EXHIBIT 1.3
DUKE CAPITAL FINANCING TRUST [ ]
% Trust Preferred Securities
(Liquidation Amount $ Per Preferred Security)
UNDERWRITING AGREEMENT
,
Gentlemen:
1. Introductory. DUKE CAPITAL FINANCING TRUST [ ], a Delaware statutory
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business trust (the "Trust"), and DUKE CAPITAL CORPORATION, a Delaware
corporation (the "Corporation"), propose that the Trust issue and sell to the
Underwriters named in Schedule A hereto (the "Underwriters") %
Trust Preferred Securities (liquidation amount $ per preferred security),
representing preferred undivided beneficial interests in the assets of the Trust
(the "Preferred Securities"), guaranteed by the Corporation as to the payment of
distributions and payments upon liquidation or redemption, to the extent set
forth in the Guarantee Agreement between the Corporation and The Chase Manhattan
Bank, as trustee thereunder (the "Guarantee Trustee"), to be dated as of the
Closing Date (as defined in Section 3 hereof) (the "Guarantee"), and the Trust
and the Corporation hereby agree with you as hereinafter set forth in this
Agreement.
The entire proceeds from the sale of the Preferred Securities will be
combined with the entire proceeds from the sale by the Trust to the Corporation
of its common securities, representing common undivided beneficial interests in
the assets of the Trust (the "Common
Securities"), and will be used by the Trust to purchase the Series % Junior
Subordinated Notes due , (the "Notes") to be issued by the
Corporation. The Preferred Securities and the Common Securities will be issued,
pursuant to the Amended and Restated Trust Agreement, dated as of ,
(the "Trust Agreement"), among the Corporation, as Depositor, and the trustees
named therein, including The Chase Manhattan Bank, as property trustee (the
"Property Trustee") and Chase Manhattan Bank Delaware, as Delaware trustee (the
"Delaware Trustee"). The Notes will be issued pursuant to a Subordinated
Indenture, dated as of , (the "Original Indenture"), between the
Corporation and The Chase Manhattan Bank, as Trustee (the "Indenture Trustee"),
as supplemented by a Supplemental Indenture, dated as of , (the
"Supplemental Indenture," and together with the Original Indenture as
theretofore amended or supplemented, the "Indenture").
2. Representations and Warranties of the Trust and the Corporation. The
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Trust and the Corporation, jointly and severally, represent and warrant to, and
agree with, the several Underwriters that:
(a) A registration statement (Nos. ), including a prospectus,
relating to the Preferred Securities, the Guarantee and the Notes has been
filed with the Securities and Exchange Commission ("Commission") under the
Securities Act of 1933 (the "1933 Act"). Such registration statement and
any post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you for
each of the other Underwriters, have been declared effective by the
Commission in such form, and no stop order suspending the effectiveness of
such registration statement has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the 1933 Act being hereinafter called a "Preliminary
Prospectus;" the various parts of such registration statement, including
all exhibits thereto and including the documents incorporated by reference
in the prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as amended at the
time such part of the registration statement became effective, being
hereinafter called the "Registration Statement"; and the final prospectus
relating to the Preferred Securities, the Guarantee and the Notes,
in the form in which it has most recently been filed, or transmitted for
filing, with the Commission prior to the date of this Agreement, being
hereinafter called the "Prospectus"; and any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any
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amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Corporation filed pursuant to Section
13(a) or 15(d) of the 1934 Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement).
(b) The Registration Statement conforms and the Prospectus will
conform in all material respects to the requirements of the 1933 Act and
the rules and regulations thereunder ("1933 Act Regulations"), and the
Registration Statement does not and the Prospectus will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, except that the foregoing does not apply to statements or
omissions in any such document based upon written information furnished to
the Trust or the Corporation by any Underwriter specifically for use
therein.
(c) The documents incorporated by reference in the Prospectus,
at the time they were filed with the Commission, conformed in all material
respects to the requirements of the 1934 Act and the rules and regulations
of the Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, do not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and any documents deemed to be incorporated by reference in
the Prospectus will, when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations, and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they are made, not misleading.
