portions of them so called for redemption, shall cease to accrue. Reference is made to said Eighty-fifth Supplemental Indenture for the full terms of the redemption provisions applicable to the bonds of this series.

 

No recourse shall be had for the payment of the principal or any Redemption Price of or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage.

 

 

This bond shall not become obligatory until The Bank of New York Mellon (formerly Irving Trust Company), the Corporate Trustee under the Mortgage, or its successor thereunder, shall have signed the form of certificate endorsed hereon.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, DUKE ENERGY PROGRESS, LLC has caused this bond to be signed in its name with the manual or facsimile signature of its President or one of its Vice Presidents and its company seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries.

 

	
 
    	
 
    	
DUKE ENERGY PROGRESS,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DATED: August 13,   2015
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Stephen G. De May
    
	
 
    	
 
    	
 
    	
Senior Vice President   and Treasurer
    
	
 
    	
 
    	
 
    
	
ATTEST:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Robert T. Lucas III
    	
 
    	
 
    
	
Assistant Secretary
    	
 
    	
 
    

 

 

CORPORATE TRUSTEE’S CERTIFICATE

 

This bond is one of the bonds, of the series herein designated, described or provided for in the within-mentioned Mortgage.

 

	
 
    	
THE BANK OF NEW YORK MELLON,
    
	
 
    	
Corporate   Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Officer
    

 

 

THIS SECURITY IS A NINETY-EIGHTH SERIES GLOBAL BOND WITHIN THE MEANING OF THE MORTGAGE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE MORTGAGE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO DUKE ENERGY PROGRESS, LLC (FORMERLY DUKE ENERGY PROGRESS, INC.) 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.

 

THIS FIRST MORTGAGE BOND, 4.20% SERIES DUE 2045 MAY, UNDER CONDITIONS PROVIDED IN THE MORTGAGE, BE EXCHANGED FOR FIRST MORTGAGE BONDS, 4.20% SERIES DUE 2045 IN THE FORM OF DEFINITIVE CERTIFICATES OF LIKE TENOR AND OF AN EQUAL AGGREGATE PRINCIPAL AMOUNT, IN AUTHORIZED DENOMINATIONS, REGISTERED IN THE NAMES OF SUCH PERSONS AS THE DEPOSITARY SHALL INSTRUCT THE CORPORATE TRUSTEE. ANY SUCH EXCHANGE SHALL BE MADE UPON RECEIPT BY THE CORPORATE TRUSTEE OF A REQUEST BY DUKE ENERGY PROGRESS, LLC THEREFOR AND A WRITTEN INSTRUCTION FROM THE DEPOSITARY SETTING FORTH THE NAME OR NAMES IN WHICH THE CORPORATE TRUSTEE IS TO REGISTER SUCH FIRST MORTGAGE BONDS, 4.20% SERIES DUE 2045 IN THE FORM OF DEFINITIVE CERTIFICATES.

 

	
REGISTERED BOND
    	
CUSIP: 26442U   AB0
    

 

DUKE ENERGY PROGRESS, LLC

First Mortgage Bond,

4.20% Series due 2045

 

	
No. R-1
    	
$500,000,000
    

 

 

DUKE ENERGY PROGRESS, LLC, a North Carolina limited liability company (the “Company”), for value received, hereby promises to pay to

 

Cede & Co.

 

or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York,

 

FIVE HUNDRED MILLION DOLLARS ($500,000,000)

 

on August 15, 2045, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts, and to pay to the registered owner hereof interest thereon from August 13, 2015, if the date of this bond is on or prior to February 15, 2016, or, if the date of this bond is after February 15, 2016, from the February 15 or August 15 next preceding the date of this bond, at the rate of 4.20% per annum (with interest on overdue principal and overdue installments of interest payable in accordance with the terms of the Mortgage (as hereinafter defined)) in like coin or currency semi-annually at said office or agency, on February 15 and August 15 in each year until the principal of this bond shall have become due and payable (each an “Interest Payment Date”). If the date of this bond is on or prior to February 15, 2016, such payments shall commence on February 15, 2016.  Interest on this bond will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Any interest on this bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name this bond (or one or more predecessor bonds) is registered at the close of business on the tenth calendar day next preceding such Interest Payment Date (i.e., February 5 and August 5, respectively) (each a “Regular Record Date”), provided, however, that so long as this bond is registered in the name of The Depository Trust Company, a New York corporation, its nominee or a successor depositary, the Regular Record Date shall be the close of business on the business day (as defined in the Eighty-fifth Supplemental Indenture mentioned below) immediately preceding such Interest Payment Date.

