Document:

EX-10.1

Exhibit 10.1

SEPARATION AND CONSULTING AGREEMENT 

     THIS SEPARATION AND CONSULTING AGREEMENT (this “Agreement”), effective as of October 23, 2008,
is made by and between Caribou Coffee Company, Inc., (the “Company”) and Amy O’Neil
(“Employee”).

R E C I T A L S

     WHEREAS, Employee was formerly the Company’s Senior Vice-President for Store Operations; and

     WHEREAS, the Company and Employee are party to an Employment Agreement, dated July 1, 2005
(the “Employment Agreement”);

     WHEREAS, it is the position of the Company that Employee resigned her employment with the
Company for a reason other than for Good Reason (as defined in the Employment Agreement) effective
October 23, 2008;

     WHEREAS, it is the position of Employee that her resignation was for Good Reason (as defined
in the Employment Agreement); and

     WHEREAS, the Company and Employee have agreed that while Employee’s employment as the Senior
Vice-President for Store Operations ended on October 23, 2008, Employee shall be employed with the
Company in a consulting role as an employee for a transitional period from October 23, 2008 to
January 23, 2009 (the “Transition Period”);

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereby agree as follows:

     1. Transition Period.

          A. Employee and the Company acknowledge and agree that Employee resigned her employment as the
Senior Vice-President for Store Operations pursuant to the Employment Agreement on October 23,
2008, and that the Employment Agreement is superseded, cancelled and of no further effect, except
as provided in Section 11 of this Agreement.

          B. Employee hereby accepts new employment with the Company as an employee pursuant to this
Agreement and agrees to perform executive and consulting services for the Company during the
Transition Period as reasonably requested by the Company’s Chief Executive Officer, and shall
continue to be paid Employee’s former regular base salary ($265,282 per annum — “Base Salary”)
during the Transition Period. Employee shall not be entitled and waives any right to any other
compensation (including, without limitation, any bonuses or any similar or other payments) during
the Transition Period or thereafter, except as provided herein. The Transition Period shall end on
January 23, 2009, and may be shortened by the Company in its sole discretion, and the amount and
extent of Employee’s duties may fluctuate (or be reduced to zero) during the Transition Period, but
Employee’s right to receive the Base Salary shall continue through the entire Transition Period
provided that Employee is in compliance with this Agreement and any other agreements between
Employee and the Company. If Employee ceases to perform services during the Transition Period,
and as a result, the Company determines that the Employee has incurred a “Separation from Service”
(within the meaning of Section 409A of the Internal Revenue
Code), any remaining payments owed under this subsection 1.B. shall not be paid until the date
which is six

 

 

(6) months and one day after the date of such Separation from Service. Any payment
resulting from a “Separation from Service” prior to January 23, 2009 shall be paid
independently from any amounts due Employee under Section 2 of this Agreement. For the purposes of
clarity, Employee is considered a “specified employee” for the purposes of Section 409A of the
Internal Revenue Code.

          C. Subject to the terms set forth in Employee’s Stock Option Agreements, Employee shall have
ninety (90) days from the end of the Transition Period on January 23, 2009, to exercise all options
vested on such date. In the event Employee incurs a separation from service prior to the end of
the Transition Period contemplated to be January 23, 2009, Employee shall have ninety (90) days
from the date of such separation from service to exercise all options vested on such date. All
options not vested on the end of the Transition Period are immediately and automatically be
forfeited on such date.

          D. During the Transition Period, Employee shall be eligible for the same benefits as are made
available to other senior executive employees of the Company (other than equity awards,
including without limitation, any stock options), as well as such other benefits as may be
specified from time to time by the Company. Currently Employee is enrolled in the Company medical,
dental, 401K plan, basic life, supplemental life, long term disability and short-term disability
programs and may continue to be enrolled in such programs as an employee throughout the Transition
Period. The Company reserves the right at any time and from time to time to change, amend, or
terminate any such benefits as the Company in its discretion deems appropriate or necessary under
the circumstances.

          E. Employee shall be eligible to continue to accrue pooled leave during the Transition Period
consistent with any other employee. Company shall pay Employee all earned and unused pooled leave
as of the last day of the Transition Period which is contemplated to be January 23, 2009, but which
may be an earlier date as provided in Section 1. B. Such earned and unused pooled leave shall be
paid on the date of the first normal payroll cycle following the end of the Transition Period. As
of October 23, 2008 Employee has accrued and unused pooled leave equal to 200 hours, which is the
maximum amount of pooled leave an employee may accrue under the Company pooled leave policy.

     2. Additional Consideration. In consideration for Employee entering into this
Agreement, and provided that Employee complies with the terms and conditions hereof (including,
without limitation, the obligation under Section 1.B to perform services throughout the Transition
Period and Employee’s obligations under certain surviving provisions of the Employment Agreement,
as referenced in Section 11, below), and provided that Employee executes a second release in the
form attached hereto as Exhibit A (the “Second Release”), the Company agrees to pay Employee the
gross amount of $221,068 (less applicable withholdings) following the later of (i) the termination
or expiration of the Transition Period; (ii) Employee’s signing the Second Release, (iii) the
expiration of any revocation periods contained in the Second Release and (iv) Employee’s
“separation from service” (within the meaning of Section 409A of the Code); provided,
however, to comply with the restriction in Section 409A of the Code concerning payments to
specified employees, the payment to Employee pursuant to this Paragraph 2 shall be made at least
six months and one day after Employee’s “separation from service” (within the meaning of section
409A of the Code). The gross payment of $221,068 described above shall be made in two lump sum
payments, the first of which in the amount of $132,640 (less applicable withholdings) is to be paid
on July 24, 2009, and the second payment of $88,428 (less applicable withholdings) is to be paid on
November 23, 2009. The Company and Employee intend that the payments made pursuant to
Paragraph 1.B after Employee has a Separation from Service and that the payments made
pursuant to this Paragraph 2 comply with the requirements of Section 409A of the Code and this
Agreement shall be construed to effect such intent. The Company shall report the payments to the
Internal Revenue Service and Employee in a manner consistent with this intent.

     3. Release. Employee, on her behalf and on behalf of her heirs, executors,
administrators, trustees and assigns hereby fully, knowingly and voluntarily, releases and forever
discharges the Company and the Company’s past and present agents, representatives, employees,
officers, directors, affiliates, controlling persons, stockholders, subsidiaries, successors and
assigns (collectively, the “Releasees”), collectively, separately, and severally, from or
for any and all state, local or federal claims, causes of
action, liabilities, and judgments of every type and description whatsoever, known and unknown

 

 

(including, but not limited to, claims arising under Title VII of the Civil Rights Act of 1964, as
amended; the Rehabilitation Act of 1973, as amended; the Employee Retirement Income Security Act of
1974, as amended; the Fair Labor Standards Act of 1938, as amended; the Americans with Disabilities
Act; the Minnesota Human Rights Act; Minn. Stat. § 181.81; the Minneapolis Code of Ordinances;
wrongful discharge; violation of Minn. Stat. § 176.82; breach of contract; tortious interference
with contractual relations; promissory estoppel; breach of the implied covenant of good faith and
fair dealing; breach of express or implied promise; breach of manuals or other policies; assault;
battery; fraud; false imprisonment; invasion of privacy; intentional or negligent
misrepresentation; defamation, including libel, slander, discharge defamation and self-publication
defamation; discharge in violation of public policy; whistleblower claims; intentional or negligent
infliction of emotional distress; or any other theory, whether legal or equitable) which she, her
heirs, administrators, executors, personal representatives, beneficiaries, and assigns may have or
claim to have against Releasees related to Employee’s employment or the termination thereof.
Employee warrants that Employee has been provided all leave under the Family and Medical Leave Act
to which she is or may have been entitled, and that the Company has not interfered with her rights
thereunder. Employee specifically waives the benefit of any statute or rule of law which, if
applied to this Agreement, would otherwise exclude from its binding effect any claims not now known
by her to exist. Notwithstanding this release provision, or any other provision or section of this
Agreement, Employee does not waive or release any claims to enforce this Agreement.

     4. Employee also hereby knowingly and voluntarily releases and discharges Releasees,
collectively, separately and severally, from or for any and all liability, claims, allegations, and
causes of action arising under the Age Discrimination in Employment Act of 1967, as amended
(“ADEA”), which Employee, Employee’s heirs, administrators, executors, personal representatives,
beneficiaries, and assigns may have or claim to have against Releasees. Notwithstanding any other
provision or section of this Agreement, Employee does not hereby waive any rights or claims under
the ADEA that may arise after the date on which the Agreement is signed by her.

     5. Employee further understands that she is releasing, and does hereby release, any claims for
damages, by charge or otherwise, whether brought by her or on her behalf by any other party,
governmental or otherwise, and agrees not to institute any claims for damages via administrative or
legal proceedings against any of the Releasees. Employee also waives and releases any and all
right to money damages or other legal relief awarded by any governmental agency related to any
charge or other claim against any of the Releasees.

     6. This Agreement does not apply to any post-termination claim that Employee may have for
benefits under the provisions of any employee benefit plan maintained by the Company. Employee’s
release of claims shall not apply to any claims Employee might have to indemnification under
Minnesota Statute § 302A.521, any other applicable statute or regulation, or the Company’s by-laws.

