Document:

Exhibit 4.2

 

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

	
            Number R-1
 	
            
 
 	
            $250,000,000

CUSIP 61166W AG 6
 
	
            5.875% Senior Note due 2038
 
	
            Rate of Interest
 	
            Maturity Date
 	
            Original Issue Date
 
	
            5.875%
 	
            April 15, 2038
 	
            April 15, 2008
 

MONSANTO COMPANY, a corporation duly organized and existing under the laws of Delaware (herein called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED FIFTY MILLION DOLLARS on the Maturity Date shown above, and to pay interest thereon from April 15, 2008 or from the most recent Interest Payment Date (which term, as well as all other capitalized terms used herein, shall have the meanings assigned in such Indenture unless otherwise indicated) to which interest has been paid or duly provided for, semi-annually on April 15 and October 15 in each year, commencing October
15, 2008, at the rate of 5.875% per annum, until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such payment, which shall be the April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and any such interest on this Note will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account maintained by the Person entitled thereto as specified in the Security Register, provided that such Person shall have given the Trustee written wire instructions at least five Business Days prior to the applicable Interest Payment Date.  Interest shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.

This Note is one of a duly authorized issue of securities of the Company (herein called the “Notes”), issued and to be issued in one or more series under an Indenture, dated as of August 1, 2002 (herein called the “Indenture”), between the Company and The Bank of New York Trust Company, N.A., as successor Trustee (herein called the “Trustee”, which term includes any further successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered.  This Note is one of the series designated above, initially limited in aggregate principal amount to $250,000,000. 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

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

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

	
            DATED: April 15, 2008
 	
             
 	
            MONSANTO COMPANY
 
	
             
 	
             
 	
             
 	
             
 	
             
 
	
            TRUSTEE’S CERTIFICATE OF AUTHENTICATION
 	
             
 	
            By
 	
             
 
	
            This is one of the Securities of the series designated therein
        referred to in the within-mentioned Indenture.
 	
             
 	
             
 	
            Vice President and Treasurer
 
	
             
 	
             
 	
            ATTEST
 
	
            The Bank of New York Trust Company, N.A., as Trustee
 	
             
 	
            
 
 
	
            BY
 	
             
 	
             
 	
            Assistant Secretary
 
	
             
 	
            Authorized Signatory
 	
             
 	
             
 

 

 

MONSANTO COMPANY

5.875% Senior Note due 2038

	
            The Notes will be subject to redemption as follows:

(i)  The Notes will be redeemable, in whole or in part, at the option of the Company at any time or from time to time at a redemption price equal to the greater of (a) 100% of the principal amount of the Notes being redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed (not including any portion of any payments of interest accrued to the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 25 basis
points, plus in each case, accrued and unpaid interest on the Notes to the redemption date;

(ii)  “Comparable Treasury Issue” means, with respect to each Treasury Reference Dealer, the United States Treasury security selected by such Reference Treasury Dealer as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of those Notes;

(iii) “Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations
for the redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations;

(iv) “Reference Treasury Dealer” means (a) Citigroup Global Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated (or their respective affiliates which are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute another Primary Treasury Dealer; and (b) any other Primary Treasury Dealer selected by the Company.

(vii) “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by that Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding that redemption date;

(viii) “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity 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 the redemption date. Notwithstanding the foregoing, installments of interest on the Notes that are due and payable on Interest Payment Dates falling on or prior to a redemption date will be payable on the Interest Payment Date to the Holders as of the close of business on the relevant record date according to the Notes and the Indenture.

Offer to Redeem Upon Change of Control Triggering Event:

(i) Upon the occurrence of a Change of Control Triggering Event, unless the Company has exercised its right to redeem the Notes as described immediately above, each Holder will have the right to require the Company to purchase all or a portion of such
Holder’s Notes, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase, subject to the rights of Holders to receive interest due on the scheduled Interest Payment Dates.

(ii) Within 30 days following the date upon which the Change of Control Triggering Event occurs or, at the Company’s option, prior thereto but after the public announcement of the pending Change of Control, the Company will send, by first class mail, a notice to each Holder setting forth the Company’s offer to purchase the Notes, specifying the purchase date, which will be no earlier than 30 days nor later than 60 days from the date the notice is mailed, unless otherwise required by law. If mailed prior to the date of the Change of Control, the notice will state that the offer is subject
to completion of the Change of Control. Holders electing to sell their Notes will be required to surrender their Notes in accordance with the offer, to the Paying Agent at the address to be specified in the notice, or transfer their Notes to the Paying Agent by book-entry transfer, prior to the close of business on the third business day prior to the payment date.

