Document:

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                                                                   Exhibit 4-E-3

                            DUKE ENERGY CORPORATION

                                       TO

                            THE CHASE MANHATTAN BANK

                                                    Trustee

                               ----------------

                         Second Supplemental Indenture

                           Dated as of June 14, 1999

                               ----------------

                                  $257,731,975

                    Series B 7.20% Junior Subordinated Notes

                               due March 31, 2039

                               ----------------
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                             TABLE OF CONTENTS (1)

                                   ARTICLE 1

                    Series B 7.20% Junior Subordinated Notes

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
 <C>          <S>                                                          <C>
 Section 101. Establishment.............................................     1
 Section 102. Definitions...............................................     2
 Section 103. Payment of Principal and Interest.........................     4
 Section 104. Deferral of Interest Payments.............................     5
 Section 105. Denominations.............................................     6
 Section 106. Global Securities.........................................     6
 Section 107. Redemption................................................     7
 Section 108. Additional Interest.......................................     7
 Section 109. Limitations on Dividend and Certain Other Payments........     8
 Section 110. Covenants Regarding Securities Trust......................     9
 Section 111. No Fiduciary Duty of Trustee to Holders of Trust
              Securities................................................     9
 Section 112. Listing of Series B Notes.................................     9
 Section 113. Covenant Defeasance.......................................     9
 Section 114. Set-Off...................................................     9
 Section 115. Subordination.............................................    10
 Section 116. Paying Agent..............................................    10

                                   ARTICLE 2

                            Miscellaneous Provisions

 Section 201. Recitals by Corporation...................................    10
 Section 202. Ratification and Incorporation of Original Indenture......    10
 Section 203. Executed in Counterparts..................................    10
 Section 204. Assignment................................................    10
 Section 205. Enforcement by Holders of Preferred Securities of Right of
              Holders to Receive Principal and Interest.................    10
</TABLE>
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(1) This Table of Contents does not constitute part of the Indenture or have
    any bearing upon the interpretation of any of its terms and provisions.

                                       i
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  THIS SECOND SUPPLEMENTAL INDENTURE is made as of the 14th day of June, 1999,
by and between DUKE ENERGY CORPORATION, a North Carolina corporation, having
its principal office at 526 South Church Street, Charlotte, North Carolina
28202 (the "Corporation"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as Trustee (herein called the "Trustee").

                              W I T N E S S E T H:

  WHEREAS, the Corporation has heretofore entered into a Subordinated
Indenture, dated as of December 1, 1997 (the "Original Indenture") with The
Chase Manhattan Bank, as Trustee;

  WHEREAS, the Original Indenture is incorporated herein by this reference and
the Original Indenture, as supplemented to the date hereof, including by this
Second Supplemental Indenture, is herein called the "Indenture";

  WHEREAS, under the Indenture, a new series of Securities may at any time be
established in accordance with the provisions of the Indenture and the terms of
such series may be described by a supplemental indenture executed by the
Corporation and the Trustee;

  WHEREAS, the Corporation proposes to create under the Indenture a series of
Securities;

  WHEREAS, additional Securities of other series hereafter established, except
as may be limited in the Indenture as at the time supplemented and modified,
may be issued from time to time pursuant to the Indenture as at the time
supplemented and modified; and

  WHEREAS, all conditions necessary to authorize the execution and delivery of
this Second Supplemental Indenture and to make it a valid and binding
obligation of the Corporation have been done or performed.

  NOW, THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

                                   ARTICLE 1

                    Series B 7.20% Junior Subordinated Notes

  Section 101. Establishment. There is hereby established a new series of
Securities to be issued under the Indenture, to be designated as the
Corporation's Series B 7.20% Junior Subordinated Notes due March 31, 2039 (the
"Series B Notes").

  There are to be authenticated and delivered $257,731,975 principal amount of
Series B Notes, and no further Series B Notes shall be authenticated and
delivered except as provided by Sections 304, 305, 306, 906 or 1106 of the
Original Indenture. The Series B Notes shall be issued in definitive fully
registered form without coupons.

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  The Series B Notes shall be in substantially the form set out in Exhibit A
hereto. The entire principal amount of the Series B Notes shall initially be
evidenced by one certificate issued to the Property Trustee of Duke Energy
Capital Trust II.

  The form of the Trustee's Certificate of Authentication for the Series B
Notes shall be in substantially the form set forth in Exhibit B hereto.

  Each Series B Note shall be dated the date of authentication thereof and
shall bear interest from the date of original issuance thereof or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for.

  Section 102. Definitions. The following defined terms used herein shall,
unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.

  "Additional Interest" means (i) such additional amounts as may be required so
that the net amounts received and retained by the Holder (if the Holder is the
Securities Trust) after paying taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States or any other taxing authority will not be less than the amounts the
Holder would have received had not such taxes, duties, assessments, or other
governmental charges been imposed; and (ii) such interest as shall accrue on
interest due and not paid on an Interest Payment Date, accruing at the rate of
7.20% per annum from the applicable Interest Payment Date to the date of
payment, compounded quarterly, on each Interest Payment Date, to the extent
permitted by applicable law.

  "Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day
on which banks in New York, New York are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office or the principal corporate trust office of the Property Trustee is
closed for business.

  "Deferred Interest" means such installments of interest as are not paid
during any Extension Period, plus Additional Interest (as defined in clause
(ii) of the definition thereof) thereon.

  "Extension Period" means any period during which the Corporation has elected
to defer payments of interest, which deferral may be for a period of up to
twenty (20) consecutive quarters.

  "Guarantee" means the Guarantee Agreement executed and delivered by the
Corporation and The Chase Manhattan Bank, as guarantee trustee, for the benefit
of the holders of the Preferred Securities, as such Agreement may be amended
from time to time.

  "Interest Payment Dates" means March 31, June 30, September 30 and December
31 of each year.

  "Investment Company Act Event" means that the Administrative Trustees (as
defined in the Trust Agreement) and the Corporation shall have received an
Opinion of Counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the

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Securities Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended,
which change becomes effective on or after the Original Issue Date.

  "Original Issue Date" means June 14, 1999.

  "Outstanding," when used with respect to the Series B Notes, means, as of the
date of determination, all Series B Notes theretofore authenticated and
delivered under the Indenture, except:

    (i) Series B Notes theretofore canceled by the Trustee or delivered to
  the Trustee for cancellation;

    (ii) Series B Notes for whose payment or redemption the necessary amount
  of money or money's worth has been theretofore deposited with the Trustee
  or any Paying Agent (other than the Corporation) in trust or set aside and
  segregated in trust by the Corporation (if the Corporation shall act as its
  own Paying Agent) for the Holders of such Series B Notes; provided that if
  such Series B Notes are to be redeemed, notice of such redemption has been
  duly given pursuant to the Indenture or provision therefor satisfactory to
  the Trustee has been made;

    (iii) Series B Notes as to which Defeasance has been effected pursuant to
  Section 1302 of the Original Indenture; and

    (iv) Series B Notes that have been paid or in exchange for or in lieu of
  which other Series B Notes have been authenticated and delivered pursuant
  to the Indenture, other than any such Series B Notes in respect of which
  there shall have been presented to the Trustee proof satisfactory to it
  that such Series B Notes are held by a bona fide purchaser in whose hands
  such Series B Notes are valid obligations of the Corporation;

provided, however, that in determining, during any period in which any Series B
Notes are owned by any Person other than the Corporation or any Affiliate
thereof, whether the Holders of the requisite principal amount of Outstanding
Series B Notes have given, made or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder as of any date,
Series B Notes owned, whether of record or beneficially, by the Corporation or
any Affiliate thereof (with the exception of the Securities Trust) shall be
disregarded and deemed not to be Outstanding. In determining whether the
Trustee shall be protected in relying upon such request, demand, authorization,
direction, notice, consent, waiver or other action, only Series B Notes that
the Trustee knows to be so owned by the Corporation or an Affiliate of the
Corporation (with the exception of the Securities Trust) in the above
circumstances shall be so disregarded. Series B Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Series B Notes and that the pledgee is not the Corporation or any
Affiliate of the Corporation.