 

Any interest on this bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the registered holder on the relevant Regular Record Date solely by virtue of such holder having been such holder; and such interest, together with any interest thereon as provided in the Mortgage (collectively, “Defaulted Interest”), may be paid by the Company, at its election in each case, as provided in Subsection A or B below:

 

A.            The Company may elect to make payment of any Defaulted Interest on the bonds of this series (as defined below) to the persons in whose names such bonds (or their respective predecessor bonds) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner (a “Special Record Date”). The Company shall notify the Corporate Trustee referred to below in writing of the amount of Defaulted Interest proposed to be paid on each bond and the date of the proposed payment (which date shall be such as will enable the Corporate Trustee to comply with the next two sentences hereof), and at the same time the Company shall deposit with the Corporate Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Corporate Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this Subsection provided and not to be deemed otherwise part of the trust estate or trust moneys. Thereupon the Corporate Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 or less than 10 days prior to the date of the proposed payment and not less than

 

 

10 days after the receipt by the Corporate Trustee of the notice of the proposed payment. The Corporate Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each holder of a bond of this series at such holder’s address as it appears in the bond register not less than 10 days prior to such Special Record Date. The Corporate Trustee may, in its discretion in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper approved by the Company in each place of payment of the bonds of this series, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the bonds of this series (or their respective predecessor bonds) are registered on such Special Record Date and shall no longer be payable pursuant to the following Subsection B.

 

B.            The Company may make payment of any Defaulted Interest on the bonds of this series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such bonds may be listed and upon such notice as may be required by such exchange, if, after notice given by the Company to the Corporate Trustee of the proposed payment pursuant to this Subsection, such payment shall be deemed practicable by the Corporate Trustee.

 

Subject to the foregoing, each bond of this series delivered under the Mortgage hereinafter mentioned upon transfer of or in exchange for or in lieu of any other bond of this series shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other bond.

 

This bond is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 4.20% Series due 2045 (the “bonds of this series”), all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust (together with any indenture supplemental thereto, including the Eighty-fifth Supplemental Indenture, dated as of August 1, 2015, the “Mortgage”), dated as of May 1, 1940, executed by the Company to The Bank of New York Mellon (formerly Irving Trust Company), as Corporate Trustee, and Tina D. Gonzalez (successor to Frederick G. Herbst), as Individual Trustee. Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustees in respect thereof, the duties and immunities of the Trustees and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage may be modified or altered by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding under the Mortgage and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected, then also by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding of each series of bonds so to be affected (excluding in any case bonds disqualified from voting by reason of the Company’s interest therein as provided in the Mortgage); provided that, without the consent of the holder hereof, no such modification or alteration, among other things, shall impair or affect the right of the holder to receive payment of the principal of and interest on this bond, on or after the respective due dates expressed herein, or permit the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of a lien on the mortgaged and pledged property.

 

 

The principal hereof may be declared or may become due prior to the maturity date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a default as in the Mortgage provided.

 

This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his 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 fully registered temporary or definitive bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. The Company and the Trustees may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes.

 

In the manner prescribed in the Mortgage, any bonds of this series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.

 

At any time on or after February 15, 2045, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, prior to maturity, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption), at a redemption price equal to 100% of the principal amount of the bonds then outstanding to be redeemed, plus in each case accrued interest on such principal amount to, but excluding, such date fixed for redemption. At any time prior to February 15, 2045, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption (together with the date fixed for redemption referred to in the preceding sentence, each a “Redemption Date”)), at a redemption price (together with the redemption price referred to in the preceding sentence, each a “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the bonds then outstanding to be redeemed and (ii) 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 such bonds matured on February 15, 2045, computed by discounting such payments, in each case, to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Eighty-fifth Supplemental Indenture mentioned above) plus 20 basis points, plus in either case accrued but unpaid interest on such principal amount to, but excluding, the Redemption Date. On and after any Redemption Date, if sufficient cash shall have been deposited with Corporate Trustee (and/or if the Company has irrevocably directed the Corporate Trustee to apply, from moneys held by it available to be used for the redemption of bonds, sufficient cash) to redeem all of the bonds of this series called for redemption, interest on the bonds of this series, or the portions of them so called for redemption, shall cease to accrue. Reference is made to said Eighty-fifth Supplemental Indenture for the full terms of the redemption provisions applicable to the bonds of this series.