(iii) The Company will not be required to make a Change of Control offer if a third party makes such an offer in the manner and at the times set forth above and otherwise in compliance with the requirements set forth above, and such third party purchases all Notes of such series properly tendered and not withdrawn under its offer.

 (iv)
“Change of Control” means any of the following:

(a) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries to any “person” (as that term is used in Section 13(d)(3) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”));

(b) any transaction (including any merger or consolidation) the result of which is that any “person” becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the outstanding voting power of the Company’s outstanding shares;

(c) the Company consolidates with, or merges with or into, any entity, or any entity consolidates with or merges with or into the Company, unless following the transaction the Company’s shareholders prior to the transaction own a majority of the voting power of the outstanding shares of the surviving entity;

(d) the first day on which the majority of the members of the Company’s board of directors cease to be continuing directors, which are (i) persons who are directors at the date of issuance of the Notes or (ii) persons nominated or elected with the approval of a majority of continuing directors; or

(e) the adoption of a plan for the Company’s liquidation or dissolution.

(v) “Change of Control Triggering Event” means that the Notes cease to be rated Investment Grade by at least two of the three Rating Agencies on any date during the period starting 60 days prior to the Company’s first public announcement of any Change of Control and ending 60 days following consummation of the Change of Control (subject to extension so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings change, other than an announcement with positive implications), and the applicable Rating Agencies confirm that any reduction in ratings is attributable to the Change of Control.
However, no Change of Control Triggering Event will be deemed to have occurred unless and until the Change of Control has been consummated.
 	
            (vi) “Fitch” means Fitch Inc., a subsidiary of Fimalac, S.A., and its successors.

(vii) “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating category of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P); and a rating of BBB- or better by Fitch (or its equivalent under any successor rating category of Fitch).

(viii) “Moody’s” means Moody’s
Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.

(ix) “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

(x) “Rating Agency” means each of Moody’s, S&P and Fitch; provided, that if any of Moody’s, S&P and Fitch ceases to provide rating services to issuers or investors for reasons outside of the Company’s control, the Company may appoint another  “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act as a replacement for such Rating Agency.

The Securities of this series do not have the benefit of any sinking fund obligations.

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

The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Note and/or certain restrictive covenants and Events of Default with respect to this Note, in each case upon compliance with certain conditions set forth in the Indenture.

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

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

As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

If at any time the Depositary for this Note notifies the Company that it is unwilling or unable to continue as
Depositary for this Note or if at any time the Depositary shall no longer be eligible under the Indenture with respect to this Note, and if a successor Depositary eligible under the Indenture for this Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election that the Notes of this issue be represented by a Book-Entry Security shall no longer be effective with respect to this Note, and the Company shall execute, and the Trustee upon receipt of a Company Order for the authentication and delivery of definitive Securities shall authenticate and deliver, Securities in definitive form in an aggregate principal amount equal to the principal amount of this Note in exchange for this Note.  The Company may at any time and in its sole discretion determine that the Securities of this series shall no longer be represented by Book-Entry Securities.  In such event the Company shall execute, and the
Trustee, upon receipt of a Company Order, shall authenticate and deliver, Securities of this series in definitive form and in an aggregate principal amount equal to the principal amount of the Book-Entry Security or Securities representing this series in exchange for such Book-Entry Security or Securities.

No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture or for the appointment of a receiver or trustee, or for any other remedy under the Indenture, unless: (1) the Trustee shall have received written notice from such Holder of a continuing Event of Default in respect of such Securities; (2) the Trustee shall have received a written request from the Holders of not less than 25% in principal amount of the Outstanding Securities of the series in respect of which the
Event of Default has occurred to institute proceedings in respect of such Event of Default in its own name as trustee under the Indenture; (3) such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority in principal amount of the Outstanding Securities of such series.