  "Preferred Securities" means the 7.20% Trust Preferred Securities issued by
the Securities Trust.

  "Property Trustee," when used with respect to the Series B Notes, means the
Person designated as such in the Trust Agreement.

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  "Regular Record Date" means, with respect to each Interest Payment Date, the
close of business on the 15th calendar day preceding such Interest Payment
Date.

  "Securities Trust" means Duke Energy Capital Trust II, a statutory business
trust formed by the Corporation under Delaware law to issue the Trust
Securities, the proceeds of which will be used to purchase Series B Notes, or a
successor thereof.

  "Special Event" means an Investment Company Act Event or Tax Event.

  "Stated Maturity" means March 31, 2039.

  "Tax Event" means that the Administrative Trustees and the Corporation shall
have received an Opinion of Counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein or
(b) any amendment to, or change in, an interpretation or application of such
laws or regulations, there is more than an insubstantial risk that (i) the
Securities Trust would be subject to United States federal income tax with
respect to income accrued or received on the Series B Notes, (ii) interest
payable on the Series B Notes would not be deductible by the Corporation for
United States federal income tax purposes, or (iii) the Securities Trust would
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or after
the Original Issue Date.

  "Trust Agreement" means the Amended and Restated Trust Agreement that governs
the affairs of the Securities Trust.

  "Trust Securities" means the securities issued by the Securities Trust
evidencing the entire beneficial interest therein.

  Section 103. Payment of Principal and Interest. The unpaid principal amount
of the Series B Notes shall bear interest at the rate of 7.20% per annum until
paid or duly provided for, such interest to accrue from June 14, 1999 or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for. Interest shall be paid quarterly in arrears on each Interest
Payment Date commencing September 30, 1999 to the Person in whose name the
Series B Notes are registered on the Regular Record Date for such Interest
Payment Date; provided that interest payable at the Stated Maturity of principal
or on a Redemption Date as provided herein will be paid to the Person to whom
principal is payable. So long as an Extension Period is not occurring, any such
interest that is not so punctually paid or duly provided for will forthwith
cease to be payable to the Holders on such Regular Record Date and may either be
paid to the Person or Persons in whose name the Series B Notes are registered at
the close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee ("Special Record Date"), notice whereof
shall be given to Holders of the Series B Notes not less than ten (10) days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange, if
any, on which the Series B Notes may be listed, and upon such notice as may be
required by any such exchange, all as more fully provided in the Original
Indenture.

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  Payments of interest on the Series B Notes will include interest accrued to
but excluding the respective Interest Payment Dates. Interest payments for the
Series B Notes shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which interest is payable
on the Series B Notes is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was
originally payable.

  Payment of the principal and interest (including Additional Interest, if any)
on the Series B Notes shall be made at the office of the Paying Agent in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, with any such payment
that is due at the Stated Maturity or at earlier redemption of any Series B
Notes being made upon surrender of such Series B Notes to the Paying Agent.
Payments of interest (including interest on any Interest Payment Date) will be
made, subject to such surrender where applicable, at the option of the
Corporation, (i) by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register or (ii) by wire transfer
at such place and to such account at a banking institution in the United States
as may be designated in writing to the Trustee at least sixteen (16) days prior
to the date for payment by the Person entitled thereto.

  The Corporation shall pay, as additional interest on the Series B Notes, when
due to the United States or any other taxing authority, the amounts set forth
in clause (i) of the definition of Additional Interest.

  Section 104. Deferral of Interest Payments. The Corporation has the right at
any time and from time to time to extend the interest payment period of the
Series B Notes for up to twenty (20) consecutive quarters (each, an "Extension
Period"), during which Extension Period the Corporation shall have the right to
make partial payments of interest on any Interest Payment Date; provided,
however, that no such Extension Period may extend beyond the Stated Maturity.
Notwithstanding the foregoing, the Corporation has no right to extend its
obligation to pay such amounts as are defined in clause (i) of the definition
of Additional Interest. Prior to the termination of any such Extension Period,
the Corporation may further extend the interest payment period; provided that
such Extension Period, together with all such previous and further extensions
of that Extension Period, shall not exceed twenty (20) consecutive quarters.
Upon the termination of any such Extension Period and upon the payment of all
accrued and unpaid interest and any Additional Interest then due, the
Corporation may select a new Extension Period, subject to the above limitations
and requirements.

  Upon the termination of any Extension Period, which termination shall be on
an Interest Payment Date, the Corporation shall pay all Deferred Interest on
the next succeeding Interest Payment Date to the Person or Persons in whose
name the Series B Notes are registered on the Regular Record Date for such
Interest Payment Date; provided that Deferred Interest payable at Stated
Maturity or on any Redemption Date will be paid to the Person or Persons to
whom principal is payable.

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  The Corporation shall give the Holder or Holders of the Series B Notes and
the Trustee notice, as provided in Sections 105 and 106, respectively, of the
Original Indenture, of its selection or extension of an Extension Period at
least one Business Day prior to the earlier of (i) the Regular Record Date
relating to the Interest Payment Date on which the Extension Period is to
commence or relating to the Interest Payment Date on which an Extension Period
that is being extended would otherwise terminate, or (ii) the date the
Corporation or the Securities Trust is required to give notice to the New York
Stock Exchange or other applicable self-regulatory organization of the record
date or the date such distributions are payable. The Corporation shall cause
the Securities Trust to give notice of the Corporation's selection of such
Extension Period to Holders of the Trust Securities. The month in which any
notice is given pursuant to the immediately preceding sentence of this Section
shall constitute the first month of the first quarter of the twenty (20)
consecutive quarters which comprise the maximum Extension Period.

  At any time any of the foregoing notices are given to the Trustee, the
Corporation shall give to the Paying Agent for the Series B Notes such
information as said Paying Agent shall reasonably require in order to fulfill
its tax reporting obligations with respect to such Series B Notes.

  Section 105. Denominations. The Series B Notes may be issued in denominations
of $25 or any integral multiple thereof.

  Section 106. Global Securities. If the Series B Notes are distributed to
holders of the Trust Securities in liquidation of such holders' interests
therein, the Series B Notes will be issued in the form of one or more Global
Securities registered in the name of the Depositary (which shall be The
Depository Trust Company) or its nominee. Except under the limited
circumstances described below, Series B Notes represented by such Global
Security or Global Securities will not be exchangeable for, and will not
otherwise be issuable as, Series B Notes in definitive form. The Global
Securities described above 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.

  Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Series B Note shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of the Depositary or its nominee or to a successor Depositary or its
nominee or except as described below. The rights of Holders of such Global
Security shall be exercised only through the Depositary.

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

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exchangeable pursuant to the preceding sentence shall be exchangeable for
Series B Notes registered in such names as the Depositary shall direct.

  Section 107. Redemption. The Series B Notes shall be subject to redemption at
the option of the Corporation, in whole or in part, without premium or penalty,
at any time or from time to time on or after June 30, 2004, at a Redemption
Price equal to 100% of the principal amount to be redeemed plus accrued but
unpaid interest (including any Additional Interest) to the Redemption Date;
provided, however, that, if a redemption in part shall result in the delisting
of the Preferred Securities, the Corporation may redeem the Series B Notes only
in whole. In addition, upon the occurrence of a Special Event, the Corporation
may, within ninety (90) days following the occurrence thereof and subject to
the terms and conditions of the Indenture, redeem the Series B Notes, in whole,
at a price equal to 100% of the principal amount to be redeemed plus any
accrued but unpaid interest (including Additional Interest, if any) to the
Redemption Date.

  In the event of redemption of the Series B Notes in part only, a new Series B
Note or Notes for the unredeemed portion shall be issued in the name or names
of the Holders thereof upon the surrender thereof.

  The Series B Notes shall not have a sinking fund.

  Notice of redemption shall be given as provided in Section 1104 of the
Original Indenture. Notwithstanding the foregoing, no notice of redemption that
is given pursuant to such Section with respect to any Series B Notes shall,
while any Preferred Securities are outstanding, contain a condition that
provides that redemption of the Series B Notes, or the part thereof, specified
therein, shall be conditional upon receipt by the Trustee or the Paying Agent
for such Series B Notes, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and any interest on such Series B
Notes. Any notice provided to the Trustee under Section 1102 of the Original
Indenture shall also be provided by the Corporation to the Property Trustee;
provided that the Corporation shall provide notice pursuant to such Section
1102 on a date less than 45 days prior to the Redemption Date only if such
shorter notice is satisfactory to both the Trustee and the Property Trustee.

  Any redemption of less than all of the Series B Notes shall, with respect to
the principal thereof, be divisible by $25.

  Section 108. Additional Interest. Whenever there is mentioned in the
Indenture, in any context, the payment of the principal of, or any premium or
interest on, or in respect of, Securities of any series, such mention shall,
with respect to the Series B Notes, be deemed to include mention of the payment
of Additional Interest provided for by the terms of the Series B Notes to the
extent that, in such context, Additional Interest is, was or would be payable
in respect thereof pursuant to such terms, and express mention of the payment
of Additional Interest in any provisions of this Second Supplemental Indenture
shall not be construed as excluding Additional Interest in those provisions of
the Original Indenture or this Second Supplemental Indenture in which such
express mention is not made.

  If, subsequent to the date that a satisfaction and discharge or Defeasance is
effected pursuant to Section 401 or 1302, respectively, of the Original
Indenture, Additional Interest (for purposes of this

                                       7
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paragraph, as defined in clause (i) of the definition thereof) (in excess of
that established as of the date that such discharge or Defeasance is effected)
becomes payable in respect of the Series B Notes so discharged or defeased, the
Corporation shall irrevocably deposit or cause to be irrevocably deposited in
accordance with the provisions of Section 401 or 1304 of the Original
Indenture, as the case may be, within ten Business Days prior to the date the
first payment in respect of any portion of such excess Additional Interest
becomes due, such additional moneys or Government Obligations as are necessary
to satisfy the provisions of Section 401 or 1304 of the Original Indenture, as
the case may be, as if a discharge or Defeasance were being effected as of the
date of such subsequent deposit.

  Except as otherwise provided in or pursuant to the Indenture, at least 10
days prior to the first Interest Payment Date upon which Additional Interest
(for purposes of this paragraph, as defined in clause (i) of the definition
thereof) shall be payable, and at least 10 days prior to each date of payment
of principal and any premium or interest if there has been any change with
respect to the information set forth in the Officers' Certificate hereinafter
mentioned, the Corporation shall furnish the Trustee and any Paying Agent, if
other than the Trustee or the Corporation, with an Officers' Certificate
stating the amount of the Additional Interest payable per minimum authorized
denomination of the Series B Notes.

  Section 109. Limitations on Dividend and Certain Other Payments. The
Corporation covenants, for the benefit of the Holders of the Series B Notes,
that, subject to the next succeeding sentence, (a) the Corporation shall not
declare or pay any dividend on, or make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, and (b) the Corporation shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees other than the Guarantee) issued by the
Corporation which rank pari passu with or junior to the Series B Notes (i) if
at such time the Corporation shall have given notice of its election to extend
an interest payment period for the Series B Notes and such extension shall be
continuing or (ii) if at such time an Event of Default with respect to the
Series B Notes shall have occurred and be continuing. The preceding sentence,
however, shall not restrict (A) any of the actions described in the preceding
sentence resulting from any reclassification of the Corporation's capital stock
or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock,
(B) the declaration and payment of a dividend or distribution or similar share
purchase rights in the future, (C) repurchases, redemptions or other
acquisitions of shares of the Corporation's capital stock in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers or directors or a stock purchase and
dividend reinvestment plan, (D) acquisitions of shares of the Corporation's
capital stock in connection with the issuance of shares of the Corporation's
capital stock (or securities convertible into or exchangeable for shares of the
Corporation's capital stock) as consideration in an acquisition transaction
that was entered into prior to the commencement of the relevant Extension
Period, (E) dividends or distributions in capital stock of the Corporation, (F)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, or (G) mandatory sinking fund
payments with respect to any series of the Corporation's preferred stock or
preferred stock A; provided that the aggregate stated value of all such series
outstanding at the time of any such payment does not exceed

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5% of the aggregate of (1) the total principal amount of all bonds or other
securities representing secured indebtedness issued or assumed by the
Corporation and then outstanding and (2) the capital and surplus of the
Corporation to be stated on the books of account of the Corporation after
giving effect to such payment; provided, however, that any moneys deposited
into any sinking fund and not in violation of this provision may thereafter be
applied to the purchase or redemption of such preferred stock or preferred
stock A in accordance with the terms of such sinking fund without regard to the
restrictions contained in this Section 109.

  Section 110. Covenants Regarding Securities Trust. For so long as the Trust
Securities remain outstanding, the Corporation covenants (i) directly or
indirectly to maintain 100% ownership of the Common Securities (as defined in
the Trust Agreement) of the Securities Trust; provided, however, that any
permitted successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities, and (ii) to use its
reasonable efforts to cause the Securities Trust (a) to remain a statutory
business trust, except in connection with the distribution of Series B Notes to
the holders of Trust Securities in liquidation of the Securities Trust, the
redemption of all of the Trust Securities, or certain mergers, consolidations
or amalgamations, each as permitted under the Trust Agreement, and (b) to
otherwise continue to be classified as a grantor trust for United States
federal income tax purposes. The Corporation shall deliver to the Trustee, no
later than the Business Day on which the event occurs, written notice of the
liquidation, dissolution or winding-up of the Securities Trust if such
liquidation, dissolution or winding-up would occur earlier than the Stated
Maturity of the Series B Notes owned by such Securities Trust.