(d) The compliance by the Corporation with all of the provisions of
this Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Corporation or any of its Principal Subsidiaries is a party or by
which any of them or their respective property is bound or to which any of
their property or assets is subject, nor will such action result in any
violation of the provisions of the Restated Certificate of Incorporation or
By-Laws of the Corporation or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Corporation or its Principal Subsidiaries or any of their respective
property; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Corporation of the transactions
contemplated by this Agreement, except for the registration under the 1933
Act of the Preferred Securities, the Guarantee and the Notes and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Preferred Securities by the Underwriters.
(e) Each of PanEnergy Corp, Panhandle Eastern Pipe Line Company, Texas
Eastern Transmission Corporation, Trunkline Gas Company and Algonquin Gas
Transmission Company, each a Delaware corporation (and hereinafter
called a "Principal Subsidiary"), is an indirect wholly-owned subsidiary of
the Corporation.
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3. Purchase, Sale and Delivery of Preferred Securities. Subject to the
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terms and conditions herein set forth, the Trust agrees to sell to each of the
Underwriters and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust at a purchase price of $ per Preferred Security,
the number of Preferred Securities set forth opposite the name of such
Underwriter in Schedule A hereto, plus the respective principal amount of
additional Preferred Securities which each such Underwriter may become obligated
to purchase pursuant to the provisions of Section 8 hereof.
As compensation to the Underwriters for their commitments hereunder, and in
view of the fact that the proceeds of the sale of the Preferred Securities will
be used by the Trust to purchase the Notes of the Corporation, the Corporation
hereby agrees to pay at the Closing Date (as defined below) to ,
for the accounts of the several Underwriters, a commission equal to $
per share for the Preferred Securities.
The Preferred Securities to be purchased by the Underwriters hereunder will
be represented by a global certificate or certificates in book-entry form which
will be deposited by or on behalf of the Trust with The Depository Trust Company
("DTC") or its designated custodian and registered in the name of Cede & Co., as
nominee of DTC. The Trust will deliver the Preferred Securities to ,
for the respective accounts of the Underwriters, against payment by or on
behalf of such Underwriters of the purchase price therefor by wire transfer of
immediately available funds to the Trust, by causing DTC to credit the Preferred
Securities to the account of at DTC. The time and date of
such delivery and payment (the "Closing Date") shall be 10:00 a.m., New York
City time, on , (unless postponed in accordance with the
provisions of Section 8), or at such other time and date as you, the Trust and
the Corporation may agree upon in writing at the office of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
1301 Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
you, the Trust and the Corporation may determine. It is understood that each
Underwriter has authorized , for its account, to accept
delivery of, receipt for, and make payment of the purchase price, for the
Preferred Securities which it has agreed to purchase.
At the Closing Date, the Corporation will pay, or cause to be paid, the
compensation payable to the Underwriters under this Section 3 by wire transfer
of immediately available funds to , as representative of
and on behalf of the Underwriters.
4. Offering by the Underwriters. It is understood that the several
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Underwriters propose to offer the Preferred Securities for sale to the public as
set forth in the Prospectus.
5. Covenants of the Trust and the Corporation. The Trust and the
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Corporation, jointly and severally, covenant and agree with the several
Underwriters that:
(a) The Trust and the Corporation will advise you promptly of any
amendment or supplementation of the Registration Statement or the
Prospectus and of the institution
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by the Commission of any stop order proceedings in respect of the
Registration Statement, and will use their best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(b) If at any time when a prospectus relating to the Preferred
Securities, the Guarantee or the Notes is required to be delivered under
the 1933 Act any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to
comply with the 1933 Act, the Trust and the Corporation promptly will
prepare and file with the Commission an amendment, supplement or an
appropriate document pursuant to Section 13 or 14 of the 1934 Act which
will correct such statement or omission or which will effect such
compliance.
(c) The Trust and the Corporation, during the period when a prospectus
relating to the Preferred Securities, the Guarantee or the Notes is
required to be delivered under the 1933 Act, will file promptly all
documents required to be filed with the Commission pursuant to Section 13
or 14 of the 1934 Act.
(d) The Corporation will make generally available to its security
holders, in each case as soon as practicable but not later than 60 days
after the close of the period covered thereby, earnings statements (in form
complying with the provisions of Section 11(a) of the 1933 Act, which need
not be certified by independent certified public accountants unless
required by the 1933 Act) covering (i) a twelve-month period beginning not
later than the first day of the Corporation's fiscal quarter next following
the effective date of the Registration Statement and (ii) a twelve-month
period beginning not later than the first day of the Corporation's fiscal
quarter next following the date of this Agreement.