The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

No recourse shall be had for the payment of the principal of (or premium, if any) or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, stockholder, officer, director or employee, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes (subject to Section 308 of the Indenture), whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflicts of laws principles thereof.Exhibit 4.1

 

EXHIBIT 4.1

Execution Copy

 

DUKE ENERGY CAROLINAS, LLC

TO

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

Trustee

 

EIGHTY-SEVENTH SUPPLEMENTAL INDENTURE

Dated as of April 14, 2008

 

CREATING TWO SERIES OF FIRST AND REFUNDING

MORTGAGE BONDS

$300,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 5.10% SERIES B DUE 2018

$600,000,000 FIRST AND REFUNDING MORTGAGE BONDS, 6.05% SERIES B DUE 2038

 

SUPPLEMENTAL TO

FIRST AND REFUNDING MORTGAGE

DATED AS OF DECEMBER 1, 1927

 

 

 

     SUPPLEMENTAL INDENTURE, bearing date as of the 14th day of April, 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 Trust Company, N.A., a national banking association, having a
corporate trust office at 100 Ashford Center North, Suite 520, 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 2004 Series B”), bonds of a series known as the “First and Refunding Mortgage
Bonds, 7%

2

 

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”) 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 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

3

 

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 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 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, 5.10% Series B due 2018” and its “First and Refunding
Mortgage Bonds, 6.05% Series B due 2038”, 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
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 whereof is
hereby acknowledged, the Company hereby covenants and agrees with the Trustee and its successors in
the trust under the Indenture as follows:

4

 

PART ONE.

BONDS OF THE 2018 SERIES B AND BONDS OF THE 2038 SERIES B

     SECTION 1. BONDS OF THE 2018 SERIES B

          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, 5.10% Series B due 2018 (herein
called “bonds of the 2018 Series B”) and the Company hereby establishes, determines and fixes the
terms and provisions of the bonds of the 2018 Series B as hereinafter in this Part One set forth.

     Each bond of the 2018 Series B shall be dated the date of its authentication (except that if
any such bond shall be authenticated on any interest payment date, it shall be dated the following
day) and interest shall be payable on the principal represented thereby commencing October 15,
2008, from the April 15 or October 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 October 15, 2008, in which
case interest shall be payable from April 14, 2008; provided, however, that
interest shall be payable on each bond of the 2018 Series B 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 2018 Series B 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 B 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 B 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 2018
Series, such defaulted interest shall be paid to the registered holder of such bond (or any bond or
bonds of the 2018 Series B 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 B 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 B 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
April 1 or October 1, whether or not a business day, next preceding such interest payment date or,
in the case of a payment of defaulted interest, the close of business on any subsequent record date
established as provided above.

          SECTION 1.2 All bonds of the 2018 Series B shall mature as to principal on April 15, 2018 and
shall bear interest at a rate of 5.10% per annum, payable semi-annually on the

5

 

fifteenth day of April and October in each year, commencing on the fifteenth day of October,
2008.

          SECTION 1.3 The bonds of the 2018 Series B 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 2018 Series.

          SECTION 1.4 The bonds of the 2018 Series B 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 B 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 B (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 30 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 B 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 2018 Series B 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 B 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

6

 

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 2018 Series B
which may be authenticated and delivered pursuant to this Eighty-Seventh Supplemental Indenture
shall be $300,000,000.

          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 2018 Series B 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 B 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 2018 Series B 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 2038 SERIES B

          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, 6.05% Series B due 2038 (herein
called “bonds of the 2038 Series B”, and together with the bonds of the 2018 Series B, the
“Bonds”) and the Company hereby establishes, determines and fixes the terms and provisions of the
bonds of the 2038 Series B as hereinafter in this Part One set forth.

     Each bond of the 2038 Series B shall be dated the date of its authentication (except that if
any such bond shall be authenticated on any interest payment date, it shall be dated the following
day) and interest shall be payable on the principal represented thereby commencing October 15,
2008, from the April 15 or October 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 October 15, 2008, in which
case interest shall be payable from April 14, 2008; provided, however, that
interest shall be payable on each bond of the 2038 Series B 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 2038 Series B shall be paid to the person who, according to the
bond register of the Company, is the registered holder of such bond of the 2038 Series B 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 2038
Series B 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

7

 

shall default in the payment of the interest due on any interest payment date on any bond of
the 2038 Series B, such defaulted interest shall be paid to the registered holder of such bond (or
any bond or bonds of the 2038 Series B 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 2038 Series B 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 2038 Series B 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 April 1 or October 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 2038 Series B shall mature as to principal on April 15, 2038 and
shall bear interest at a rate of 6.05% per annum, payable semi-annually on the fifteenth day of
April and October in each year, commencing on the fifteenth day of October, 2008.

          SECTION 2.3 The bonds of the 2038 Series B 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 2038 Series B.