  Section 111. No Fiduciary Duty of Trustee to Holders of Trust Securities. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Trust
Securities and shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of a Trust Security to
establish that such Person is such a holder.

  Section 112. Listing of Series B Notes. If the Series B Notes are to be
issued as a Global Security or Global Securities in connection with the
distribution of the Series B Notes to the holders of the Preferred Securities,
the Corporation shall use its best efforts to list such Series B Notes on the
New York Stock Exchange or any other exchange on which such Preferred
Securities are then listed. The Corporation shall notify the Trustee if and
when the Series B Notes become admitted to trading on the New York Stock
Exchange or any other national securities exchange.

  Section 113. Covenant Defeasance. Section 1303 of the Original Indenture
shall not apply to any of the Series B Notes.

  Section 114. Set-Off. Notwithstanding anything to the contrary in the
Indenture or in any Series B Note, prior to the dissolution of the Securities
Trust, the Corporation shall have the right to set off and apply against any
payment it is otherwise required to make hereunder or thereunder with respect
to the principal of or interest (including any Additional Interest) on the
Series B Notes with and to the extent the Corporation has theretofore made, or
is concurrently on the date of such payment making, a payment with respect to
the Preferred Securities under the Guarantee. Contemporaneously with, or as
promptly as practicable after, any such payment under the Guarantee, the
Corporation shall deliver to the Trustee an Officers' Certificate (upon which
the Trustee shall be entitled to rely conclusively without any requirement to
investigate the facts contained therein) to the

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effect that such payment has been made and that, as a result of such payment,
the corresponding payment under the Series B Notes has been set off in
accordance with this Section 114.

  Section 115. Subordination. The indebtedness evidenced by the Series B Notes
shall be, to the extent and in the manner set forth in the Original Indenture,
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness (as defined in the Original Indenture) with respect to the
Series B Notes, and the Series B Notes shall rank pari passu in right of
payment with each other series of Securities issued under the Indenture, with
the exception of any series of Securities which by its terms provides
otherwise.

  Section 116. Paying Agent. The Trustee shall initially serve as Paying Agent
with respect to the Series B Notes, with the Place of Payment initially being
the Corporate Trust Office of the Trustee.

                                   ARTICLE 2

                            Miscellaneous Provisions

  Section 201. Recitals by Corporation. The recitals in this Second
Supplemental Indenture are made by the Corporation only and not by the Trustee,
and all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of the Series B Notes and of this Second Supplemental
Indenture as fully and with like effect as if set forth herein in full.

  Section 202. Ratification and Incorporation of Original Indenture. As
supplemented hereby, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this Second Supplemental Indenture
shall be read, taken and construed as one and the same instrument.

  Section 203. Executed in Counterparts. This Second Supplemental Indenture may
be executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.

  Section 204. Assignment. The Corporation shall have the right at all times to
assign any of its rights or obligations under this Indenture with respect to
the Series B Notes to a direct or indirect wholly owned subsidiary of the
Corporation; provided that, in the event of any such assignment, the
Corporation shall remain primarily liable for the performance of all such
obligations. The Indenture may also be assigned by the Corporation in
connection with a transaction described in Article Eight of the Original
Indenture.

  Section 205. Enforcement by Holders of Preferred Securities of Right of
Holders to Receive Principal and Interest. So long as the Series B Notes are
held by the Property Trustee on behalf of the Securities Trust, a registered
holder of Preferred Securities may institute a legal proceeding directly
against the Corporation, without first instituting a legal proceeding directly
against or requesting or directing that action be taken by the Property Trustee
or any other Person, for enforcement of payment to such registered holder of
principal of or interest on Series B Notes having a principal amount equal to
the aggregate stated liquidation amount of such Preferred Securities of such
registered holder on or after the due dates therefor specified or provided for
in the

                                       10
<PAGE>

Series B Notes. This Section 205 and Section 109 of this Second Supplemental
Indenture are for the benefit of the registered holders of Preferred Securities
and, prior to the dissolution of the Securities Trust, may be enforced by such
holders. A holder of a Preferred Security shall not have the right, as such
holder, to enforce any other provision of the Indenture.

  IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed
in its name and behalf by its duly authorized officers, all as of the day and
year first above written.

                                          Duke Energy Corporation

                                          By: /s/ David L. Hauser
                                              --------------------------

Attest:

/s/ Robert T. Lucas III
-------------------------
                                          The Chase Manhattan Bank,
                                            as Trustee

                                          By: /s/ P. Kelly
                                              --------------------------

Attest:

/s/ William G. Keenan
-------------------------

                                       11
<PAGE>

                                                                       EXHIBIT A

                                    FORM OF

                    SERIES B 7.20% JUNIOR SUBORDINATED NOTE

                               DUE MARCH 31, 2039

No.                                                         CUSIP No. 264399 DM5

THE INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE
INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS, AND THIS SECURITY IS ISSUED SUBJECT TO THE
PROVISIONS OF THE INDENTURE WITH RESPECT THERETO.

                            DUKE ENERGY CORPORATION

                    SERIES B 7.20% JUNIOR SUBORDINATED NOTE

                               DUE MARCH 31, 2039

<TABLE>
<S>                        <C>
  Principal Amount:        $
  Regular Record Date:     15th calendar day prior to Interest Payment Date
  Original Issue Date:     June 14, 1999
  Stated Maturity:         March 31, 2039
  Interest Payment Dates:  March 31, June 30, September 30, December 31
  Interest Rate:           7.20% per annum
  Authorized Denomination: $25 or any integral multiple thereof
  Initial Redemption Date: June 30, 2004
</TABLE>

  Duke Energy Corporation, a North Carolina corporation (the "Corporation,"
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to
                      , or registered assigns, the principal sum of
DOLLARS ($      ) on the Stated Maturity shown above (or upon earlier
redemption), and to pay interest thereon from the Original Issue Date shown
above, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly in arrears on each Interest Payment Date
as specified above, commencing on September 30, 1999, and on the Stated
Maturity (or upon earlier redemption) at the rate per annum shown above (the
"Interest Rate") until the principal hereof is paid or made available for
payment and on any overdue principal and on any overdue installment of
interest. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date (other than an Interest Payment Date that is the
Stated Maturity or a Redemption Date) will, as provided in such Indenture, be
paid to the Person in whose name this Series B 7.20% Junior Subordinated Note
due March 31, 2039 (this "Security") is registered at the close of business on
the Regular Record Date as specified above next preceding such Interest Payment
Date; provided that any interest payable at Stated Maturity or on any
Redemption Date will be paid to the Person to whom principal

                                      A-1
<PAGE>

is payable. Except as otherwise provided in the Indenture, any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange, if any, on which the Securities of this series shall be
listed, and upon such notice as may be required by any such exchange, all as
more fully provided in said Indenture.

  Payments of interest on this Security will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this
Security shall be computed and paid on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on this
Security is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the date the payment was originally payable.
"Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on
which banks in New York, New York are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office or the principal corporate trust office of the Property Trustee is
closed for business.