(e) The Trust and the Corporation will furnish to you, without charge,
copies of the Registration Statement ( of which will be signed and
will include all exhibits other than those incorporated by reference), the
Prospectus, and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as you reasonably request.
(f) The Trust and the Corporation will arrange or cooperate in
arrangements for the qualification of the Preferred Securities, and to the
extent required or advisable, the Guarantee and the Notes for sale under
the laws of such jurisdictions as you designate and will continue such
qualifications in effect so long as required for the distribution;
provided, however, that neither the Trust nor the Corporation shall be
required to qualify as a foreign corporation or to file any general
consents to service of process under the laws of any state where it is not
now so subject.
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(g) The Corporation will not, during the period beginning from the
date hereof and continuing to and including the date fifteen days after the
date hereof, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any Preferred Securities, any security convertible
into or exchangeable for the Preferred Securities or the Notes or any debt
security substantially similar to the Notes or equity securities
substantially similar to the Preferred Securities (except for the Notes and
the Preferred Securities issued pursuant to this Agreement), without your
prior written consent.
(h) The Corporation will pay all expenses incident to the performance
of the obligations of the Trust and the Corporation under this Agreement
including (i) the printing and filing of the Registration Statement and the
printing of this Agreement and the Blue Sky Survey, (ii) the issuance and
delivery of the Preferred Securities, the Guarantee and the Notes as
specified herein, (iii) the fees and disbursements of counsel for the
Underwriters in connection with the qualification of the Preferred
Securities, the Guarantee and the Notes under the securities laws of any
jurisdiction in accordance with the provisions of Section 5(f) and in
connection with the preparation of the Blue Sky Survey, such fees not to
exceed $5,000, (iv) the printing and delivery to the Underwriters, in
quantities as hereinabove referred to, of copies of the Registration
Statement and any amendments thereto, (v) any fees charged by independent
rating agencies for rating the Preferred Securities, (vi) all fees and
expenses of the Trustees, including the Indenture Trustee, Property
Trustee, Guarantee Trustee and Delaware Trustee and the fees and
disbursements of their counsel, (vii) any fees and expenses in
connection with the listing of the Preferred Securities and, if applicable,
the Notes on the New York Stock Exchange, (viii) any filing fee required by
the National Association of Securities Dealers, Inc. and (ix) the costs of
any depository arrangements for the Preferred Securities with DTC or any
successor depository.
6. Conditions of the Obligations of the Underwriters. The obligations of
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the several Underwriters to purchase and pay for the Preferred Securities will
be subject to the accuracy of the representations and warranties on the part of
the Trust or the Corporation herein, to the accuracy of the statements of
trustees or representatives of the Trust and officers of the Corporation made
pursuant to the provisions hereof, to the performance by the Trust and the
Corporation of their obligations hereunder and to the following additional
conditions precedent:
(a) Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Trust, the Corporation or you, shall be threatened by the
Commission.
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(b) Prior to the Closing Date, the rating assigned by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Services to any debt
securities of the Corporation as of the date of this Agreement shall not
have been lowered.
(c) Since the respective most recent dates as of which information is
given in the Prospectus and up to the Closing Date, there shall not have
been any material adverse change in the condition of the Trust or the
Corporation, financial or otherwise, except as reflected in or contemplated
by the Prospectus, and, since such dates and up to the Closing Date, there
shall not have been any material transaction entered into by the
Corporation other than transactions contemplated by the Prospectus and
transactions in the ordinary course of business.
(d) You shall have received an opinion or opinions of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
LLP, counsel to the Corporation, dated the Closing Date, to the effect
that:
(i) The Corporation has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as described
in the Prospectus.