          SECTION 2.4 The bonds of the 2038 Series B 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 2038 Series B 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 2038 Series B (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 35 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 2038 Series B 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 2038 Series B shall be effected as provided in Article 3
of the Indenture except that, in case a part only of the bonds of the 2038 Series B 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 2038 Series B
which may be authenticated and delivered pursuant to this Eighty-Seventh Supplemental Indenture
shall be $600,000,000.

          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 2038 Series B 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 2038 Series B 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 2038 Series B 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 2018 Series B or the 2038 Series B” 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 or of the 6.00% 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 2018 Series B and the 2038 Series B 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 2018 Series B or the 2038 Series B 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 and the 2007B Pledge 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 or the 2007B Pledge Series and whether or not the bonds of the 1990 Pollution Control
Series, the 2027 City of Greensboro Series, the Medium-Term Notes Series, the 2008 Series, the 2003
Series C, the 1993 Pollution Control Series, the 2004 Series B, the 2033 Series, the 2023 Series B,
the 2025 Series, the 2024 Series, the 3.75% Series, the 41/2% Series, the 5.30% Series, the 5.25%
Series, the 6.00% Series, the 2007A Pledge Series

10

 

or the 2007B Pledge 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 2018 Series B or the 2038 Series B 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 or the 2007B Pledge 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 or the 2007B Pledge
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 2018 Series B or the
2038 Series B are outstanding.

PART FOUR.

GLOBAL SECURITIES; TRANSFER AND EXCHANGE

     SECTION 1. The bonds of the 2018 Series B 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 B 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 B 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 2018 Series B 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 B 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 B registered in such names as the Depositary shall
direct.

     SECTION 2. The bonds of the 2038 Series B 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
2038 Series B represented by such Global Security or Global Securities shall not be exchangeable
for, and shall not otherwise be issuable as, bonds of the 2038 Series B 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 2038 Series B 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 2038 Series B 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 2038 Series B 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 2018 Series B or the 2038
Series B 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 2018 Series B or the 2038 Series B, 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 2018 Series B or
the 2038 Series B.

     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 selected by the
Quotation Agent as having a 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 comparable maturity to the
remaining term of such Bonds.

13

 

     “Comparable Treasury Price” means with respect to any redemption date for Bonds, the average
of three Reference Treasury Dealer Quotations for such redemption date.

     “Depositary” means a clearing agency registered under the Exchange Act that is designated to
act as Depositary for the bonds of the 2018 Series B or the 2038 Series B, 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 2018 Series B or the 2038 Series B 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 a Reference Treasury Dealer appointed by the Company.

     “Reference Treasury Dealers” means each of Barclays Capital Inc., Banc of America Securities
LLC and Greenwich Capital Markets, Inc. (each a “Primary Treasury Dealer”) and their respective
successors; provided, however, that if any of the foregoing shall cease to be a Primary Treasury
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

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

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

14

 

the Comparable Treasury Price for such redemption date. The Treasury Rate will be calculated
on the third business day preceding the redemption date.

PART FIVE.

MISCELLANEOUS.

     SECTION 1. (a) For the purposes of §2.10 of the Indenture and for the purposes of any
modification of the provisions of the Replacement Fund referred to in Part Two of this supplemental
indenture, the covenants and provisions on the part of the 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 2018 Series B and the 2038 Series B. Such covenants and provisions
shall remain in force and be applicable only so long as any bonds of the 2018 Series B or the 2038
Series B 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 2018 Series B or the 2038 Series B 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 2018 Series B or the 2038 Series B, 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 2018 Series B and the 2038 Series B. Such covenants and
provisions shall remain in force and be applicable only so long as any bonds of the 2018 Series B
or the 2038 Series B 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 2018 Series B or the 2038 Series B 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 2018 Series B or the 2038 Series B, 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.

15

 

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

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

     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 2018 Series B or the 2038 Series B may be
modified, amended or supplemented by the Company and the Trustee, without the consent of the
holders of the bonds of the 2018 Series B or the 2038 Series B, and if not inconsistent with the
Indenture, to cure ambiguities in this supplemental indenture or the bonds of the 2018 Series B or
the 2038 Series B, or correct defects or inconsistencies in the provisions of this supplemental
indenture or the bonds of the 2018 Series B or the 2038 Series B or to provide for such appropriate
additional provisions in this supplemental indenture or the bonds of the 2018 Series B or the 2038
Series B 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 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 Trust Company, N.A.,

     as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	Stefan Victory 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	 
	 	 
	 

Name: Reda Sabaliauskaite

	 	 
	Title: Assistant Treasurer
	 	 
	 
	 	 