     7. Employee hereby acknowledges and represents that (a) she has been given a period of at
least twenty-one (21) days to consider the terms of this Agreement, (b) the Company has advised or
hereby advises her in writing to consult with an attorney prior to executing this Agreement, and
(c) she has received valuable and good consideration to which she is otherwise not entitled in
exchange for her execution of this Agreement.

     8. Employee and the Company hereby acknowledge this Agreement shall not become effective or
enforceable until the fifteenth (15th) day after it is executed by Employee (“Effective Date”) and
that Employee may revoke this Agreement at any time before the Effective Date. Employee has been
informed and understands that any such revocation must be in writing and delivered to the Company
by hand, or sent by mail within the 15-day period. If delivered by mail, the revocation must be:
(1) postmarked within the 15-day period, (2) properly addressed as set forth below, and (3) sent by
certified mail, return receipt requested.

	 	 	 	 	 
	To the Company:

	 	Caribou Coffee Company, Inc.
	 	 
	 

	 	Attn: General Counsel	 	 

 

 

3900 Lakebreeze Avenue

Brooklyn Center, Minnesota 55429

Telephone No.: (763) 592-2200

Facsimile No.: (763) 592-2300

     9. Employee agrees that she has not heretofore assigned, transferred or hypothecated nor
attempted to assign, transfer or hypothecate any interest she may have in the released claims.

     10. Employee agrees not to make any statement, written or verbal, to any person or entity,
including in any forum or media, or take any action, in disparagement of the Company, Arcapita Inc.
or any of their respective affiliates, or any of the current, former or future partners, managers,
members, officers, directors and employees of any of the foregoing (individually, a “Company
Party” and collectively the “Company Parties”), including negative references to or
about any Company Party’s services, policies, practices, documents, methods of doing business,
strategies, objectives, partners, managers, members, or employees, or take any other action that
may disparage any Company Party to the general public and/or any Company Party’s employees,
clients, franchisees, potential franchisees, suppliers, investors, potential investors, business
partners or potential business partners, unless compelled to do so under oath.

          11. Employee has no oral representations, understandings, or agreements with the Company or
any of its officers, directors, or representatives covering the same subject matter as this
Agreement. This Agreement is the final, complete, and exclusive statement of expression of the
agreement between the Company and Employee with respect to the subject matter hereof, and cannot be
varied, contradicted, or supplemented by evidence of any prior or contemporaneous oral or written
agreements. This Agreement may not be later modified except by a further writing signed by a duly
authorized officer of the Company or member of the Board and Employee, and no term of this
Agreement may be waived except by a writing signed by the party waiving the benefit of such term.
This Agreement supersedes all other agreements between Employee and the Company related to
Employee’s employment with the Company or the termination thereof, provided, however, that
this Agreement does not supersede or replace Sections 8, 10, 11, 12, 14, 15, 16, and/or 19 of the
Employment Agreement except as modified herein in Section 16, nor does it supersede or replace any
agreement related to Employee as a holder of securities or options of the Company, all of which
shall survive this Agreement and the Second Release in accordance with their terms, except as
modified herein in Section 16.

          12. If any portion of this Agreement is held invalid or inoperative, the other portions of
this Agreement shall be deemed valid and operative and, so far as is reasonable and possible,
effect shall be given to the intent manifested by the portion held invalid or inoperative.

          13. This Agreement, and all other disputes or issues arising from or relating in any way to
the Company’s relationship with Employee, shall be governed by the internal laws of the State of
Minnesota, irrespective of the choice of law rules of any jurisdiction. All disputes arising from
or relating to this Agreement shall be subject to the exclusive jurisdiction of and be litigated in
the state or federal courts located in the State of Minnesota. All parties hereby consent to the
exclusive jurisdiction and venue of such courts for the litigation of all disputes and waive any
claims of improper venue, lack of personal jurisdiction, or lack of subject matter jurisdiction as
to any such disputes.

          14. Headings in this Agreement are for convenience only and shall not control the meaning of
this Agreement. Whenever applicable, masculine and neutral pronouns shall equally apply to the
feminine genders; the singular shall include the plural and the plural shall include the singular.
The parties have reviewed and understand this Agreement, and each has had a full opportunity to
negotiate the Agreement’s terms and to consult with counsel of their own choosing. Therefore, the
parties expressly waive all applicable common law and statutory rules of construction that any
provision of this Agreement should be construed against the agreement’s drafter, and agree that
this Agreement and all amendments thereto shall be construed as a whole, according to the fair
meaning of the language used.

 

 

          15. Company employs Employee as an employee and shall afford Employee the same rights to
indemnification and coverage by the Company’s insurance programs afforded to other employees of the
Company during and after the term of the Transition Period.

          16. Notwithstanding anything in the Employment Agreement or any other agreement between the
parties to the contrary, Employee’s obligations not to use or disclose confidential information,
not to compete or solicit the customers or employees of the Company, such as contained in Section 8
of the Employment Agreement or any counterpart provisions, as well as provisions in any stock
option or other agreements between the parties shall all expire on November 23, 2009 and be of no
further force and effect and all such provisions providing for a longer duration are hereby amended
and revised accordingly.

          17. This Agreement may be executed in one or more counterparts, each of which when executed
and delivered shall be an original, and all of which when executed shall constitute one and the
same instrument.

EMPLOYEE:

	 	 	 	 	 
	 

	 	 	 	November 18, 2008
	 

Amy O’Neil

	 	 	 	 
	 
	 	 	 	 
	CARIBOU COFFEE COMPANY, INC.	 	 
	 
	 	 	 	 
	 

	 	 	 	November 18, 2008
	 

	 	 	 	 

By:     Michael Tattersfield

Title:  Chief Executive Officer & President

 

 

EXHIBIT A

FORM OF SECOND RELEASE

     THIS RELEASE (this “Release”), effective as of                     , ___, is made by and
between Caribou Coffee Company, Inc., (the “Company”) and Amy O’Neil (“Employee”).

R E C I T A L S

     WHEREAS, the Company and Employee are party to a Separation and Consulting Agreement, dated
October 23, 2008 (the “First Agreement”); and

     WHEREAS, pursuant to the terms of the First Agreement, as a condition to the Company’s payment
of certain post-employment amounts to Employee pursuant to Paragraph 2 thereof, Employee is
required to execute a full and complete release, on behalf of herself and her heirs, executors,
administrators, trustees and assigns releasing all claims, actions and causes of action against the
Company and each subsidiary and affiliate of the Company, and their respective predecessors,
successors, current and former directors, officers, administrators, trustees, employees, agents and
other representatives.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereby agree as follows:

     1. Release. Employee, on her behalf and on behalf of her heirs, executors,
administrators, trustees and assigns hereby fully, knowingly and voluntarily, releases and forever
discharges the Company and the Company’s past and present agents, representatives, employees,
officers, directors, affiliates, controlling persons, stockholders, subsidiaries, successors and
assigns (collectively, the “Releasees”), collectively, separately, and severally, from or
for any and all state, local or federal claims, causes of action, liabilities, and judgments of
every type and description whatsoever, known and unknown (including, but not limited to, claims
arising under Title VII of the Civil Rights Act of 1964, as amended; the Rehabilitation Act of
1973, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Fair Labor
Standards Act of 1938, as amended; the Americans with Disabilities Act; the Minnesota Human Rights
Act; Minn. Stat. § 181.81; the Minneapolis Code of Ordinances; wrongful discharge; violation of
Minn. Stat. § 176.82; breach of contract; tortious interference with contractual relations;
promissory estoppel; breach of the implied covenant of good faith and fair dealing; breach of
express or implied promise; breach of manuals or other policies; assault; battery; fraud; false
imprisonment; invasion of privacy; intentional or negligent misrepresentation; defamation,
including libel, slander, discharge defamation and self-publication defamation; discharge in
violation of public policy; whistleblower claims; intentional or negligent infliction of emotional
distress; or any other theory, whether legal or equitable) which she, her heirs, administrators,
executors, personal representatives, beneficiaries, and assigns may have or claim to have against
Releasees related to Employee’s employment or the termination thereof. Employee warrants that
Employee has been provided all leave under the Family and Medical Leave Act to which she is or may
have been entitled, and that the Company has not interfered with her rights thereunder. Employee
specifically waives the benefit of any statute or rule of law which, if applied to this Agreement,
would otherwise exclude from its binding effect any claims not now known by her to exist.

     2. Employee also hereby knowingly and voluntarily releases and discharges Releasees,
collectively, separately and severally, from or for any and all liability, claims, allegations, and
causes of action arising under the Age Discrimination in Employment Act of 1967, as amended
(“ADEA”), which Employee, Employee’s heirs, administrators, executors, personal representatives,
beneficiaries, and assigns may have or claim to have against Releasees. Notwithstanding any other
provision or section of this Agreement, Employee does not hereby waive any rights or claims under
the ADEA that may arise after the date on which the Agreement is signed by her.

 

 

     3. Employee further understands that she is releasing, and does hereby release, any claims for
damages, by charge or otherwise, whether brought by her or on her behalf by any other party,
governmental or otherwise, and agrees not to institute any claims for damages via administrative or
legal proceedings against any of the Releasees. Employee also waives and releases any and all
right to money damages or other legal relief awarded by any governmental agency related to any
charge or other claim against any of the Releasees.