 

No recourse shall be had for the payment of the principal or any Redemption Price of or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage.

 

 

This bond shall not become obligatory until The Bank of New York Mellon (formerly Irving Trust Company), the Corporate Trustee under the Mortgage, or its successor thereunder, shall have signed the form of certificate endorsed hereon.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, DUKE ENERGY PROGRESS, LLC has caused this bond to be signed in its name with the manual or facsimile signature of its President or one of its Vice Presidents and its company seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries.

 

	
 
    	
 
    	
DUKE ENERGY PROGRESS,   LLC
    
	
 
    	
 
    	
 
    
	
DATED: August 13,   2015
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Stephen G. De May
    
	
 
    	
 
    	
 
    	
Senior Vice President   and Treasurer
    
	
 
    	
 
    	
 
    
	
ATTEST:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Robert T. Lucas III
    	
 
    	
 
    
	
Assistant Secretary
    	
 
    	
 
    

 

 

CORPORATE TRUSTEE’S CERTIFICATE

 

This bond is one of the bonds, of the series herein designated, described or provided for in the within-mentioned Mortgage.

 

	
 
    	
THE BANK OF NEW YORK   MELLON,
    
	
 
    	
Corporate   Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Officer
    

 

 

THIS SECURITY IS A NINETY-EIGHTH SERIES GLOBAL BOND WITHIN THE MEANING OF THE MORTGAGE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE MORTGAGE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO DUKE ENERGY PROGRESS, LLC (FORMERLY DUKE ENERGY PROGRESS, INC.) 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.

 

THIS FIRST MORTGAGE BOND, 4.20% SERIES DUE 2045 MAY, UNDER CONDITIONS PROVIDED IN THE MORTGAGE, BE EXCHANGED FOR FIRST MORTGAGE BONDS, 4.20% SERIES DUE 2045 IN THE FORM OF DEFINITIVE CERTIFICATES OF LIKE TENOR AND OF AN EQUAL AGGREGATE PRINCIPAL AMOUNT, IN AUTHORIZED DENOMINATIONS, REGISTERED IN THE NAMES OF SUCH PERSONS AS THE DEPOSITARY SHALL INSTRUCT THE CORPORATE TRUSTEE. ANY SUCH EXCHANGE SHALL BE MADE UPON RECEIPT BY THE CORPORATE TRUSTEE OF A REQUEST BY DUKE ENERGY PROGRESS, LLC THEREFOR AND A WRITTEN INSTRUCTION FROM THE DEPOSITARY SETTING FORTH THE NAME OR NAMES IN WHICH THE CORPORATE TRUSTEE IS TO REGISTER SUCH FIRST MORTGAGE BONDS, 4.20% SERIES DUE 2045 IN THE FORM OF DEFINITIVE CERTIFICATES.

 

	
REGISTERED BOND
    	
CUSIP: 26442U   AB0
    

 

DUKE ENERGY PROGRESS, LLC

First Mortgage Bond,

4.20% Series due 2045

 

	
No. R-2
    	
$200,000,000
    

 

 

DUKE ENERGY PROGRESS, LLC, a North Carolina limited liability company (the “Company”), for value received, hereby promises to pay to

 

Cede & Co.

 

or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York,

 

TWO HUNDRED MILLION DOLLARS ($200,000,000)

 

on August 15, 2045, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts, and to pay to the registered owner hereof interest thereon from August 13, 2015, if the date of this bond is on or prior to February 15, 2016, or, if the date of this bond is after February 15, 2016, from the February 15 or August 15 next preceding the date of this bond, at the rate of 4.20% per annum (with interest on overdue principal and overdue installments of interest payable in accordance with the terms of the Mortgage (as hereinafter defined)) in like coin or currency semi-annually at said office or agency, on February 15 and August 15 in each year until the principal of this bond shall have become due and payable (each an “Interest Payment Date”). If the date of this bond is on or prior to February 15, 2016, such payments shall commence on February 15, 2016.  Interest on this bond will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Any interest on this bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name this bond (or one or more predecessor bonds) is registered at the close of business on the tenth calendar day next preceding such Interest Payment Date (i.e., February 5 and August 5, respectively) (each a “Regular Record Date”), provided, however, that so long as this bond is registered in the name of The Depository Trust Company, a New York corporation, its nominee or a successor depositary, the Regular Record Date shall be the close of business on the business day (as defined in the Eighty-fifth Supplemental Indenture mentioned below) immediately preceding such Interest Payment Date.