(ii) The Trust Agreement has been duly authorized, executed and
delivered by the Corporation and duly qualified under the Trust
Indenture Act of 1939, and, assuming due authorization, execution
and delivery thereof by The Chase Manhattan Bank, as Trustee,
constitutes a valid and legally binding instrument of the
Corporation, enforceable against the Corporation in accordance with
its terms, subject to the qualifications that the enforceability of
the Corporation's obligations under the Trust Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(iii) The Guarantee Agreement has been duly authorized, executed
and delivered by the Corporation and duly qualified under the Trust
Indenture Act of 1939 and constitutes a valid and legally binding
instrument of the Corporation, enforceable against the Corporation
in accordance with its terms, subject to the qualifications that the
enforceability of the Corporation's obligations under the Guarantee
Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally and by general
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principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) The Indenture has been duly authorized, executed and
delivered by the Corporation and duly qualified under the Trust
Indenture Act of 1939 and, assuming the due authorization, execution
and delivery thereof by The Chase Manhattan Bank, as Trustee,
constitutes a valid and legally binding instrument of the
Corporation, enforceable against the Corporation in accordance with
its terms, subject to the qualifications that the enforceability of
the Corporation's obligations under the Indenture may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(v) The Notes have been duly authorized and executed by the
Corporation and, when authenticated by The Chase Manhattan Bank, as
Trustee, in the manner provided in the Indenture and delivered
against payment therefor, will constitute valid and legally binding
obligations of the Corporation, enforceable against the Corporation
in accordance with their terms, subject to the qualifications that
the enforceability of the Corporation's obligations under the Notes
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(vi) The Registration Statement has become effective under the
1933 Act, and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or threatened under the 1933 Act.
(vii) This Agreement has been duly authorized, executed and
delivered by the Corporation.
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(viii) The performance by the Corporation of this Agreement will
not contravene any of the provisions of the Certificate of
Incorporation or By-Laws of the Corporation.
(ix) The Corporation is not a holding company under the Public
Utility Holding Company Act of 1935, as amended.
(x) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Preferred Securities, the
issue of the Guarantee or the issue and sale of the Notes or the
consummation by the Corporation and the Trust of the transactions
contemplated by this Agreement, the Trust Agreement, the Guarantee
or the Indenture, except such as have been obtained under the 1933
Act and the Trust Indenture Act and such consents, approvals,
authorizations, orders, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Preferred Securities and the
Guarantee by the Underwriters.
(xi) The Registration Statement as of the date of effectiveness
under the 1933 Act and the Prospectus as of the date it was filed
with, or transmitted for filing to, the Commission complied
as to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations; and nothing has come to their
attention that would lead them to believe that the Registration
Statement as of the date of effectiveness under the 1933 Act (or if
an amendment to such Registration Statement or an annual report on
Form 10-K has been filed by the Corporation with the Commission
subsequent to the effectiveness of the Registration Statement, then
at the time of the most recent such filing) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus as of the date it was
filed with, or transmitted for filing to, the Commission and at the
Closing Date contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Such opinion may state
that such counsel do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus except as otherwise expressly
provided in such opinion and do not express any opinion or belief
as to the financial statements or other financial data contained in
the Registration Statement and the Prospectus or as to the statement
of the eligibility and qualification of the Trustee.
(xii) The statements made in the Prospectus under the captions
"Description of the Preferred Securities," "Description of the
Guarantees," "Description of the Series Junior Subordinated
Notes" and "Description of the Junior Subordinated Notes," insofar
as they purport to summarize provisions of documents specifically
referred to therein, fairly present the information called for with
respect thereto by Form S-3, and the statements as to matters of law
and legal conclusions contained in the Prospectus under the caption
"Certain Federal Income Tax Considerations" are correct in all
material respects.
In rendering the foregoing opinion or opinions, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may
state that such opinion or opinions are limited to the Federal laws of the
United States, the laws of the State of New York and the General Corporation Law
of the State of Delaware, and that they are expressing no opinion as to the
effect of the laws of any other jurisdiction. In addition, such counsel may
state that they have relied as to certain matters on information obtained from
public officials, officers of the Corporation and other sources believed by them
to be responsible and that the signatures on all documents examined by them are
genuine, assumptions which such counsel have not independently verified.
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(e) You shall have received an opinion, dated the Closing Date,
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., to the effect that:
(i) Each of the Corporation and the Principal Subsidiaries is duly
qualified to do business in each jurisdiction in which the ownership
or leasing of its property or the conduct of its business requires
such qualification, except where the failure to so qualify,
considering all such cases in the aggregate, does not have a material
adverse effect on the business, properties, financial position or
results of operations of the Corporation and its subsidiaries taken as
a whole.