     4. This Release does not apply to any post-termination claim that Employee may have for
benefits under the provisions of any employee benefit plan maintained by the Company. Employee’s
release of claims shall not apply to any claims Employee might have to indemnification under
Minnesota Statute § 302A.521, any other applicable statute or regulation, or the Company’s by-laws.

     5. Employee hereby acknowledges and represents that (a) she has been given a period of at
least twenty-one (21) days to consider the terms of this Agreement, (b) the Company has advised or
hereby advises her in writing to consult with an attorney prior to executing this Agreement, and
(c) she has received valuable and good consideration to which she is otherwise not entitled in
exchange for her execution of this Agreement.

     6. Employee and the Company hereby acknowledge this Agreement shall not become effective or
enforceable until the fifteenth (15th) day after it is executed by Employee (“Effective Date”) and
that Employee may revoke this Agreement at any time before the Effective Date. Employee has been
informed and understands that any such revocation must be in writing and delivered to the Company
by hand, or sent by mail within the 15-day period. If delivered by mail, the revocation must be:
(1) postmarked within the 15-day period, (2) properly addressed as set forth below, and (3) sent by
certified mail, return receipt requested:

	 	 	 	 	 
	To the Company:

	 	Caribou Coffee Company, Inc.
	 	 
	 

	 	          Attn: General Counsel	 	 
	 

	 	          3900 Lakebreeze Avenue	 	 
	 

	 	          Brooklyn Center, Minnesota 55429	 	 
	 

	 	          Telephone No.: (763) 592-2200	 	 
	 

	 	          Facsimile No.: (763) 592-2300	 	 

     7. Employee agrees that she has not heretofore assigned, transferred or hypothecated nor
attempted to assign, transfer or hypothecate any interest she may have in the released claims.

     8. Employee agrees not to make any statement, written or verbal, to any person or entity,
including in any forum or media, or take any action, in disparagement of the Company, Arcapita Inc.
or any of their respective affiliates, or any of the current, former or future partners, managers,
members, officers, directors and employees of any of the foregoing (individually, an “Company
Party” and collectively the “Company Parties”), including negative references to or
about any Company Party’s services, policies, practices, documents, methods of doing business,
strategies, objectives, partners, managers, members, or employees, or take any other action that
may disparage any Company Party to the general public and/or any Company Party’s employees,
clients, franchisees, potential franchisees, suppliers, investors, potential investors, business
partners or potential business partners, unless compelled to do so under oath.

     9. This Agreement shall in all respects be governed and construed in accordance with the laws
of the State of Minnesota without regard to choice of law principles.

EMPLOYEE:

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

	 	 	 	 	 	 	 
	Amy O’Neil

	 	 	 	Date	 	 
	 
	 	 	 	 	 	 
	CARIBOU COFFEE COMPANY, INC.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Date
	 	 

By:      Michael Tattersfield

Title:     Chief Executive Officer & PresidentEX-4.1

Exhibit 4.1

Execution Copy

 

DUKE ENERGY CAROLINAS, LLC

TO

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

Trustee

 

EIGHTY-EIGHTH SUPPLEMENTAL INDENTURE

Dated as of November 17, 2008

 

CREATING TWO SERIES OF FIRST AND REFUNDING

MORTGAGE BONDS

$400,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 5.75% SERIES C DUE 2013

$500,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 7.00% SERIES C DUE 2018

 

SUPPLEMENTAL TO

FIRST AND REFUNDING MORTGAGE

DATED AS OF DECEMBER 1, 1927

 

 

 

     SUPPLEMENTAL INDENTURE, bearing date as of the 17th day of November, 2008, made and entered
into by and between Duke Energy Carolinas, LLC, a limited liability company duly organized and
existing under the laws of the State of North Carolina, hereinafter called the “Company,” party of
the first part, and The Bank of New York Mellon Trust Company, N.A., (formerly known as The Bank of
New York Trust Company, N.A.) a national banking association, having a corporate trust office at
900 Ashwood Parkway, Suite 425, Atlanta, Georgia 30338, hereinafter called the “Trustee,” as
Trustee, party of the second part. The Trustee is the successor to JPMorgan Chase Bank, N.A.
(formerly known as The Chase Manhattan Bank, formerly known as Chemical Bank (successor to Morgan
Guaranty Trust Company of New York)), as trustee.

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

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

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

2

 

2004 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 7% Series
Due 2033” (herein called “bonds of the 2033 Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 6 7/8% Series B Due 2023” (herein called “bonds of the 2023 Series B”),
bonds of a series known as the “First and Refunding Mortgage Bonds, 6 3/4% Series Due 2025” (herein
called “bonds of the 2025 Series”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 7 7/8% Series Due 2024” (herein called “bonds of the 2024 Series”), bonds of a series known
as the “First and Refunding Mortgage Bonds, 7 1/2% Series B Due 2025” (herein called “bonds of the
2025 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds, 71/2% Series Due
1999” (herein called “bonds of the 1999 Series”), bonds of a series known as the “First and
Refunding Mortgage Bonds, 7% Series Due 2000” (herein called “bonds of the 2000 Series”), bonds of
a series known as the “First and Refunding Mortgage Bonds, 7% Series B Due 2000” (herein called
“bonds of the 2000 Series B”), bonds of a series known as the “First and Refunding Mortgage Bonds,
6.625% Series due 2003” (herein called “bonds of the 2003 Series”), bonds of a series known as the
“First and Refunding Mortgage Bonds, 9 5/8% Series due 2020” (herein called “bonds of the 2020
Series”), bonds of a series known as the “First and Refunding Mortgage Bonds, 8 3/4% Series due
2021” (herein called “bonds of the 2021 Series”), bonds of a series known as “First and Refunding
Mortgage Bonds, 7% Series due 2005” (herein called “bonds of the 2005 Series”), bonds of a series
known as “First and Refunding Mortgage Bonds, 3.75% Series A due 2008” (herein called “bonds of the
3.75% Series A”), bonds of series known as “First and Refunding Mortgage Bonds, 3.75% Series B due
2008” (herein called “bonds of the 3.75% Series B,” and together with the bonds of the 3.75% Series
A, the “bonds of the 3.75% Series”), bonds of a series known as “First and Refunding Mortgage
Bonds, 7 3/8% Series Due 2023” (herein called “bonds of the 7 3/8% Series”), bonds of series known
as “First and Refunding Mortgage Bonds, 41/2% Series Due 2010” (herein called “bonds of the 41/2%
Series”), bonds of series known as “First and Refunding Mortgage Bonds, 5.30% Series due 2015”
(herein called “bonds of the 5.30% Series”), bonds of series known as “First and Refunding Mortgage
Bonds, 5.25% Series due 2018” (herein called “bonds of the 5.25% Series”), bonds of series known as
“First and Refunding Mortgage Bonds, 6.00% Series due 2038” (herein called “bonds of the 6.00%
Series”), bonds of series known as “First and Refunding Mortgage Bonds, 2007A Pledge Series due
2040” (herein called “bonds of the 2007A Pledge Series”), bonds of series known as “First and
Refunding Mortgage Bonds, 2007B Pledge Series due 2040” (herein called “bonds of the 2007B Pledge
Series”), bonds of series known as “First and Refunding Mortgage Bonds, 5.10% Series B due 2018”
(herein called “bonds of the 5.10% Series”), bonds of series known as “First and Refunding Mortgage
Bonds, 6.05% Series B due 2038” (herein called “bonds of the 6.05% Series”) and such other bonds
that have been issued have heretofore been issued and (except for bonds of the 2.65% Series, bonds
of the 1979 Series, bonds of the 1998 Series, bonds of the 1999 Series, bonds of the 2000 Series,
bonds of the 2000 Series B, bonds of the 2003 Series, bonds of the 2003 Series B, bonds of the 2003
Series C, bonds of the 2020 Series, bonds of the 2021 Series, bonds of the 2005 Series, bonds of
the 2025 Series B, bonds of the 7 3/8% Series and other such bonds which have been redeemed or
retired in their entirety) are the only bonds now outstanding under the original indenture as
heretofore supplemented; and

     WHEREAS the Company has duly executed and delivered a supplemental indenture, dated as of June
15, 1964, to Morgan Guaranty Trust Company of New York, as Trustee, for the purpose of evidencing
the succession by merger of the Company to the New Jersey Company and the assumption by the Company
of the covenants and conditions of the New Jersey

3

 

Company in the original indenture and to enable the Company to have and exercise the powers
and rights of the New Jersey Company under the original indenture in accordance with the terms
thereof and whereby the Company assumed and agreed to pay duly and punctually the principal of and
interest on the bonds issued under the original indenture in accordance with the provisions of said
bonds and the coupons thereto appertaining and the original indenture, and agreed to perform and
fulfill all the terms, covenants and conditions of the original indenture binding upon the New
Jersey Company, and

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

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

     WHEREAS the Company desires to create under the original indenture, as heretofore supplemented
and as to be supplemented by this supplemental indenture, two new series of bonds, to be known as
its “First and Refunding Mortgage Bonds, 5.75% Series C due 2013” and its “First and Refunding
Mortgage Bonds, 7.00% Series C due 2018”, and to determine the terms and provisions and the form of
the bonds of each such series; and

     WHEREAS for the purposes hereinabove recited, and pursuant to due limited liability company
action, the Company has duly determined to execute and deliver to the Trustee a supplemental
indenture in the form hereof supplementing the original indenture (the original indenture, as
supplemented by the aforesaid supplemental indenture dated as of June 15, 1964, by supplemental
indentures dated as of February 1, 1968, March 1, 1990, May 15, 1990, July 1, 1991, March 1, 1993,
April 1, 1993, May 1, 1993, July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994, February
25, 2003, March 21, 2003, September 23, 2003, March 20, 2006, January 10, 2008, February 11, 2008,
April 14, 2008 and as hereby supplemented, being sometimes hereinafter referred to as the
“Indenture”); and

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

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     That in consideration of the premises and of the sum of one dollar duly paid by the Company to
the Trustee at or before the execution and delivery of these presents, the receipt

4

 

whereof is hereby acknowledged, the Company hereby covenants and agrees with the Trustee and
its successors in the trust under the Indenture as follows:

PART ONE.