 

Any interest on this bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the registered holder on the relevant Regular Record Date solely by virtue of such holder having been such holder; and such interest, together with any interest thereon as provided in the Mortgage (collectively, “Defaulted Interest”), may be paid by the Company, at its election in each case, as provided in Subsection A or B below:

 

A.                                    The Company may elect to make payment of any Defaulted Interest on the bonds of this series (as defined below) to the persons in whose names such bonds (or their respective predecessor bonds) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner (a “Special Record Date”). The Company shall notify the Corporate Trustee referred to below in writing of the amount of Defaulted Interest proposed to be paid on each bond and the date of the proposed payment (which date shall be such as will enable the Corporate Trustee to comply with the next two sentences hereof), and at the same time the Company shall deposit with the Corporate Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Corporate Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the persons entitled to such Defaulted Interest as in this Subsection provided and not to be deemed otherwise part of the trust estate or trust moneys. Thereupon the Corporate Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 or less than 10 days prior to the date of the proposed payment and not less than

 

 

10 days after the receipt by the Corporate Trustee of the notice of the proposed payment. The Corporate Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each holder of a bond of this series at such holder’s address as it appears in the bond register not less than 10 days prior to such Special Record Date. The Corporate Trustee may, in its discretion in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper approved by the Company in each place of payment of the bonds of this series, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the bonds of this series (or their respective predecessor bonds) are registered on such Special Record Date and shall no longer be payable pursuant to the following Subsection B.

 

B.                                    The Company may make payment of any Defaulted Interest on the bonds of this series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such bonds may be listed and upon such notice as may be required by such exchange, if, after notice given by the Company to the Corporate Trustee of the proposed payment pursuant to this Subsection, such payment shall be deemed practicable by the Corporate Trustee.

 

Subject to the foregoing, each bond of this series delivered under the Mortgage hereinafter mentioned upon transfer of or in exchange for or in lieu of any other bond of this series shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other bond.

 

This bond is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 4.20% Series due 2045 (the “bonds of this series”), all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust (together with any indenture supplemental thereto, including the Eighty-fifth Supplemental Indenture, dated as of August 1, 2015, the “Mortgage”), dated as of May 1, 1940, executed by the Company to The Bank of New York Mellon (formerly Irving Trust Company), as Corporate Trustee, and Tina D. Gonzalez (successor to Frederick G. Herbst), as Individual Trustee. Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustees in respect thereof, the duties and immunities of the Trustees and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage may be modified or altered by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding under the Mortgage and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected, then also by affirmative vote of the holders of at least 66 2/3% in principal amount of the bonds then outstanding of each series of bonds so to be affected (excluding in any case bonds disqualified from voting by reason of the Company’s interest therein as provided in the Mortgage); provided that, without the consent of the holder hereof, no such modification or alteration, among other things, shall impair or affect the right of the holder to receive payment of the principal of and interest on this bond, on or after the respective due dates expressed herein, or permit the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of a lien on the mortgaged and pledged property.

 

 

The principal hereof may be declared or may become due prior to the maturity date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a default as in the Mortgage provided.

 

This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his 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 fully registered temporary or definitive bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. The Company and the Trustees may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes.

 

In the manner prescribed in the Mortgage, any bonds of this series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.

 