  The Corporation shall have the right at any time and from time to time during
the term of this Security to extend the interest payment period of such
Security for up to twenty (20) consecutive quarters (each, an "Extension
Period"), but not beyond the Stated Maturity of this Security, during which
Extension Periods interest shall accrue on unpaid installments of interest at
the Interest Rate, compounded quarterly, to the date of payment to the extent
permitted by applicable law (such unpaid interest plus such interest thereon
being called "Deferred Interest"); provided, however, that the Corporation
shall have the right to make partial payments of interest on any Interest
Payment Date during any Extension Period. Upon the termination of each
Extension Period, which shall be an Interest Payment Date, the Corporation
shall pay all Deferred Interest on the next succeeding Interest Payment Date to
the Person in whose name this Security is registered at the close of business
on the Regular Record Date for such Interest Payment Date; provided that any
Deferred Interest payable at Stated Maturity or on any Redemption Date will be
paid to the Person to whom principal is payable. Prior to the termination of
any such Extension Period, the Corporation may further extend the interest
payment period; provided that such Extension Period together with all such
previous and further extensions thereof shall not exceed twenty (20)
consecutive quarters. Upon the termination of any such Extension Period, and
the payment of all accrued and unpaid interest (including any Additional
Interest) then due, the Corporation may select a new Extension Period, subject
to the above requirements. The Corporation shall not (i) declare or pay any
dividend or distribution on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock, and (ii) make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees other than the Guarantee) issued by the
Corporation that rank pari passu with or junior to this Security if the
Corporation shall have given notice of its

                                      A-2
<PAGE>

election to extend an interest payment period for this Security and such
extension shall be continuing or if at such time an Event of Default with
respect to the series of which this Security is a part shall have occurred and
be continuing. The preceding sentence, however, shall not restrict (A) any of
the actions described in the preceding sentence resulting from any
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for
another class or series of the Corporation's capital stock, (B) the declaration
and payment of a dividend or distribution or similar share purchase rights in
the future, (C) repurchases, redemptions or other acquisitions of shares of the
Corporation's capital stock in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of employees,
officers or directors or a stock purchase and dividend reinvestment plan, (D)
acquisitions of shares of the Corporation's capital stock in connection with
the issuance of shares of the Corporation's capital stock (or securities
convertible into or exchangeable for shares of the Corporation's capital stock)
as consideration in an acquisition transaction that was entered into prior to
the commencement of the relevant Extension Period, (E) dividends or
distributions on capital stock of the Corporation, (F) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, or (G) mandatory sinking fund payments with
respect to any series of the Corporation's preferred stock or preferred stock
A; provided that the aggregate stated value of all such series outstanding at
the time of any such payment does not exceed 5% of the aggregate of (1) the
total principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by the Corporation and then outstanding and (2)
the capital and surplus of the Corporation to be stated on the books of account
of the Corporation after giving effect to such payment; provided, however, that
any moneys deposited into any sinking fund and not in violation of this
provision may thereafter be applied to the purchase or redemption of such
preferred stock or preferred stock A in accordance with the terms of such
sinking fund without regard to the restrictions contained in this provision.
The Corporation shall give the Holder of this Security and the Trustee notice
of its selection or extension of an Extension Period at least one Business Day
prior to the earlier of (i) the Regular Record Date relating to the Interest
Payment Date on which the Extension Period is to commence or relating to the
Interest Payment Date on which an Extension Period that is being extended would
otherwise terminate or (ii) the date the Corporation or the Securities Trust is
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization of the record date or the date such distributions
are payable.

  The Corporation also shall be obligated to pay when due and without extension
all additional amounts as may be required so that the net amount received and
retained by the Holder of this Security (if the Holder is the Securities Trust)
after paying taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts such Holder would have
received had no such taxes, duties, assessments, or other governmental charges
been imposed.

  Payment of the principal of and interest (including Additional Interest, if
any) due at the Stated Maturity or earlier redemption of this Security shall be
made upon surrender of this Security, at the Corporate Trust Office of the
Trustee, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.
Payment of interest (including interest on an Interest Payment Date) will be
made, subject to such surrender where

                                      A-3
<PAGE>

applicable, at the option of the Corporation, (i) by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer at such place and to such account at
a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.

  The indebtedness evidenced by this Security is, to the extent and in the
manner set forth in the Indenture, subordinate in right of payment to the prior
payment in full of all Senior Indebtedness (as defined in the Indenture), and
this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes. Each Holder hereof, by his acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness whether now
outstanding or hereafter incurred and waives reliance by each such holder upon
said provisions.

  REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH
ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS IF SET FORTH AT THIS PLACE.

  Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

  IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                          Duke Energy Corporation

                                          By: _________________________________

Attest:
_________________________________

                                      A-4
<PAGE>

                         CERTIFICATE OF AUTHENTICATION

  This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.

                                          The Chase Manhattan Bank,
                                            as Trustee

                                          By: _________________________________
                                                   Authorized Officer

                                      A-5
<PAGE>

                           (Reverse Side of Security)

  This Security is one of a duly authorized issue of Securities of the
Corporation (the "Securities"), issued and issuable in one or more series under
a Subordinated Indenture, dated as of December 1, 1997, as supplemented (the
"Indenture"), between the Corporation and The Chase Manhattan Bank, as Trustee
(the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitation of rights, duties and
immunities thereunder of the Corporation, the Trustee and the Holders of the
Securities issued thereunder and of the terms upon which said Securities are,
and are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof as Series B 7.20% Junior Subordinated Notes due
March 31, 2039 (the "Series B Notes") in the aggregate principal amount of up
to $257,731,975. Capitalized terms used herein for which no definition is
provided herein shall have the meanings set forth in the Indenture.

  The Corporation shall have the right, subject to the terms and conditions of
the Indenture, to redeem this Security at any time on or after June 30, 2004 at
the option of the Corporation, without premium or penalty, in whole or in part,
at a Redemption Price equal to 100% of the principal amount to be redeemed plus
accrued but unpaid interest (including any Additional Interest) to the
Redemption Date. Upon the occurrence of a Special Event (as defined below), the
Corporation may, within 90 days following the occurrence thereof and subject to
the terms and conditions of the Indenture, redeem this Security without premium
or penalty, in whole, at a Redemption Price equal to 100% of the principal
amount thereof plus accrued but unpaid interest (including any Additional
Interest) to the Redemption Date. A Special Event may be a Tax Event or an
Investment Company Act Event. "Tax Event" means that the Administrative
Trustees and the Corporation shall have received an Opinion of Counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Securities Trust would be
subject to United States federal income tax with respect to income accrued or
received on the Series B Notes, (ii) interest payable on the Series B Notes
would not be deductible by the Corporation for United States federal income tax
purposes, or (iii) the Securities Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, which
change or amendment becomes effective on or after the Original Issue Date.
"Investment Company Act Event" means that the Administrative Trustees and the
Corporation shall have received an Opinion of Counsel experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Securities Trust
is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended, which change
becomes effective on or after the Original Issue Date.

  In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the surrender hereof. The Securities of this
series will not have a sinking fund.

                                      A-6
<PAGE>

  If an Event of Default with respect to the Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

  The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Securities of all series affected thereby (voting as one
class). The Indenture contains provisions permitting the Holders of not less
than a majority in principal amount of the Outstanding Securities of all series
with respect to which a default under the Indenture shall have occurred and be
continuing (voting as one class), on behalf of the Holders of the Securities of
all such series, to waive, with certain exceptions, such default under the
Indenture and its consequences. The Indenture also permits the Holders of not
less than a majority in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Corporation with certain provisions of the
Indenture affecting such series. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

  No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.