BONDS OF THE 2013 SERIES C AND BONDS OF THE 2018 SERIES C

     SECTION 1. BONDS OF THE 2013 SERIES C

          SECTION 1.1 The Company hereby creates a new series of bonds to be issued under and secured by
the Indenture and known as its First and Refunding Mortgage Bonds, 5.75% Series C due 2013 (herein
called “bonds of the 2013 Series C”) and the Company hereby establishes, determines and fixes the
terms and provisions of the bonds of the 2013 Series C as hereinafter in this Part One set forth.

     Each bond of the 2013 Series C shall be dated the date of its authentication (except that if
any such bond shall be authenticated on any interest payment date, it shall be dated the following
day) and interest shall be payable on the principal represented thereby commencing May 15, 2009,
from the May 15 or November 15, as the case may be, next preceding the date thereof to which
interest has been paid, unless such date of authentication is prior to May 15, 2009, in which case
interest shall be payable from November 17, 2008; provided, however, that interest
shall be payable on each bond of the 2013 Series C authenticated after the record date (as defined
in the next succeeding paragraph of this Section 1.1) with respect to any interest payment date and
prior to such interest payment date, only from such interest payment date.

     Interest on any bond of the 2013 Series C shall be paid to the person who, according to the
bond register of the Company, is the registered holder of such bond of the 2013 Series C at the
close of business on the applicable record date, and such interest payments shall be made by check
mailed to such registered holder at his last address shown on such bond register or, at the option
of the Company, by wire transfer at such place and to such account at a banking institution in the
United States as may be designated in writing to the Trustee at least sixteen (16) days prior to
the date of payment by the Person entitled thereto (provided, that if the bonds of the 2013
Series C are represented by Global Securities held by the Depositary, payment may be made pursuant
to the procedures of the Depositary); provided, however, that, if the Company shall
default in the payment of the interest due on any interest payment date on any bond of the 2013
Series, such defaulted interest shall be paid to the registered holder of such bond (or any bond or
bonds of the 2013 Series C issued upon transfer, exchange or substitution thereof) on the date of
subsequent payment of such defaulted interest or, at the election of the Company, to the person in
whose name such bond (or any bond or bonds of the 2013 Series C issued upon transfer, exchange or
substitution thereof) is registered on a subsequent record date established by notice given by mail
by or on behalf of the Company to the holders of all bonds of the 2013 Series C not less than ten
(10) days preceding such subsequent record date. The term “record date” as used in this Section 1.1
shall mean, with respect to any semi-annual interest payment date, the close of business on the May
1 or November 1, whether or not a business day, next preceding such interest payment date or, in
the case of a payment of defaulted interest, the close of business on any subsequent record date
established as provided above.

5

 

          SECTION 1.2 All bonds of the 2013 Series C shall mature as to principal on November 15, 2013
and shall bear interest at a rate of 5.75% per annum, payable semi-annually on the fifteenth day of
May and November in each year, commencing on the fifteenth day of May, 2009.

          SECTION 1.3 The bonds of the 2013 Series C shall be fully registered bonds, without coupons,
in denominations of two thousand dollars ($2,000) and integral multiples of one thousand dollars
($1,000) in excess thereof, all such bonds to be numbered, and shall be transferable and
exchangeable as provided in the form of bond set forth as Exhibit A to this supplemental indenture.
The provisions of §1.19 and any other provision in the Indenture in respect of coupon bonds or
reservation of coupon bond numbers shall be inapplicable to the bonds of the 2013 Series.

          SECTION 1.4 The bonds of the 2013 Series C may be redeemed at the option of the Company, in
whole or in part at any time and from time to time, at a redemption price equal to the greater of
(1) 100% of the principal amount of the bonds of the 2013 Series C to be redeemed and (2) the sum
of the present values of the remaining scheduled payments of principal and interest on such bonds
of the 2013 Series C (exclusive of interest accrued to the redemption date) discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 50 basis points, plus, in either case, accrued and unpaid interest on the
principal amount being redeemed to such redemption date. The Company shall notify the Trustee of
the redemption price with respect to any redemption pursuant to this paragraph promptly after the
calculation thereof. The Trustee shall not be responsible for calculating said redemption price.

     The bonds of the 2013 Series C are also subject to redemption through the operation of the
Replacement Fund provided in Part Two of this supplemental indenture or through the application of
moneys paid to the Trustee pursuant to the provisions of §5.05 of the Indenture, at any time or
from time to time prior to maturity, upon prior notice as hereinafter provided, at the redemption
prices specified in the fourth paragraph of the reverse side of the form of bond set forth as
Exhibit A to this supplemental indenture, together with interest accrued thereon to the date fixed
for redemption thereof.

     All such redemptions of bonds of the 2013 Series C shall be effected as provided in Article 3
of the Indenture except that, in case a part only of the bonds of the 2013 Series C is to be paid
and redeemed, the particular bonds or part thereof shall be selected by the Trustee in such manner
as the Trustee in its uncontrolled discretion shall determine to be fair and in any case where
several bonds are registered in the same name, the Trustee may treat the aggregate principal amount
so registered as if it were represented by one bond and except that when bonds are redeemed in part
only the notice given to any particular holder need state only the principal amount of the bonds of
that holder which is to be redeemed and except that notice to the holders of bonds to be redeemed
shall be given by mailing to such holders a notice of such redemption, first class mail postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth day, before the date
fixed for redemption, at their last addresses as they shall appear upon the bond register of the
Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice; and failure duly to give such
notice by mail, or any defect in such notice, to the holder of

6

 

any bond designated for redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other bond. No publication of notice of such redemption shall
be required.

          SECTION 1.5 The limit upon the aggregate principal amount of the bonds of the 2013 Series C
which may be authenticated and delivered pursuant to this Eighty-Eighth Supplemental Indenture
shall be $400,000,000.

          SECTION 1.6 The place or places of payment (as to principal and premium, if any, and
interest), redemption, transfer, exchange and registration of the bonds of the 2013 Series C shall
be the office or offices or the agency or agencies of the Company in the Borough of Manhattan, The
City of New York, designated from time to time by the Board of Directors of the Company
(provided, that if the bonds of the 2013 Series C are represented by Global Securities held
by or on behalf of the Depositary, the procedures of the Depositary may be followed for any action
under this Section 1.6 of Part One).

          SECTION 1.7 The form of the bonds of the 2013 Series C and the certificate of the Trustee to
be endorsed on such bonds, respectively, shall be in substantially the form set forth in Exhibit A
hereto.

    SECTION 2. BONDS OF THE 2018 SERIES C

          SECTION 2.1 The Company hereby creates a new series of bonds to be issued under and secured by
the Indenture and known as its First and Refunding Mortgage Bonds, 7.00% Series C due 2018 (herein
called “bonds of the 2018 Series C”, and together with the bonds of the 2013 Series C, the
“Bonds”) and the Company hereby establishes, determines and fixes the terms and provisions of the
bonds of the 2018 Series C as hereinafter in this Part One set forth.

     Each bond of the 2018 Series C shall be dated the date of its authentication (except that if
any such bond shall be authenticated on any interest payment date, it shall be dated the following
day) and interest shall be payable on the principal represented thereby commencing May 15, 2009,
from the May 15 or November 15, as the case may be, next preceding the date thereof to which
interest has been paid, unless such date of authentication is prior to May 15, 2009, in which case
interest shall be payable from November 17, 2008; provided, however, that interest
shall be payable on each bond of the 2018 Series C authenticated after the record date (as defined
in the next succeeding paragraph of this Section 2.1) with respect to any interest payment date and
prior to such interest payment date, only from such interest payment date.