At any time on or after February 15, 2045, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, prior to maturity, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption), at a redemption price equal to 100% of the principal amount of the bonds then outstanding to be redeemed, plus in each case accrued interest on such principal amount to, but excluding, such date fixed for redemption. At any time prior to February 15, 2045, the bonds of this series shall be redeemable at the option of the Company, in whole or in part and from time to time, upon notice as provided in the Mortgage (given not less than 30 days and not more than 90 days prior to the date fixed for redemption (together with the date fixed for redemption referred to in the preceding sentence, each a “Redemption Date”)), at a redemption price (together with the redemption price referred to in the preceding sentence, each a “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the bonds then outstanding to be redeemed and (ii) 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 such bonds matured on February 15, 2045, computed by discounting such payments, in each case, to the Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Eighty-fifth Supplemental Indenture mentioned above) plus 20 basis points, plus in either case accrued but unpaid interest on such principal amount to, but excluding, the Redemption Date. On and after any Redemption Date, if sufficient cash shall have been deposited with Corporate Trustee (and/or if the Company has irrevocably directed the Corporate Trustee to apply, from moneys held by it available to be used for the redemption of bonds, sufficient cash) to redeem all of the bonds of this series called for redemption, interest on the bonds of this series, or the portions of them so called for redemption, shall cease to accrue. Reference is made to said Eighty-fifth Supplemental Indenture for the full terms of the redemption provisions applicable to the bonds of this series.

 

No recourse shall be had for the payment of the principal or any Redemption Price of or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage.

 

 

This bond shall not become obligatory until The Bank of New York Mellon (formerly Irving Trust Company), the Corporate Trustee under the Mortgage, or its successor thereunder, shall have signed the form of certificate endorsed hereon.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, DUKE ENERGY PROGRESS, LLC has caused this bond to be signed in its name with the manual or facsimile signature of its President or one of its Vice Presidents and its company seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries.

 

	
 
    	
 
    	
DUKE ENERGY PROGRESS,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DATED: August 13,   2015
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Stephen G. De May
    
	
 
    	
 
    	
 
    	
Senior Vice President   and Treasurer
    
	
 
    	
 
    	
 
    
	
ATTEST:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Robert T. Lucas III
    	
 
    	
 
    
	
Assistant Secretary
    	
 
    	
 
    

 

 

CORPORATE TRUSTEE’S CERTIFICATE

 

This bond is one of the bonds, of the series herein designated, described or provided for in the within-mentioned Mortgage.

 

	
 
    	
THE BANK OF NEW YORK   MELLON,
    
	
 
    	
Corporate   Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized OfficerExhibit

SECOND AMENDMENT TO THE
THIRD AMENDED AND RESTATED 
AGREEMENT OF LIMITED PARTNERSHIP OF
XHR LP

DESIGNATION OF 12.5% SERIES A CUMULATIVE NON-VOTING PREFERRED UNITS

June 3, 2015

Pursuant to Section 4.02 and Article XI of the Third Amended and Restated Agreement of Limited Partnership of XHR LP, as amended by that certain First Amendment, dated as of May 5, 2015 (the “Partnership Agreement”), XHR GP, Inc., a Delaware corporation, as the General Partner (as defined in the Partnership Agreement), hereby amends the Partnership Agreement as follows in connection with the designation and issuance of 12.5% Series A Cumulative Non-Voting Preferred Units (as defined below):

1.    Designation.  The Partnership Agreement is amended to include the following as Article XIV of the Partnership Agreement:

Article XIV
12.5% Series A Cumulative Non-Voting Preferred Units

14.01    Designation.  A series of Partnership Units in the Partnership, designated as the 12.5% Series A Cumulative Non-Voting Preferred Units (the “Series A Preferred Units”), is hereby established.  The number of Series A Preferred Units shall be 125.  The 125 Series A Preferred Units were issued effective as of May 5, 2015 to Xenia REIT in respect of the issuance by Xenia REIT of 125 shares of its 12.5% Series A Cumulative Non-Voting Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), on January 5, 2015.  The designations, preferences and other rights of the Series A Preferred Units contained in this Second Amendment are intended to be substantially similar to the designations, preferences and other rights (except voting rights) for the Series A Preferred Stock contained in Exhibit A to the Articles of Amendment and Restatement of Xenia REIT (the “Series A Preferred Stock Designation”), and the General Partner shall interpret this Second Amendment in a manner consistent with such intent.