  As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation for such purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Corporation and
the Security Registrar and duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of this
series, of authorized denominations and of like tenor and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

  As provided in and subject to the provisions of the Indenture, the Holder of
this Security shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than a majority in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, and
the Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request and shall have failed to

                                      A-7
<PAGE>

institute any such proceeding for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal
hereof or any interest hereon on or after the respective due dates expressed
herein.

  The Indenture contains provisions for defeasance at any time of the entire
indebtedness of the Securities of this series upon compliance with certain
conditions set forth in the Indenture.

  Prior to due presentment of this Security for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.

  The Securities of this series are issuable only in registered form without
coupons in denominations of $25 or any integral multiple thereof. As provided
in the Indenture and subject to the limitations therein set forth, Securities
of this series are exchangeable for a like aggregate principal amount of
Securities of this series of a different authorized denomination, as requested
by the Holder surrendering the same upon surrender of the Security or
Securities to be exchanged at the office or agency of the Corporation.

  This Security shall be governed by, and construed in accordance with, the
internal laws of the State of New York.

                                      A-8
<PAGE>

                                 ABBREVIATIONS

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

TEN COM -- as tenants in common   UNIF GIFT MIN ACT -- ______ Custodian ______
                                                       (Cust)           (Minor)

TEN ENT -- as tenants by the entireties

                                                   under Uniform Gifts to Minors
JT TEN -- as joint tenants with                    Act ______________________
        rights of survivorship and                              (State)
        not as tenants in common

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

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

--------------------------------------------------------------------------------
    Please Print or Typewrite Name and Address, Including Postal Zip Code of
                                    Assignee

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing

--------------------------------------------------------------------------------

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

Dated: _____________________________     --------------------------------------

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

                                      A-9<PAGE>

                                                                   Exhibit 4-E-4

                            DUKE ENERGY CORPORATION

                                       TO

                            THE CHASE MANHATTAN BANK

                                                    Trustee

                               ----------------

                               Supplemental Indenture

                            Dated as of       ,

                               ----------------

                                    $

                        Series     % Junior Subordinated Notes

                                   due

                               ----------------
<PAGE>

                             TABLE OF CONTENTS (1)

                                   ARTICLE 1

                        Series     % Junior Subordinated Notes

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<C>          <S>                                                           <C>
Section 101. Establishment...............................................    1
Section 102. Definitions.................................................    1
Section 103. Payment of Principal and Interest...........................    2
Section 104. Denominations...............................................    2
Section 105. Global Securities...........................................    2
Section 106. Redemption at the Option of the Corporation.................    3
Section 107. Subordination...............................................    4
Section 108. Paying Agent................................................    4

                                   ARTICLE 2

                            Miscellaneous Provisions

Section 201. Recitals by Corporation.....................................    4
Section 202. Ratification and Incorporation of Original Indenture........    4
Section 203. Executed in Counterparts....................................    4
</TABLE>

Exhibit A    Form of Series     % Junior Subordinated Note due
Exhibit B    Certificate of Authentication
--------
(1) This Table of Contents does not constitute part of the Indenture or have
    any bearing upon the interpretation of any of its terms and provisions.

                                       i
<PAGE>

  THIS      SUPPLEMENTAL INDENTURE is made as of the    day of    ,     , by
and between DUKE ENERGY CORPORATION, a North Carolina corporation, having its
principal office at 526 South Church Street, Charlotte, North Carolina 28202
(the "Corporation"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as Trustee (herein called the "Trustee").

                             W I T N E S S E T H:

  WHEREAS, the Corporation has heretofore entered into a Subordinated
Indenture, dated as of December 1, 1997 (the "Original Indenture") with The
Chase Manhattan Bank, as Trustee;

  WHEREAS, the Original Indenture is incorporated herein by this reference and
the Original Indenture, as may be amended and supplemented to the date hereof,
including by this     Supplemental Indenture, is herein called the
"Indenture";

  WHEREAS, under the Indenture, a new series of Securities may at any time be
established in accordance with the provisions of the Indenture and the terms
of such series may be described by a supplemental indenture executed by the
Corporation and the Trustee;

  WHEREAS, the Corporation proposes to create under the Indenture a series of
Securities;

  WHEREAS, additional Securities of other series hereafter established, except
as may be limited in the Indenture as at the time supplemented and modified,
may be issued from time to time pursuant to the Indenture as at the time
supplemented and modified; and

  WHEREAS, all conditions necessary to authorize the execution and delivery of
this     Supplemental Indenture and to make it a valid and binding obligation
of the Corporation have been done or performed.

  NOW, THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:

                                   ARTICLE 1

                        Series    % Junior Subordinated Notes

  Section 101. Establishment. There is hereby established a new series of
Securities to be issued under the Indenture, to be designated as the
Corporation's Series    % Junior Subordinated Notes due    (the "Series
Notes").

  There are to be authenticated and delivered $      principal amount of
Series   Notes, and no further Series   Notes shall be authenticated and
delivered except as provided by Section 304, 305, 306, 906 or 1106 of the
Original Indenture. The Series   Notes shall be issued in fully registered
form without coupons.

  The Series   Notes shall be in substantially the form set out in Exhibit A
hereto, and the form of the Trustee's Certificate of Authentication for the
Series   Notes shall be in substantially the form set forth in Exhibit B
hereto.

  Each Series   Note shall be dated the date of authentication thereof and
shall bear interest from the date of original issuance thereof or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for.

  Section 102. Definitions. The following defined terms used herein shall,
unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.
<PAGE>

  "Interest Payment Dates" means       and        , commencing       ,       .

  "Original Issue Date" means       ,     .

  "Regular Record Date" means, with respect to each Interest Payment Date, the
close of business on the 15th calendar day prior to such Interest Payment
Date.

  "Stated Maturity" means   ,   .

  Section 103. Payment of Principal and Interest. The principal of the Series
Notes shall be due at Stated Maturity (unless earlier redeemed). The unpaid
principal amount of the Series Notes shall bear interest at the rate of % per
annum until paid or duly provided for, such interest to accrue from          ,
             or from the most recent Interest Payment Date to which interest has
been paid or duly provided for. Interest shall be paid semiannually in arrears
on each Interest Payment Date to the Person or Persons in whose name the Series
Notes are registered on the Regular Record Date for such Interest Payment Date;
provided that interest payable at the Stated Maturity of principal or on a
Redemption Date as provided herein shall be paid to the Person to whom principal
is payable. Any such interest that is not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holders on such Regular Record
Date and may either be paid to the Person or Persons in whose name the Series
Notes are registered at the close of business on a Special Record Date for the
payment of such defaulted interest to be fixed by the Trustee ("Special Record
Date"), notice whereof shall be given to Holders of the Series Notes not less
than ten (10) days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange, if any, on which the Series Notes may be listed, and upon such notice
as may be required by any such exchange, all as more fully provided in the
Original Indenture.