     Interest on any bond of the 2018 Series C shall be paid to the person who, according to the
bond register of the Company, is the registered holder of such bond of the 2018 Series C at the
close of business on the applicable record date, and such interest payments shall be made by check
mailed to such registered holder at his last address shown on such bond register or, at the option
of the Company, by wire transfer at such place and to such account at a banking institution in the
United States as may be designated in writing to the Trustee at least sixteen (16) days prior to
the date of payment by the Person entitled thereto (provided, that if the bonds of the 2018
Series C are represented by Global Securities held by the Depositary, payment may be

7

 

made pursuant to the procedures of the Depositary); provided, however, that,
if the Company shall default in the payment of the interest due on any interest payment date on any
bond of the 2018 Series C, such defaulted interest shall be paid to the registered holder of such
bond (or any bond or bonds of the 2018 Series C issued upon transfer, exchange or substitution
thereof) on the date of subsequent payment of such defaulted interest or, at the election of the
Company, to the person in whose name such bond (or any bond or bonds of the 2018 Series C issued
upon transfer, exchange or substitution thereof) is registered on a subsequent record date
established by notice given by mail by or on behalf of the Company to the holders of all bonds of
the 2018 Series C not less than ten (10) days preceding such subsequent record date. The term
“record date” as used in this Section 2.1 shall mean, with respect to any semi-annual interest
payment date, the close of business on the May 1 or November 1, whether or not a business day, next
preceding such interest payment date or, in the case of a payment of defaulted interest, the close
of business on any subsequent record date established as provided above.

          SECTION 2.2 All bonds of the 2018 Series C shall mature as to principal on November 15, 2018
and shall bear interest at a rate of 7.00% per annum, payable semi-annually on the fifteenth day of
May and November in each year, commencing on the fifteenth day of May, 2009.

          SECTION 2.3 The bonds of the 2018 Series C shall be fully registered bonds, without coupons,
in denominations of two thousand dollars ($2,000) and integral multiples of one thousand dollars
($1,000) in excess thereof, all such bonds to be numbered, and shall be transferable and
exchangeable as provided in the form of bond set forth as Exhibit B to this supplemental indenture.
The provisions of §1.19 and any other provision in the Indenture in respect of coupon bonds or
reservation of coupon bond numbers shall be inapplicable to the bonds of the 2018 Series C.

          SECTION 2.4 The bonds of the 2018 Series C may be redeemed at the option of the Company, in
whole or in part at any time and from time to time, at a redemption price equal to the greater of
(1) 100% of the principal amount of the bonds of the 2018 Series C to be redeemed and (2) the sum
of the present values of the remaining scheduled payments of principal and interest on such bonds
of the 2018 Series C (exclusive of interest accrued to the redemption date) discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 50 basis points, plus, in either case, accrued and unpaid interest on the
principal amount being redeemed to such redemption date. The Company shall notify the Trustee of
the redemption price with respect to any redemption pursuant to this paragraph promptly after the
calculation thereof. The Trustee shall not be responsible for calculating said redemption price.

     The bonds of the 2018 Series C are also subject to redemption through the operation of the
Replacement Fund provided in Part Two of this supplemental indenture or through the application of
moneys paid to the Trustee pursuant to the provisions of §5.05 of the Indenture, at any time or
from time to time prior to maturity, upon prior notice as hereinafter provided, at the redemption
prices specified in the fourth paragraph of the reverse side of the form of bond set forth as
Exhibit B to this supplemental indenture, together with interest accrued thereon to the date fixed
for redemption thereof.

8

 

     All such redemptions of bonds of the 2018 Series C shall be effected as provided in Article 3
of the Indenture except that, in case a part only of the bonds of the 2018 Series C is to be paid
and redeemed, the particular bonds or part thereof shall be selected by the Trustee in such manner
as the Trustee in its uncontrolled discretion shall determine to be fair and in any case where
several bonds are registered in the same name, the Trustee may treat the aggregate principal amount
so registered as if it were represented by one bond and except that when bonds are redeemed in part
only the notice given to any particular holder need state only the principal amount of the bonds of
that holder which is to be redeemed and except that notice to the holders of bonds to be redeemed
shall be given by mailing to such holders a notice of such redemption, first class mail postage
prepaid, not later than the thirtieth day, and not earlier than the sixtieth day, before the date
fixed for redemption, at their last addresses as they shall appear upon the bond register of the
Company. Any notice which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice; and failure duly to give such
notice by mail, or any defect in such notice, to the holder of any bond designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the redemption of any
other bond. No publication of notice of such redemption shall be required.

          SECTION 2.5 The limit upon the aggregate principal amount of the bonds of the 2018 Series C
which may be authenticated and delivered pursuant to this Eighty-Eighth Supplemental Indenture
shall be $500,000,000.

          SECTION 2.6 The place or places of payment (as to principal and premium, if any, and
interest), redemption, transfer, exchange and registration of the bonds of the 2018 Series C shall
be the office or offices or the agency or agencies of the Company in the Borough of Manhattan, The
City of New York, designated from time to time by the Board of Directors of the Company
(provided, that if the bonds of the 2018 Series C are represented by Global Securities held
by or on behalf of the Depositary, the procedures of the Depositary may be followed for any action
under this Section 2.6 of Part One).

          SECTION 2.7 The form of the bonds of the 2018 Series C and the certificate of the Trustee to
be endorsed on such bonds, respectively, shall be in substantially the form set forth in Exhibit B
hereto.

PART TWO.

REPLACEMENT FUND.

     SECTION 1. So long as any of the Bonds are outstanding, the Company will continue to maintain
the Replacement Fund set forth in, and in accordance with the applicable terms and conditions now
contained in, Part Two of the supplemental indenture dated as of February 1, 1949, and the
covenants on the part of the Company contained in such Part Two shall continue and remain in full
force and effect, whether or not bonds of the 1979 Series are outstanding and to the same extent as
though the words “or any bonds of the 2013 Series C or the 2018 Series C” were inserted after the
word “Series” appearing in the second line of Section 1 and the second line of Section 4 of said
Part Two of said supplemental indenture dated as of February 1, 1949.

9

 

     SECTION 2. If at any time (a) any of the Bonds are outstanding and (b) no bonds of the
Medium-Term Notes Series, of the 2008 Series, of the 2003 Series C, of the 2004 Series B, of the
3.75% Series, of the 41/2% Series, of the 5.30% Series, of the 2033 Series, of the 2023 Series B, of
the 2025 Series, of the 2024 Series, of the 5.25% Series, of the 6.00% Series, of the 5.10% Series
or the 6.05% Series are outstanding and (c) cash which shall have been deposited with the Trustee
pursuant to such Replacement Fund shall not within five years from the date of deposit thereof have
been paid out, or used or set aside by the Trustee for the payment, purchase or redemption of
bonds, pursuant to such Replacement Fund, such cash shall, if in excess of fifty thousand dollars
($50,000), be applied to the redemption of bonds of the 2013 Series C and the 2018 Series C on a
pro rata basis as between such series in an aggregate principal amount sufficient to exhaust as
nearly as possible the full amount of such cash. Anything in Section 5 of Part Two of the aforesaid
supplemental indenture dated as of February 1, 1949, in Section 3 of Part Two of the supplemental
indentures dated as of May 1, 1993, July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994,
February 25, 2003, March 21, 2003 and September 23, 2003, in Section 3 of Part Three of the
supplemental indenture dated as of March 1, 1990 and in Section 5 of Part Four of the supplemental
indenture dated as of March 1, 1993 to the contrary notwithstanding, no cash shall be paid over to
the Company thereunder if at the time any bonds of the 2013 Series C or the 2018 Series C are then
outstanding, and such cash shall in such event be applied as in this Part Two set forth.

     SECTION 3. Whenever all of the Bonds, the bonds of the Medium-Term Notes Series, the 2003
Series B, the 2008 Series, the 2003 Series C, the 2004 Series B, the 3.75% Series, the 41/2% Series,
the 5.30% Series, the 2033 Series, the 2025 Series, the 2024 Series, the 5.25% Series, the 6.00%
Series, the 2007A Pledge Series, the 2007B Pledge Series, the 5.10% Series and the 6.05% Series
shall have been paid, purchased or redeemed, the Trustee shall, upon application of the Company,
pay to or upon the order of the Company all cash theretofore deposited with the Trustee pursuant to
the provisions of the Replacement Fund and not previously disposed of pursuant to the provisions of
the Replacement Fund, and shall deliver to the Company any bonds which shall theretofore have been
deposited with the Trustee pursuant to the provisions of the Replacement Fund or paid, purchased or
redeemed pursuant to the provisions of the Replacement Fund.

PART THREE.

ADDITIONAL COVENANTS OF THE COMPANY

     SECTION 1. Whether or not the covenants on the part of the Company contained in Part Three of
the supplemental indenture dated as of February 1, 1949 are modified with the consent of the
holders of bonds of the 1990 Pollution Control Series, the 2027 City of Greensboro Series, the
Medium-Term Notes Series, the 2008 Series, the 2003 Series C, the 1993 Pollution Control Series,
the 2004 Series B, the 2033 Series, the 2023 Series B, the 2025 Series, the 2024 Series, the 3.75%
Series, the 41/2% Series, the 5.30% Series, the 5.25% Series, the 6.00% Series, the 2007A Pledge
Series, the 2007B Pledge Series, the 5.10% Series or the 6.05% Series and whether or not the bonds
of the 1990 Pollution Control Series, the 2027 City of Greensboro Series, the Medium-Term Notes
Series, the 2008 Series, the 2003 Series C, the 1993 Pollution Control Series, the 2004 Series B,
the 2033 Series, the 2023 Series B, the 2025 Series,

10

 

the 2024 Series, the 3.75% Series, the 41/2% Series, the 5.30% Series, the 5.25% Series, the
6.00% Series, the 2007A Pledge Series, the 2007B Pledge Series, the 5.10% Series or the 6.05%
Series are outstanding, such covenants on the part of the Company contained in said Part Three
shall continue and remain in full force and effect so long as any of the Bonds are outstanding and
to the same extent as though the words “or so long as any bonds of the 2013 Series C or the 2018
Series C are outstanding” were inserted after the words “so long as any of the bonds of the 1979
Series or any bonds of the 2.65% Series are outstanding” wherever such words appear in said Part
Three of the supplemental indenture dated as of February 1, 1949.