14.02    Rank.  The Series A Preferred Units shall, with respect to distribution and redemption rights and rights upon liquidation, dissolution or winding up of the Partnership, rank senior to all classes or series of Partnership Units and to all other equity securities issued by the Partnership from time to time (collectively, the “Junior Securities”). The term “equity securities” shall not include convertible debt securities.
14.03    Distributions.
(a)    Each holder of the then outstanding Series A Preferred Units shall be entitled to receive, when and as authorized by the General Partner and declared by the Partnership, out of 

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funds legally available for the payment of distributions, cumulative preferential cash distributions per Series A Preferred Unit at the rate of 12.5% per annum of the total of $1,000.00 plus all accumulated and unpaid distributions thereon, subject to Section 14.05(b) below. Such distributions shall accrue on outstanding Series A Preferred Units on a daily basis and be cumulative from January 5, 2015, the date on which the Series A Preferred Stock was issued, and shall be payable semi-annually in arrears on or before June 30 and December 31 of each year (each, a “Series A Preferred Unit Distribution Payment Date”) or, if not a business day, the next succeeding business day. Any distribution payable on the Series A Preferred Units for any partial distribution period will be computed on the basis of a 360-day year consisting of twelve 30-day months (it being understood that the distribution payable on June 30, 2015 will be for less than a full distribution period). A “distribution period” shall mean, with respect to the first “distribution period,” the period from and including January 5, 2015 to and including the first Series A Preferred Unit Distribution Payment Date, and with respect to each subsequent “distribution period,” the period from but excluding a Series A Preferred Unit Distribution Payment Date to and including the next succeeding Series A Preferred Unit Distribution Payment Date or other date as of which accrued distributions are to be calculated. Subject to Section 14.05(b) below, distributions will be payable to holders of record as they appear in the partnership interests transfer records of the Partnership at the close of business on the applicable record date, which shall be the fifteenth day of the calendar month in which the applicable Series A Preferred Unit Distribution Payment Date falls or such other date designated by the General Partner for the payment of distributions that is not more than 30 days prior to such Series A Preferred Unit Distribution Payment Date (each, a “Series A Preferred Unit Distribution Record Date”).
(b)    No distributions on the Series A Preferred Units shall be declared by the Partnership or paid or set apart for payment by the Partnership at such time as the terms and provisions of any written agreement between the Partnership and any party that is not an affiliate of the Partnership, including any agreement relating to its indebtedness, prohibit such declaration, payment or setting apart for payment or provide that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. For purposes of this Section 14.03(b), “affiliate” shall mean any party that controls, is controlled by or is under common control with the Partnership. 
(c)     Notwithstanding the foregoing, distributions on the Series A Preferred Units shall accrue whether or not the terms and provisions set forth in Section 14.03(b) hereof at any time prohibit the current payment of distributions, whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized or declared. Furthermore, distributions will be declared and paid when due in all events to the fullest extent permitted by law and except as provided in Section 14.03(b) above. Accrued but unpaid distributions on the Series A Preferred Units will accumulate as of the Series A Preferred Unit Distribution Payment Date on which they first become payable. 
(d)     Unless full cumulative distributions on all of the outstanding Series A Preferred Units have been or contemporaneously are paid or declared and a sum sufficient for the payment 

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thereof is set apart for payment for all past distribution periods, no distributions (other than in Junior Securities) shall be paid or declared and set apart for payment, nor shall any other distribution be declared or made upon any Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Junior Securities) by the Partnership (except by conversion into or exchange for other Junior Securities and except for transfers, redemptions or purchases of Partnership Interests corresponding to any class or series of capital stock of Xenia REIT to be acquired by Xenia REIT pursuant to its charter to the extent necessary to preserve Xenia REIT’s status as a real estate investment trust under the Internal Revenue Code of 1986, as amended, or any successor statute). 
(e)     When distributions are not paid in full (or a sum sufficient for such full payment is not set apart) on the Series A Preferred Units, all distributions declared upon the Series A Preferred Units shall be declared and paid pro rata based on the number of Series A Preferred Units then outstanding. 
(f)     Any distribution payment made on Series A Preferred Units shall first be credited against the earliest accrued but unpaid distribution due with respect to such units which remains payable. Holders of the Series A Preferred Units shall not be entitled to any distribution, whether payable in cash, property or shares, in excess of full cumulative distributions on the Series A Preferred Units as described above. 
14.04    Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the holders of Series A Preferred Units then outstanding will be entitled to be paid, or have the Partnership declare and set apart for payment, out of the assets of the Partnership legally available for distribution to its partners, before any distribution of assets is made to holders of any Junior Securities, a liquidation preference per Series A Preferred Unit equal to the sum of the following (collectively, the “Series A Preferred Unit Liquidation Preference”): (i) $1,000.00, (ii) all accrued and unpaid distributions thereon through and including the date of payment and (iii) if the Series A Preferred Unit Redemption Premium (as defined below) would then be payable upon the redemption of Series A Preferred Units in accordance with Section 14.05(a) below, the per unit Series A Preferred Unit Redemption Premium. In the event that the Partnership elects to set apart the Series A Preferred Unit Liquidation Preference for payment, the Series A Preferred Units shall remain outstanding until the holders thereof are paid the full Series A Preferred Unit Liquidation Preference therefor, which payment shall be made no later than immediately prior to the Partnership making its final liquidating distribution on its Common Units. In the event that the Series A Preferred Unit Redemption Premium would be payable on the date that the Series A Preferred Unit Liquidation Preference was set apart for payment but no Series A Preferred Unit Redemption Premium would be payable on the payment date, the Partnership may make a corresponding reduction to the funds set apart for payment of the Series A Preferred Unit Liquidation Preference. 
(b) In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Partnership are insufficient to pay the full amount of the 