	Signed, sealed, executed, acknowledged

and delivered by The Bank of New York 

Trust Company, N.A.,
	 	 
	in the presence of:
	 	 
	 
	 	 
	 
	 	 
	 

Name: Inna Rueve

	 	 
	Title: Trust Associate
	 	 
	 
	 	 
	 
	 	 
	 

Name: Lakeisha Wilson

	 	 
	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
Trust Company, N.A., sign, attest and affix hereto the corporate seal of said The Bank of New York
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 14th day of April, 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 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 14th day of April, 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 14th day of April, 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 14th day of April, 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, 5.10% SERIES B DUE 2018

[FACE SIDE OF BOND]

[DEPOSITORY LEGEND, IF APPLICABLE]

DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND,

5.10% SERIES B DUE 2018

			
	 	 	 
	No. 

CUSIP No. 26442CAD6

ISIN US26442CAD65
	 	$          

     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 April 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 October 15, 2008, in which case from April 14, 2008, and unless
the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding
April 15 or October 15, in which case from the next succeeding April 15 or October 15, as the case
may be), at the rate of 5.10% per cent per annum, in like coin or currency, semi-annually on April
15 and October 15 in each year, commencing October 15, 2008, 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 April 1 or October 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.

A-1

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be signed in its name by its
President or one of its Vice Presidents, manually or by facsimile signature, and its 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 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, 5.10% Series B 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
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
and April 14, 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 30 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 selected by the
Quotation Agent as having a maturity comparable to the remaining term of the bonds of this
series to be redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such bonds.

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

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

“Reference Treasury Dealers” means each of Barclays Capital Inc., Banc of America Securities
LLC and Greenwich Capital Markets, Inc. (each a “Primary Treasury Dealer”) and their
respective successors; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.

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

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

A-4

 

equal to the Comparable Treasury Price for such redemption date. The Treasury Rate will be
calculated on the third business day preceding the redemption date.

     The bonds of this series are also subject to redemption for the Replacement Fund for bonds of
this series provided for in the supplemental indenture dated as of April 14, 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.

     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, 6.05% SERIES B DUE 2038

[FACE SIDE OF BOND]

[DEPOSITORY LEGEND, IF APPLICABLE]

DUKE ENERGY CAROLINAS, LLC

FIRST AND REFUNDING MORTGAGE BOND,

6.05% SERIES B DUE 2038

			
	 	 	 
	No.
	 	$          
	CUSIP No. 26442C AE4	 	 
	ISIN US26442CAE49	 	 

     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 April 15, 2038 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 October 15, 2008, in which case from April 14, 2008, and unless
the date hereof is subsequent to a record date (as defined below) and prior to the next succeeding
April 15 or October 15, in which case from the next succeeding April 15 or October 15, as the case
may be), at the rate of 6.05% per cent per annum, in like coin or currency, semi-annually on April
15 and October 15 in each year, commencing October 15, 2008, 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 April 1 or October 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 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, 6.05% Series B due 2038, 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
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
and April 14, 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 35 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 selected by the
Quotation Agent as having a maturity comparable to the remaining term of the bonds of this
series to be redeemed that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such bonds.

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

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

“Reference Treasury Dealers” means each of Barclays Capital Inc., Banc of America Securities
LLC and Greenwich Capital Markets, Inc. (each a “Primary Treasury Dealer”) and their
respective successors; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.

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

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

B-4

 

equal to the Comparable Treasury Price for such redemption date. The Treasury Rate will be
calculated on the third business day preceding the redemption date.

     The bonds of this series are also subject to redemption for the Replacement Fund for bonds of
this series provided for in the supplemental indenture dated as of April 14, 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.

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

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

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

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

[END OF BOND FORM]

B-5

 

ABBREVIATIONS

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

	 	 	 	 	 	 	 	 	 
	TEN COM—as tenants in common

	 	UNIF GIFT MIN ACT-
	 	 	Custodian	 	 
	 

	 	 	 	 
	 	 	 	 
	 

	 	 	 	(Cust)
	 	 	 	(Minor)

TEN ENT—as tenants by the entireties

	 	 	 	 	 
	JT TEN—as joint tenants with rights of	 	under Uniform Gifts to
	survivorship and not as tenants in common

	 	Minors Act	 	 
	 

	 	 	 	 
	 

	 	 	 	(State)

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

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

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

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

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

Dated:                                        

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

	 	Signature Guarantee:	 	 
	 

	 	 	 

B-6

 

SIGNATURE GUARANTEE

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

B-7

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