     SECTION 2. Whether or not the second sentence of paragraph (a) of §2.08 of the original
indenture (making certain provisions for the definition of the term “net amount” applicable while
bonds of the 2.65% Series were outstanding and which was originally set forth in Section 4 of
Article One of the supplemental indenture dated as of September 1, 1947 and which is corrected and
clarified by Section 2 of Part Four of the supplemental indenture dated as of February 1, 1968) is
modified with the consent of the holders of bonds of the 1990 Pollution Control Series, the 2027
City of Greensboro Series, Medium-Term Notes Series, the 2008 Series, the 2003 Series C, the 1993
Pollution Control Series, the 2004 Series B, the 2033 Series, the 2023 Series B, the 2025 Series,
the 2024 Series, the 3.75% Series, the 41/2% Series, the 5.30% Series, the 5.25% Series, the 6.00%
Series, the 2007A Pledge Series, the 2007B Pledge Series, the 5.10% Series or the 6.05% Series and
whether or not bonds of the 1990 Pollution Control Series, the 2027 City of Greensboro Series, the
Medium-Term Notes Series, the 2008 Series, the 2003 Series C, the 1993 Pollution Control Series,
the 2004 Series B, the 2033 Series, the 2023 Series B, the 2025 Series, the 2024 Series, the 3.75%
Series, the 41/2% Series, the 5.30% Series, the 5.25% Series, the 6.00% Series, the 2007A Pledge
Series, the 2007B Pledge Series, the 5.10% Series or the 6.05% Series are outstanding, said
sentence shall continue and remain in full force and effect so long as any Bonds are outstanding,
and with the same force and effect as though said sentence had stated that such provisions were to
be applicable so long as any of the bonds of the 2013 Series C or the 2018 Series C are
outstanding.

PART FOUR.

GLOBAL SECURITIES; TRANSFER AND EXCHANGE

     SECTION 1. The bonds of the 2013 Series C shall initially be issued in the form of one or more
Global Securities registered in the name of the Depositary (which initially shall be The Depository
Trust Company) or its nominee. Except under the limited circumstances described below, bonds of the
2013 Series C represented by such Global Security or Global Securities shall not be exchangeable
for, and shall not otherwise be issuable as, bonds of the 2013 Series C in definitive form. The
Global Securities described in this Part Four may not be transferred except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of
the Depositary or to a successor Depositary or its nominee.

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

11

 

     A Global Security shall be exchangeable for bonds of the 2013 Series C registered in the names
of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a Depositary for such Global Security and no
successor Depositary shall have been appointed by the Company within 90 days of receipt by the
Company of such notification, or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act at a time when the Depositary is required to be so registered to
act as such Depositary and no successor Depositary shall have been appointed by the Company within
90 days after it becomes aware of such cessation, (ii) an Event of Default has occurred and is
continuing with respect to the 2013 Series C or (iii) the Company in its sole discretion, and
subject to the procedures of the Depositary, determines that such Global Security shall be so
exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for bonds of the 2013 Series C registered in such names as the Depositary shall
direct.

     SECTION 2. The bonds of the 2018 Series C shall initially be issued in the form of one or more
Global Securities registered in the name of the Depositary (which initially shall be The Depository
Trust Company) or its nominee. Except under the limited circumstances described below, bonds of the
2018 Series C represented by such Global Security or Global Securities shall not be exchangeable
for, and shall not otherwise be issuable as, bonds of the 2018 Series C in definitive form. The
Global Securities described in this Part Four may not be transferred except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of
the Depositary or to a successor Depositary or its nominee.

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

     A Global Security shall be exchangeable for bonds of the 2018 Series C registered in the names
of persons other than the Depositary or its nominee only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a Depositary for such Global Security and no
successor Depositary shall have been appointed by the Company within 90 days of receipt by the
Company of such notification, or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act at a time when the Depositary is required to be so registered to
act as such Depositary and no successor Depositary shall have been appointed by the Company within
90 days after it becomes aware of such cessation, (ii) an Event of Default has occurred and is
continuing with respect to the 2018 Series C or (iii) the Company in its sole discretion, and
subject to the procedures of the Depositary, determines that such Global Security shall be so
exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for bonds of the 2018 Series C registered in such names as the Depositary shall
direct.

12

 

     SECTION 3. Depository Legend. Each of the Global Securities shall bear the following
legend (the “Depository Legend”) on the face thereof:

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

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

     SECTION 4. Transfer and Exchange. (a) Every bond of the 2013 Series C or the 2018
Series C presented or surrendered for registration of transfer or for exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed, by the Holder
thereof or his attorney duly authorized in writing.

     (b) No service charge shall be made for any registration of transfer or exchange of
bonds of the 2013 Series C or the 2018 Series C, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration or transfer or exchange of bonds of the 2013 Series C or
the 2018 Series C.

     SECTION 5. Definitions. The following defined terms used herein shall, unless the
context otherwise requires, have the meanings specified below. Capitalized terms used herein for
which no definition is provided herein shall have the meanings set forth in the Indenture.

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

     “Comparable Treasury Issue” means the United States Treasury security or securities selected
by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining
term of the Bonds 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 a
comparable maturity to the remaining term of such Bonds.

13

 

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

     “Depositary” means a clearing agency registered under the Exchange Act that is designated to
act as Depositary for the bonds of the 2013 Series C or the 2018 Series C, which Depositary shall
initially be The Depository Trust Company.

     “Depository Legend” means a legend set forth in Section 3 of this Part Four.

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

     “Global Security” means a Bond in global form.

     “Holder” means a Person in whose name a bond of the 2013 Series C or the 2018 Series C is
registered in the registration books maintained by the Trustee.

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

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

     “Reference Treasury Dealer” means each of Barclays Capital Inc., Citigroup Global Markets Inc.
and Credit Suisse Securities (USA) LLC, plus two other financial institutions appointed by the
Company at the time of any redemption or their respective affiliates or successors which are
primary U.S. Government securities dealers; provided, however, that if any of the foregoing or
their affiliates or successors shall cease to be a primary U.S. Government securities dealer in the
United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary
Treasury Dealer.

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

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

14

 

PART FIVE.

MISCELLANEOUS.

     SECTION 1. (a) For the purposes of §2.10 of the Indenture and for the purposes of any
modification of the provisions of the Replacement Fund referred to in Part Two of this supplemental
indenture, the covenants and provisions on the part of the Company which are set forth or
incorporated in Part Two of this supplemental indenture shall be for the benefit only of the
holders of the bonds of the 2013 Series C and the 2018 Series C. Such covenants and provisions
shall remain in force and be applicable only so long as any bonds of the 2013 Series C or the 2018
Series C shall be outstanding, and, subject to the provisions of paragraph (2) of subdivision (c)
of §10.01 of the Indenture, any such covenants and provisions may be modified with respect to the
bonds of the 2013 Series C or the 2018 Series C with the consent, in writing or by vote at a
bondholders’ meeting of the holders of sixty-six and two-thirds per cent (66 2/3%) of the principal
amount of the bonds of the 2013 Series C or the 2018 Series C, as the case may be, at the time
outstanding and without the consent of the holders of any other bonds then outstanding under the
Indenture; provided that no such consent shall be effective to waive any past default under
such covenants and provisions, and its consequences, unless the consent of the holders of at least
a majority in principal amount of all bonds then outstanding under the Indenture is obtained. Such
covenants shall be deemed to be additional covenants and none of them shall affect or derogate
from, or relieve the Company from, its obligation to comply with any of the other covenants,
conditions, requirements or provisions of the Indenture or any other supplemental indenture.

     (b) For the purposes of §2.10 of the Indenture and for the purposes of any modification of the
provisions of Part Three of this supplemental indenture, the covenants and provisions on the part
of the Company which are set forth or incorporated in said Part Three shall be for the benefit only
of the holders of the bonds of the 2013 Series C and the 2018 Series C. Such covenants and
provisions shall remain in force and be applicable only so long as any bonds of the 2013 Series C
or the 2018 Series C shall be outstanding, and, subject to the provisions of paragraph (2) of
subdivision (c) of §10.01 of the Indenture, any such covenants and provisions may be modified with
respect to the bonds of the 2013 Series C or the 2018 Series C with the consent, in writing or by
vote at a bondholders’ meeting of the holders of sixty-six and two-thirds per cent (66 2/3%) of the
principal amount of the bonds of the 2013 Series C or the 2018 Series C, as the case may be, at the
time outstanding and without the consent of the holders of any other bonds then outstanding under
the Indenture; provided that no such consent shall be effective to waive any past default
under such covenants and provisions, and its consequences, unless the consent of the holders of at
least a majority in principal amount of all bonds then outstanding under the Indenture is obtained.
Such covenants shall be deemed to be additional covenants and none of them shall affect or derogate
from, or relieve the Company from, its obligation to comply with any of the other covenants,
conditions, requirements or provisions of the Indenture or any other supplemental indenture.