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Series A Preferred Unit Liquidation Preference on all outstanding Series A Preferred Units, then the holders of the Series A Preferred Units shall share ratably in any such distribution of assets in proportion to the full Series A Preferred Unit Liquidation Preference to which they would otherwise be respectively entitled. 
(c) After payment of the full amount of the Series A Preferred Unit Liquidation Preference to which they are entitled, the holders of Series A Preferred Units will have no right or claim to any of the remaining assets of the Partnership. 
(d) Upon the Partnership’s provision of written notice as to the effective date of any such liquidation, dissolution or winding up of the Partnership, accompanied by payment in the amount of the full Series A Preferred Unit Liquidation Preference to which each record holder of the Series A Preferred Units is entitled, the Series A Preferred Units shall no longer be outstanding Partnership Interests of the Partnership and all rights of the holders of such units will terminate. Such notice shall be given by first class mail, postage pre-paid, to each record holder of the Series A Preferred Units at the respective mailing addresses of such holders as the same shall appear on the partnership interests transfer records of the Partnership. 
(e) The consolidation or merger of the Partnership with or into any other business enterprise or of any other business enterprise with or into the Partnership, or the sale, lease or conveyance of all or substantially all of the assets or business of the Partnership, shall not be deemed to constitute a liquidation, dissolution or winding up of the Partnership. 
14.05    Redemption.
(a) Redemption. If Xenia REIT elects to redeem any shares of Series A Preferred Stock in accordance with Section 5 of the Series A Preferred Stock Designation, the Partnership shall, on the date set for redemption of such shares of Series A Preferred Stock, redeem the number of Series A Preferred Units equal to the number of shares of Series A Preferred Stock for which Xenia REIT has given notice of redemption pursuant to Section 5(d)(i) of the Series A Preferred Stock Designation, for cash at a redemption price per Series A Preferred Unit (the “Series A Preferred Unit Redemption Price”) equal to $1,000.00 plus all accrued and unpaid distributions thereon to and including the date fixed for redemption, plus a redemption premium of $100 per unit (the “Series A Preferred Unit Redemption Premium”) if the date fixed for redemption of Series A Preferred Units (the “Series A Preferred Unit Redemption Date”) is on or before December 31, 2016. If less than all of the outstanding Series A Preferred Units are to be redeemed, the Series A Preferred Units to be redeemed may be selected by any equitable method determined by the General Partner provided that such method does not result in the creation of fractional units. 
(b) Rights to Distributions on Units Called for Redemption. Immediately prior to or upon any redemption of Series A Preferred Units, the Partnership shall pay, in cash, any accrued and unpaid distributions to and including the Series A Preferred Unit Redemption Date. If the Series A Preferred Unit Redemption Date for any Series A Preferred Units called for redemption falls after a Series A Preferred Unit Distribution Record Date and prior to the corresponding Series A Preferred Unit Distribution Payment Date, each holder of record as of the effective time of such 