  Payments of interest on the Series   Notes shall include interest accrued to
but excluding the respective Interest Payment Dates. Interest payments for the
Series   Notes shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which interest is payable
on the Series   Notes is not a Business Day, then payment of the interest
payable on such date shall be made on the next succeeding day that is a
Business Day (and without any interest or payment in respect of any such
delay) with the same force and effect as if made on the date the payment was
originally payable. "Business Day" means a day other than (i) a Saturday or a
Sunday, (ii) a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to remain closed or (iii) a
day on which the Corporate Trust Office is closed for business.

  Payment of principal of, premium, if any, and interest on the Series   Notes
shall be made in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
Payments of principal of, premium, if any, and interest on Series   Notes
represented by a Global Security shall be made by wire transfer of immediately
available funds to the Holder of such Global Security, provided that, in the
case of payments of principal and premium, if any, such Global Security is
first surrendered to the Paying Agent. If any of the Series   Notes are no
longer represented by a Global Security, (i) payments of principal, premium,
if any, and interest due at the Stated Maturity or earlier redemption of such
Series   Notes shall be made at the office of the Paying Agent upon surrender
of such Series   Notes to the Paying Agent and (ii) payments of interest shall
be made, at the option of the Corporation, subject to such surrender where
applicable, (A) by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register or (B) by wire transfer
at such place and to such account at a banking institution in the United
States as may be designated in writing to the Trustee at least sixteen (16)
days prior to the date for payment by the Person entitled thereto.

  Section 104. Denominations. The Series   Notes shall be issued in
denominations of $      or any integral multiple thereof.

  Section 105. Global Securities. The Series   Notes shall initially be issued
in the form of one or more Global Securities registered in the name of the
Depositary (which initially shall be The Depository Trust Company) or its
nominee. Except under the limited circumstances described below, Series
Notes represented

                                       2
<PAGE>

by such Global Security or Global Securities shall not be exchangeable for,
and shall not otherwise be issuable as, Series   Notes in definitive form. The
Global Securities described above 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 Global Security shall be exchangeable for Series   Notes registered in the
names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Corporation that it is unwilling or unable to continue
as a Depositary for such Global Security and no successor Depositary shall
have been appointed by the Corporation within 90 days of receipt by the
Corporation of such notification, or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act at a time when the
Depositary is required to be so registered to act as such Depositary and no
successor Depositary shall have been appointed by the Corporation within 90
days after it becomes aware of such cessation or (ii) the Corporation in its
sole discretion determines that such Global Security shall be so exchangeable.
Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Series   Notes registered in such names as the
Depositary shall direct.

  Section 106. Redemption at the Option of the Corporation. The Series   Notes
shall be redeemable, in whole or from time to time in part, at the option of
the Corporation on any date (a "Redemption Date"), at a Redemption Price equal
to the greater of (i) 100% of the principal amount of the Series   Notes to be
redeemed and (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest accrued to
such Redemption Date) discounted to such Redemption Date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus   basis points, plus, in either case, accrued and unpaid
interest on the principal amount being redeemed to such Redemption Date.

  "Treasury Rate" means, with respect to any Redemption Date for the Series
Notes, (i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Stated Maturity, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined, and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight-line basis, rounding to the nearest month) or
(ii) if such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date. The Treasury Rate shall be calculated
on the third Business Day preceding the Redemption Date.

  "Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Series   Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Series   Notes.

  "Independent Investment Banker" means              and any successor firm
or, if such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee after consultation with the Corporation.

                                       3
<PAGE>

  "Comparable Treasury Price" means with respect to any Redemption Date for
the Series   Notes (i) the average of    Reference Treasury Dealer Quotations
for such Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer
than    such Reference Treasury Dealer Quotations, the average of all such
quotations.

  "Reference Treasury Dealer" means each of               ,           ,
         ,                       and             and their respective
successors; provided, however, that if any of the foregoing shall cease to be
a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Corporation will substitute therefor another Primary
Treasury Dealer.

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

  Notwithstanding Section 1104 of the Original Indenture, the notice of
redemption with respect to the foregoing redemption need not set forth the
Redemption Price but only the manner of calculation thereof.

  The Corporation shall notify the Trustee of the Redemption Price with
respect to the foregoing redemption promptly after the calculation thereof.
The Trustee shall not be responsible for calculating said Redemption Price.

  If less than all of the Series   Notes are to be redeemed, the Trustee shall
select the Series   Notes or portions of Series   Notes to be redeemed by such
method as the Trustee shall deem fair and appropriate. The Trustee may select
for redemption Series   Notes and portions of Series   Notes in amounts of
whole multiples of $      .

  The Series   Notes shall not have a sinking fund.

  Section 107. Subordination. The indebtedness evidenced by the Series   Notes
shall be, to the extent and in the manner set forth in the Original Indenture,
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness (as defined in the Original Indenture) with respect to the
Series   Notes, and the Series   Notes shall rank pari passu in right of
payment with each other series of Securities issued under the Indenture, with
the exception of any series of Securities which by its terms provides
otherwise.

  Section 108. Paying Agent. The Trustee shall initially serve as Paying Agent
with respect to the Series   Notes, with the Place of Payment initially being
the Corporate Trust Office.

                                   ARTICLE 2

                           Miscellaneous Provisions

  Section 201. Recitals by Corporation. The recitals in this     Supplemental
Indenture are made by the Corporation only and not by the Trustee, and all of
the provisions contained in the Original Indenture in respect of the rights,
privileges, immunities, powers and duties of the Trustee shall be applicable
in respect of the Series   Notes and of this     Supplemental Indenture as
fully and with like effect as if set forth herein in full.

  Section 202. Ratification and Incorporation of Original Indenture. As
supplemented hereby, the Original Indenture is in all respects ratified and
confirmed, and the Original Indenture and this     Supplemental Indenture
shall be read, taken and construed as one and the same instrument.

  Section 203. Executed in Counterparts. This     Supplemental Indenture may
be executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.

                                       4
<PAGE>

  IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed
in its name and behalf by its duly authorized officers, all as of the day and
year first above written.

                                          Duke Energy Corporation

                                          By:
                                              ---------------------------------
                                                      Vice President

Attest:

-----------------------------

                                          The Chase Manhattan Bank,
                                           as Trustee

                                          By:
                                              ---------------------------------
                                                      Vice President

Attest:

-----------------------------
                                       5
<PAGE>

                                   EXHIBIT A

                                    FORM OF
                     SERIES     % JUNIOR SUBORDINATED NOTE
                                      DUE

No.                                                                CUSIP No.

THE INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE
INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS, AND THIS SECURITY IS ISSUED SUBJECT TO THE
PROVISIONS OF THE INDENTURE WITH RESPECT THERETO.

                            DUKE ENERGY CORPORATION
                     SERIES     % JUNIOR SUBORDINATED NOTE
                                      DUE

  Principal Amount: $

  Regular Record Date: close of business on the 15th calendar day prior to the
                       relevant Interest Payment Date

  Original Issue Date:       ,

  Stated Maturity:     ,

  Interest Payment Dates:    and      , commencing       ,        .