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

15

 

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

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

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

     SECTION 6. In addition to the amendment provisions of the Indenture, the terms and conditions
of this supplemental indenture and the bonds of the 2013 Series C or the 2018 Series C may be
modified, amended or supplemented by the Company and the Trustee, without the consent of the
holders of the bonds of the 2013 Series C or the 2018 Series C, and if not inconsistent with the
Indenture, to cure ambiguities in this supplemental indenture or the bonds of the 2013 Series C or
the 2018 Series C, or correct defects or inconsistencies in the provisions of this supplemental
indenture or the bonds of the 2013 Series C or the 2018 Series C or to provide for such appropriate
additional provisions in this supplemental indenture or the bonds of the 2013 Series C or the 2018
Series C as are necessary for certificated bonds to be issued in lieu of Global Securities or to
reflect additional provisions related to the issuance of Global Securities (including changes in
the procedures of the Depositary).

16

 

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

	 	 	 	 	 
	 	DUKE ENERGY CAROLINAS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	M. Allen Carrick 	 
	 	 	Title:  	Assistant Treasurer 	 
	 

ATTEST:

	 	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Name:

	 	Robert T. Lucas III	 	 
	Title:

	 	Assistant Secretary	 	 
	 
	 	 	 	 
	Signed, sealed, executed, acknowledged
and delivered by Duke Energy	 	 
	Carolinas, LLC, in the presence of:	 	 
	 
	 	 	 	 
	 	 	 
	Delcia S. Dunlap	 	 
	 
	 	 	 	 
	 	 	 
	Jennie M. Raine	 	 

17

 

	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, 

N.A., as
Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	Van K. Brown 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	ATTEST:	 	 
	 
	 	 	 	 
	 	 	 
	Name:

	 	Reda Sabaliauskaite	 	 
	Title:

	 	Assistant Treasurer	 	 
	 
	 	 	 	 
	Signed, sealed, executed, acknowledged
and delivered by The Bank of New York	 	 
	Mellon Trust Company, N.A.,
in the presence of:	 	 
	 
	 
	 	 	 	 
	 	 	 
	Name:

	 	Inna Rueve	 	 
	Title:

	 	Trust Associate	 	 
	 
	 
	 	 	 	 
	 	 	 
	Name:

	 	Daya Jayaraj	 	 
	Title:

	 	Trust Associate	 	 

18

 

	 	 	 	 	 
	State of Georgia
	 	)	 	 
	 
	 	) ss.:	 	 
	County of Dekalb
	 	)	 	 

Personally appeared before me, Inna Rueve, and made oath that she saw Stefan Victory, a Vice
President, and Reda Sabaliauskaite, an Assistant Treasurer, respectively, of The Bank of New York
Mellon Trust Company, N.A., sign, attest and affix hereto the corporate seal of said The Bank of
New York Mellon Trust Company, N.A., and, as the act and deed of said corporation, deliver the
within written and foregoing deed, and that she, with Lakeisha Wilson, witnessed the execution
thereof.

	 	 	 	 	 
	 

	 	 

Reda Sabaliauskaite
	 	 
	 
	 	 	 	 
	 

	 	Sworn and subscribed before me

this 17th day of November, 2008.	 	 
	 
	 	 	 	 
	 

	 	 

David Dawes
	 	 
	 

	 	Notary Public	 	 
	 

	 	Commission Expires August 10, 2010	 	 

	 	 	 	 	 
	State of Georgia
	 	)	 	 
	 
	 	) ss..	 	 
	County of Dekalb
	 	)	 	 

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

Witness may hand and official seal, this 17th day of November, 2008.

	 	 	 	 	 
	 

	 	 

David Dawes
	 	 
	 

	 	Notary Public	 	 
	 

	 	Commission Expires August 10, 2010	 	 

19

 

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

I, Heather Paige Blum, a notary public of Mecklenburg County, North Carolina, certify that Delcia
S. Dunlap personally appeared before me this day, and being duly sworn, stated that in her presence
M. Allen Carrick executed the foregoing instrument, and that she, with Jennie M. Raine, witnessed
the execution thereof.

Witness my hand and official seal, this the 17th day of November, 2008.

	 	 	 	 	 
	 
	 

	 	 

Heather Paige Blum
	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	 

	 	My Commission expires January 9, 2013.	 	 

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

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

Witness my hand and official seal, this the 17th day of November, 2008.

	 	 	 
	 
	 

	 	 

Heather Paige Blum
	 	 
	 

	 	Notary Public
	 
	 	 
	 

	 	My Commission expires January 9, 2013.

20

 

EXHIBIT A

FORM OF DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND, 5.75% SERIES C DUE 2013

[FACE SIDE OF BOND]

[DEPOSITORY LEGEND, IF APPLICABLE]

DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND,

5.75% SERIES C DUE 2013

	 	 	 	 	 	 	 
	No.

	 	 	 	 	$	 
	CUSIP No.

	 	26442C AF1	 	 	 	 
	ISIN

	 	US26442CAF14	 	 	 	 

     Duke Energy Carolinas, LLC, a North Carolina limited liability company (hereinafter called the
“Company”), for value received, hereby promises to pay to       or registered assigns, the
principal sum of      Dollars on November 15, 2013 in any coin or currency of the United
States of America which at the time of payment shall be legal tender for the payment of public and
private debts, at the office or agency of the Company in the Borough of Manhattan, The City of New
York, and to pay interest thereon at said office or agency from the interest payment date next
preceding the date hereof to which interest on outstanding bonds of this series has been paid
(unless the date hereof is prior to May 15, 2009, in which case from November 17, 2008, and unless
the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding
May 15 or November 15, in which case from the next succeeding May 15 or November 15, as the case
may be), at the rate of 5.75% per cent per annum, in like coin or currency, semi-annually on May 15
and November 15 in each year, commencing May 15, 2009, until the principal hereof shall become due
and payable. Such interest payments shall be made to the person in whose name this bond is
registered at the close of business on the May 1 or November 1, whether or not a business day,
preceding each semi-annual interest payment date (a “record date”) (subject to certain exceptions
provided in the Indenture hereinafter mentioned), at his last address as it shall appear upon the
bond register of the Company.

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

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

21

 

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

Dated:

	 	 	 	 	 
	 	DUKE ENERGY CAROLINAS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	ATTEST:	 	 
	 
	 
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

CERTIFICATE OF AUTHENTICATION

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

	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, 
N.A., as
Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A-2

 

	 	 	 	 	 

[REVERSE SIDE OF BOND]

     This bond is one of the bonds of a series, designated specially as First and Refunding
Mortgage Bonds, 5.75% Series C due 2013, of an authorized issue of bonds of the Company, without
limit as to aggregate principal amount, designated generally as First and Refunding Mortgage Bonds,
all issued and to be issued under and equally and ratably secured by an indenture dated as of
December 1, 1927, duly executed by Duke Power Company, a New Jersey corporation (hereinafter called
the “New Jersey Company”), to Guaranty Trust Company of New York, as Trustee (The Bank of New York
Mellon Trust Company, N.A., as successor trustee), as supplemented and modified by indentures
supplemental thereto, including supplemental indentures dated as of September 1, 1947, February 1,
1949, February 1, 1960, June 15, 1964 (under which the Company succeeded to and was substituted for
the New Jersey Company), February 1, 1968, March 1, 1990, May 15, 1990, July 1, 1991, March 1,
1993, April 1, 1993, May 1, 1993, July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994,
February 25, 2003, March 21, 2003, September 23, 2003, March 20, 2006, January 10, 2008, February
11, 2008, April 14, 2008 and November 17, 2008, the latter providing for said series (said
indenture as so supplemented and modified being hereinafter referred to as the “Indenture”), to
which Indenture reference is made for a description of the property mortgaged, the nature and
extent of the security, the rights of the holders of the bonds in respect thereof, the terms and
conditions upon which the bonds are secured and the restrictions subject to which additional bonds
secured thereby may be issued. To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture supplemental thereto, and of the
rights and obligations of the Company and of the holders of the bonds, may be made with the consent
of the Company by the affirmative vote, or with the written consent, of the holders of not less
than 66 2/3% in principal amount of the bonds then outstanding, and by the affirmative vote, or
with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds
of any series then outstanding and affected by such modification or alteration, in case one or more
but less than all of the series of bonds then outstanding under the Indenture are so affected,
evidenced, in each case, as provided in the Indenture; provided that any supplemental
indenture may be modified in accordance with the provisions contained therein for its modification;
and provided, further, that no such modification or alteration shall be made which will affect the
terms of payment of the principal of, or interest or premium on, this bond, or the right of any
bondholder to institute suit for the enforcement of any such payment on or after the respective due
dates expressed in this bond, or reduce the percentage required for the taking of any such action.
Any such affirmative vote of, or written consent given by, any holder of this bond is binding upon
all subsequent holders hereof as provided in the Indenture.