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redemption of Series A Preferred Units so called for redemption shall be entitled to receive only the accrued and unpaid distributions to and including the Series A Preferred Unit Redemption Date and, provided that the full amount of the Series A Preferred Unit Redemption Price (including all accrued and unpaid distributions thereon to and including the Series A Preferred Unit Redemption Date and any applicable Series A Preferred Unit Redemption Premium) has been paid or set apart pursuant to Section 14.05(c)(iii) below, holders of record of such Series A Preferred Units so called for redemption as of the Series A Preferred Unit Distribution Record Date for such a distribution shall not be entitled to receive the distribution payable on such units on the corresponding Series A Preferred Unit Distribution Payment Date. 
(c) Procedures for Redemption. 
(i) Notice of redemption of the Series A Preferred Units shall be consistent with the notice procedures set forth in Section 5(d)(i) of the Series A Preferred Stock Designation.
(ii) Upon the Partnership’s provision of written notice as to the effective date of the redemption of any Series A Preferred Units, accompanied by payment in the amount of the full Series A Preferred Unit Redemption Price through such effective date to which each record holder of Series A Preferred Units to be redeemed is entitled or, if the Series A Preferred Units to be redeemed are represented by certificates, the setting apart of such amount pursuant to Section 14.05(c)(iii) below, the Series A Preferred Units shall be redeemed and shall no longer be deemed outstanding and all rights of the holders of such units will terminate. 
(iii) If notice of redemption of any Series A Preferred Units has been given and if the funds necessary for such redemption have been set apart by the Partnership for the benefit of the holders of any Series A Preferred Units so called for redemption, then, from and after the redemption date, distributions will cease to accrue on such Series A Preferred Units, such Series A Preferred Units shall no longer be deemed outstanding and all rights of the holders of such units will terminate, except the right to receive the Series A Preferred Unit Redemption Price therefor. If the Partnership shall so require and the notice of redemption shall so state, holders of Series A Preferred Units to be redeemed shall surrender the certificates representing such Series A Preferred Units, to the extent that such units are certificated, at the place designated in such notice and, upon surrender in accordance with said notice of the certificates representing Series A Preferred Units so redeemed (properly endorsed or assigned for transfer, if the Partnership shall so require and the notice shall so state), such Series A Preferred Units shall be redeemed by the Partnership at the Series A Preferred Unit Redemption Price. In case less than all of the Series A Preferred Units represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed Series A Preferred Units without cost to the holder thereof. In the event that the Series A Preferred Units to be redeemed are uncertificated, such units shall be redeemed in accordance with the notice and no further action on the part of the holders of such units shall be required. 
(iv) The deposit of funds with a bank or trust company for the purpose of redeeming Series A Preferred Units shall be irrevocable except that: 

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(A) the Partnership shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any units redeemed shall have no claim to such interest or other earnings; and 
(B) any balance of monies so deposited by the Partnership and unclaimed by the holders of the Series A Preferred Units entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with any interest or other earnings thereon, to the Partnership, and, after any such repayment, the holders of the units entitled to the funds so repaid to the Partnership shall look only to the Partnership for payment of the Series A Preferred Unit Redemption Price without interest or other earnings. 
14.06    Voting Rights.  Holders of the Series A Preferred Units will not have any voting rights.
14.07    Conversion.  The Series A Preferred Units are not convertible into or exchangeable for any other property or securities of the Partnership.
3.    Other Amendments.  The Partnership Agreement is hereby amended as follows:

(a)    Article V, Section 5.01 of the Partnership Agreement is amended by adding the following new Section 5.01(i):

“(i)     Priority Allocations With Respect To Preferred Units.  After giving effect to the allocations set forth in Sections 5.01(c), (d), and (e) hereof, but before giving effect to the allocations set forth in Sections 5.01(a) and 5.01(b) hereof, Net Operating Income shall be allocated to each Partner owning Series A Preferred Units until the aggregate amount of Net Operating Income allocated to such Partner under this Section 5.01(i) for the current and all prior years equals the aggregate amount of distributions paid on such Series A Preferred Units (including any portion of the Series A Preferred Unit Redemption Price or Series A Preferred Unit Liquidation Preference attributable to accrued and unpaid distributions) for the current and all prior years.  For purposes of this Section 5.01(i), “Net Operating Income” means the excess, if any, of the Partnership’s gross income over its expenses (but not taking into account depreciation, amortization, or any other noncash expenses of the Partnership), calculated in accordance with the principles of Section 5.01(h) hereof.”
1.4.     Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms.

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IN WITNESS WHEREOF, the undersigned has executed this Second Amendment to the Partnership Agreement as of the date first set forth above. 
GENERAL PARTNER:

XHR GP, INC., 
a Delaware corporation

By:   /s/ Marcel Verbaas     
Name:    Marcel Verbaas
		
	Title:
	President

CH\2080744.3

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