  Interest Rate:   % per annum

  Authorized Denomination: $      or any integral multiples thereof

  Duke Energy Corporation, a North Carolina corporation (the "Corporation,"
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to
             , or registered assigns, the principal sum of           DOLLARS
($     ) on the Stated Maturity shown above and to pay interest thereon from
the Original Issue Date shown above, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semiannually in
arrears on each Interest Payment Date as specified above, commencing on the
Interest Payment Date next succeeding the Original Issue Date shown above and
on the Stated Maturity at the rate per annum shown above (the "Interest Rate")
until the principal hereof is paid or made available for payment and on any
overdue principal and on any overdue installment of interest. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date (other than an Interest Payment Date that is the Stated Maturity or a
Redemption Date) will, as provided in the Indenture, be paid to the Person in
whose name this Series     % Junior Subordinated Note due      (this "Security")
is registered on the Regular Record Date as specified above next preceding such
Interest Payment Date; provided that any interest payable at Stated Maturity or
on a Redemption Date will be paid to the Person to whom principal is payable.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Securities of this series not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange, if any, on which the Securities of this series shall be listed, and
upon such notice as may be required by any such exchange, all as more fully
provided in the Indenture.

  Payments of interest on this Security will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this
Security shall be computed and paid on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on this
Security is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without

                                      A-1
<PAGE>

any interest or payment in respect of any such delay) with the same force and
effect as if made on the date the payment was originally payable. "Business Day"
means a day other than (i) a Saturday or a Sunday, (ii) a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office is closed for business.

  Payment of principal of, premium, if any, and interest on the Securities of
this series shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payments of principal of, premium, if any, and interest on
Securities of this series represented by a Global Security shall be made by
wire transfer of immediately available funds to the Holder of such Global
Security, provided that, in the case of payments of principal and premium, if
any, such Global Security is first surrendered to the Paying Agent. If any of
the Securities of this series are no longer represented by a Global Security,
(i) payments of principal, premium, if any, and interest due at the Stated
Maturity or earlier redemption of such Securities shall be made at the office
of the Paying Agent upon surrender of such Securities to the Paying Agent, and
(ii) payments of interest shall be made, at the option of the Corporation,
subject to such surrender where applicable, (A) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register or (B) by wire transfer at such place and to such account at a
banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.

  The indebtedness evidenced by this Security is, to the extent and in the
manner set forth in the Indenture, subordinate in right of payment to the
prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Security is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Security, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided, and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes. Each Holder
hereof, by his acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness whether now outstanding or hereafter incurred and
waives reliance by each such holder upon said provisions.

  REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

  Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

  IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                          Duke Energy Corporation

                                          By:
                                              ---------------------------------
                                                      Vice President

Attest:

-------------------------------------
         Assistant Secretary

                         CERTIFICATE OF AUTHENTICATION

  This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

                                          The Chase Manhattan Bank,
                                           as Trustee

                                          By:
                                              ---------------------------------

                                      A-2
<PAGE>

                          (Reverse Side of Security)

  This Security is one of a duly authorized issue of Securities of the
Corporation (the "Securities"), issued and issuable in one or more series
under a Subordinated Indenture, dated as of December 1, 1997, as supplemented
(the "Indenture"), between the Corporation and The Chase Manhattan Bank, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitation
of rights, duties and immunities thereunder of the Corporation, the Trustee
and the Holders of the Securities issued thereunder and of the terms upon
which said Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof as Series     %
Junior Subordinated Notes due    in the aggregate principal amount of
$          . Capitalized terms used herein for which no definition is provided
herein shall have the meanings set forth in the Indenture.

  The Securities of this series will be redeemable, in whole or from time to
time in part, at the option of the Corporation on any date (a "Redemption
Date"), at a Redemption Price equal to the greater of (i) 100% of the
principal amount of the Securities of this series to be redeemed and (ii) the
sum of the present values of the remaining scheduled payments of principal and
interest thereon (exclusive of interest accrued to such Redemption Date)
discounted to such Redemption Date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate plus   basis
points, plus, in either case, accrued and unpaid interest on the principal
amount being redeemed to such Redemption Date.

  "Treasury Rate" means, with respect to any Redemption Date for the
Securities of this series, (i) the yield, under the heading which represents
the average for the immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or after the
Stated Maturity, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined, and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.

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

  "Independent Investment Banker" means                           and any
successor firm or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee after consultation with the
Corporation.

  "Comparable Treasury Price" means with respect to any Redemption Date for
the Securities of this series (i) the average of    Reference Treasury Dealer
Quotations for such Redemption Date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations or (ii) if the Trustee obtains fewer
than    such Reference Treasury Dealer Quotations, the average of all such
quotations.

                                      A-3
<PAGE>

  "Reference Treasury Dealer" means each of                ,          ,
         ,                       and            and their respective
successors; provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Corporation will substitute therefor another Primary Treasury
Dealer.

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

  Notice of any redemption by the Corporation will be mailed at least 30 days
but not more than 60 days before any Redemption Date to each Holder of
Securities of this series to be redeemed. If less than all the Securities of
this series are to be redeemed at the option of the Corporation, the Trustee
shall select, in such manner as it shall deem fair and appropriate, the
Securities of this series to be redeemed in whole or in part. The Trustee may
select for redemption Securities of this series and portions of Securities of
this series in amounts of whole multiples of $     .

  In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the surrender hereof.

  If an Event of Default with respect to the Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

  The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Securities of all series affected thereby (voting as one
class). The Indenture contains provisions permitting the Holders of not less
than a majority in principal amount of the Outstanding Securities of all series
with respect to which a default under the Indenture shall have occurred and be
continuing (voting as one class), on behalf of the Holders of the Securities of
all such series, to waive, with certain exceptions, such default under the
Indenture and its consequences. The Indenture also permits the Holders of not
less than a majority in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Corporation with certain provisions of the
Indenture affecting such series. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

  No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.

  As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation for such purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Corporation and
the Security Registrar and duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of this
series, of authorized denominations and of like tenor and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

                                      A-4
<PAGE>

  The Indenture contains provisions for defeasance at any time of the entire
indebtedness of the Securities of this series and for covenant defeasance at
any time of certain covenants in the Indenture upon compliance with certain
conditions set forth in the Indenture.

  Prior to due presentment of this Security for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.

  The Securities of this series are issuable only in registered form without
coupons in denominations of $      and any integral multiple thereof. As
provided in the Indenture and subject to the limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same upon surrender of the Security
or Securities to be exchanged at the office or agency of the Corporation.

  This Security shall be governed by, and construed in accordance with, the
internal laws of the State of New York.

                                      A-5
<PAGE>

                                 ABBREVIATIONS

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

TEN COM -- as tenants in common      UNIF GIFT MIN ACT -        Custodian
                                                        -------          ------
                                                        (Cust)          (Minor)
                                             under Uniform Gifts to Minors
                                             Act
                                                --------------------------
                                                           (State)

TEN ENT -- as tenants by the entireties

JT TEN -- as joint tenants with rights of
          survivorship and not as tenants
          in common

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

-------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
                                                                       --------

-------------------------------------------------------------------------------
(please insert Social Security or other identifying number of assignee)

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

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing

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

Dated:
       --------------------------    ------------------------------------------

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

                                      A-6
<PAGE>

                                   EXHIBIT B

                         CERTIFICATE OF AUTHENTICATION

  This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.

                                          The Chase Manhattan Bank,
                                             as Trustee

                                          By:
                                              ---------------------------------
                                                    Authorized Officer

                                      B-1

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