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

     The bonds of this series may be redeemed at the option of the Company, in whole or in part at
any time and from time to time, at a redemption price equal to the greater of (1) 100% of the
principal amount of the bonds of this series to be redeemed and (2) the sum of the present values
of the remaining scheduled payments of principal and interest on such bonds (exclusive of interest
accrued to the redemption date), discounted to the redemption date on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis

A-3

 

points, plus, in either case, accrued and unpaid interest on the principal amount being
redeemed to such redemption date.

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

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

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

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

“Reference Treasury Dealer” means each of Barclays Capital Inc., Citigroup Global Markets
Inc. and Credit Suisse Securities (USA) LLC, plus two other financial institutions appointed
by the Company at the time of any redemption or their respective affiliates or successors
which are primary U.S. Government securities dealers; provided, however, that if any of the
foregoing or their affiliates or successors shall cease to be a primary U.S. Government
securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall
substitute therefor another Primary Treasury Dealer.

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

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

     The bonds of this series are also subject to redemption for the Replacement Fund for bonds of
this series provided for in the supplemental indenture dated as of November 17, 2008, providing for
this series, or upon application of certain moneys included in the trust estate, at any time or
from time to time prior to maturity, at 100% of their principal amount, in each case together with
accrued interest to the date fixed for redemption.

A-4

 

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

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

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

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

[END OF BOND FORM]

A-5

 

ABBREVIATIONS

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

	 	 	 	 	 	 	 	 	 	 	 
	TEN COM—as tenants in common

	 	UNIF GIFT MIN ACT-
	 	 	 	Custodian	 	 	 	 
	 

	 	 	 	 

(Cust)
	 	 
	 	 

(Minor)
	 	 
	TEN ENT—as tenants by the entireties	 	 	 	 	 	 	 	 
	JT TEN—as joint tenants with rights of	 	 	 	under Uniform Gifts to	 	 
	survivorship and not as tenants in common	 	Minors Act	 	 	 	 
	 

	 	 	 	 	 	 	 	 

(State)
	 	 

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

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

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

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

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

Dated:                    

NOTICE: The signature to this assignment must correspond with

the name as written upon the face of the within instrument in

every particular without alteration or enlargement, or any

change whatever.

Signature Guarantee:                                                            

A-6

 

SIGNATURE GUARANTEE

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

A-7

 

EXHIBIT B

FORM OF DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND, 7.00% SERIES C DUE 2018

[FACE SIDE OF BOND]

[DEPOSITORY LEGEND, IF APPLICABLE]

DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND,

7.00% SERIES C DUE 2018

	 	 	 	 	 	 	 	 	 	 	 
	No.
	 	 	 	 	 	$	 	 	 	 
	CUSIP No.
	 	26442C AG9	 	 	 	 	 	 	 	 
	ISIN
	 	US26442CAG96	 	 	 	 	 	 	 	 

     Duke Energy Carolinas, LLC, a North Carolina limited liability company (hereinafter called the
“Company”), for value received, hereby promises to pay to       or registered assigns, the
principal sum of       Dollars on November 15, 2018 in any coin or currency of the United
States of America which at the time of payment shall be legal tender for the payment of public and
private debts, at the office or agency of the Company in the Borough of Manhattan, The City of New
York, and to pay interest thereon at said office or agency from the interest payment date next
preceding the date hereof to which interest on outstanding bonds of this series has been paid
(unless the date hereof is prior to May 15, 2009, in which case from November 17, 2008, and unless
the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding
May 15 or November 15, in which case from the next succeeding May 15 or November 15, as the case
may be), at the rate of 7.00% per cent per annum, in like coin or currency, semi-annually on May 15
and November 15 in each year, commencing May 15, 2009, until the principal hereof shall become due
and payable. Such interest payments shall be made to the person in whose name this bond is
registered at the close of business on the May 1 or November 1, whether or not a business day,
preceding each semi-annual interest payment date (a “record date”) (subject to certain exceptions
provided in the Indenture hereinafter mentioned), at his last address as it shall appear upon the
bond register of the Company.

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

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

B-1

 

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

Dated:

	 	 	 	 	 
	 	DUKE ENERGY CAROLINAS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	ATTEST:	 	 
	 
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

CERTIFICATE OF AUTHENTICATION

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

	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company,
 N.A., as
Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

B-2

 

	 	 	 	 	 

[REVERSE SIDE OF BOND]

     This bond is one of the bonds of a series, designated specially as First and Refunding
Mortgage Bonds, 7.00% Series C due 2018, of an authorized issue of bonds of the Company, without
limit as to aggregate principal amount, designated generally as First and Refunding Mortgage Bonds,
all issued and to be issued under and equally and ratably secured by an indenture dated as of
December 1, 1927, duly executed by Duke Power Company, a New Jersey corporation (hereinafter called
the “New Jersey Company”), to Guaranty Trust Company of New York, as Trustee (The Bank of New York
Mellon Trust Company, N.A. as successor trustee), as supplemented and modified by indentures
supplemental thereto, including supplemental indentures dated as of September 1, 1947, February 1,
1949, February 1, 1960, June 15, 1964 (under which the Company succeeded to and was substituted for
the New Jersey Company), February 1, 1968, March 1, 1990, May 15, 1990, July 1, 1991, March 1,
1993, April 1, 1993, May 1, 1993, July 1, 1993, August 1, 1993, August 20, 1993, May 1, 1994,
February 25, 2003, March 21, 2003, September 23, 2003, March 20, 2006, January 10, 2008, February
11, 2008, April 14, 2008 and November 17, 2008, the latter providing for said series (said
indenture as so supplemented and modified being hereinafter referred to as the “Indenture”), to
which Indenture reference is made for a description of the property mortgaged, the nature and
extent of the security, the rights of the holders of the bonds in respect thereof, the terms and
conditions upon which the bonds are secured and the restrictions subject to which additional bonds
secured thereby may be issued. To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture supplemental thereto, and of the
rights and obligations of the Company and of the holders of the bonds, may be made with the consent
of the Company by the affirmative vote, or with the written consent, of the holders of not less
than 66 2/3% in principal amount of the bonds then outstanding, and by the affirmative vote, or
with the written consent, of the holders of not less than 66 2/3% in principal amount of the bonds
of any series then outstanding and affected by such modification or alteration, in case one or more
but less than all of the series of bonds then outstanding under the Indenture are so affected,
evidenced, in each case, as provided in the Indenture; provided that any supplemental
indenture may be modified in accordance with the provisions contained therein for its modification;
and provided, further, that no such modification or alteration shall be made which will affect the
terms of payment of the principal of, or interest or premium on, this bond, or the right of any
bondholder to institute suit for the enforcement of any such payment on or after the respective due
dates expressed in this bond, or reduce the percentage required for the taking of any such action.
Any such affirmative vote of, or written consent given by, any holder of this bond is binding upon
all subsequent holders hereof as provided in the Indenture.

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

     The bonds of this series may be redeemed at the option of the Company, in whole or in part at
any time and from time to time, at a redemption price equal to the greater of (1) 100% of the
principal amount of the bonds of this series to be redeemed and (2) the sum of the present values
of the remaining scheduled payments of principal and interest on such bonds (exclusive of interest
accrued to the redemption date), discounted to the redemption date on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis

B-3

 

points, plus, in either case, accrued and unpaid interest on the principal amount being
redeemed to such redemption date.

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

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

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

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

“Reference Treasury Dealer” means each of Barclays Capital Inc., Citigroup Global Markets
Inc. and Credit Suisse Securities (USA) LLC, plus two other financial institutions appointed
by the Company at the time of any redemption or their respective affiliates or successors
which are primary U.S. Government securities dealers; provided, however, that if any of the
foregoing or their affiliates or successors shall cease to be a primary U.S. Government
securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall
substitute therefor another Primary Treasury Dealer.

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

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

     The bonds of this series are also subject to redemption for the Replacement Fund for bonds of
this series provided for in the supplemental indenture dated as of November 17, 2008, providing for
this series, or upon application of certain moneys included in the trust estate, at any time or
from time to time prior to maturity, at 100% of their principal amount, in each case together with
accrued interest to the date fixed for redemption.

B-4

 

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

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

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

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

[END OF BOND FORM]

B-5

 

ABBREVIATIONS

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

	 	 	 	 	 	 	 	 	 	 	 
	TEN COM—as tenants in common

	 	UNIF GIFT MIN ACT-
	 	 	 	Custodian	 	 	 	 
	 

	 	 	 	 

(Cust)
	 	 
	 	 

(Minor)
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	TEN ENT—as tenants by the entireties	 	 	 	 	 	 	 	 
	JT TEN—as joint tenants with rights of	 	 	 	under Uniform Gifts to	 	 
	survivorship and not as tenants in common	 	Minors Act	 	 	 	 
	 

	 	 	 	 	 	 	 	 

(State)
	 	 

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

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

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

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

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

     Dated:                                        

NOTICE: The signature to this assignment must correspond with

the name as written upon the face of the within instrument in

every particular without alteration or enlargement, or any

change whatever.

Signature Guarantee:                                                            

B-6

 

SIGNATURE GUARANTEE

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

B-7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]