(ii) Such counsel does not know of any litigation or any
legal or governmental proceeding instituted or threatened against the
Corporation or any of its subsidiaries that would be required to be
disclosed in the Prospectus and is not so disclosed.
Such counsel shall also state that nothing has come to his attention
that has caused him to believe that the Registration Statement as of the date of
effectiveness under the 1933 Act and the Prospectus as of the date it was filed
with, or transmitted for filing to, the Commission, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus as of the date it was filed with, or transmitted for filing
to, the Commission and at the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Such counsel may also state that he
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus and
does not express any opinion or belief as to the financial statements or other
financial data contained in the Registration Statement and the Prospectus.
In rendering the foregoing opinion, such counsel may rely, to the extent
recited therein, upon opinions of local counsel. Such counsel may also state
that he has relied as to certain factual matters on information obtained from
public officials, officers of the Corporation and other sources believed by him
to be responsible.
(f) You shall have received the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger,
P.A., special Delaware counsel to the Trust, dated the Closing Date, to
the effect that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act of
the State of Delaware (the "Delaware Business Trust Act"), and all
filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a
business trust have been made.
(ii) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the business trust power and authority to
own property and conduct its business, all as described in the
Prospectus.
(iii) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the business trust power and authority (a)
to execute and deliver this Agreement, (b) to perform its
obligations under this Agreement and (c) to issue and perform its
obligations under the Preferred Securities and the Common
Securities.
(iv) Under the Delaware Business Trust Act and the Trust
Agreement, the execution and delivery by the Trust of this Agreement
and the performance by the Trust of its obligations hereunder and
under the Trust Agreement, have been duly authorized by all
necessary business trust action on the part of the Trust.
(v) The Trust Agreement constitutes a valid and binding
obligation of the Corporation and the trustees named therein,
enforceable against the Corporation and the trustees named therein,
in accordance with its terms, subject, as to enforcement, to the
effect upon the Trust Agreement of (a) bankruptcy, insolvency,
moratorium, receivership, liquidation, fraudulent conveyance or
transfer, reorganization and other similar laws relating to or
affecting the remedies and rights of creditors generally, (b)
principles of equity, including applicable law relating to fiduciary
duties (regardless of whether considered or applied in a proceeding
in equity or at law) and (c) the effect of applicable public policy
on the enforceability of provisions relating to indemnification or
contribution.
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(vi) The Preferred Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and non-assessable
preferred undivided beneficial interests in the assets of the Trust;
the Holders of the Preferred Securities, as beneficial owners of the
Trust (the "Securityholders"), are entitled to the same limitation
of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law
of the State of Delaware; provided, however, that such counsel may
note that the Securityholders may be obligated, pursuant to the
Trust Agreement, to (a) provide indemnity and/or security in
connection with and pay a sum sufficient to cover any taxes or
governmental charges arising from transfers or exchanges of
Preferred Securities certificates and the issuance of replacement
Preferred Securities certificates and (b) provide security and/or
indemnity in connection with requests of or directions to the
Property Trustee (as defined in the Trust Agreement) to exercise its
rights and powers under the Trust Agreement; and under the Delaware
Business Trust Act and the Trust Agreement, the issuance of the
Preferred Securities is not subject to preemptive or other similar
rights.
(vii) The Common Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and fully paid
undivided beneficial interests in the assets of the Trust; and under
the Delaware Business Trust Act and the Trust Agreement, the
issuance of the Common Securities is not subject to preemptive or
other similar rights.
(viii) The issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the execution, delivery and
performance by the Trust of this Agreement, the performance by the
Trust of the Trust Agreement, the consummation by the Trust of the
transactions contemplated herein and therein and the compliance by
the Trust with its obligations hereunder do not violate (a) any of
the provisions of the Certificate of Trust of the Trust or the Trust
Agreement or (b) any applicable Delaware law or Delaware
administrative regulation.
(ix) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than having a Delaware trustee as required by the
Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the
State of Delaware, no authorization, approval, consent or order of
any Delaware court or Delaware governmental authority or Delaware
agency is required to be obtained by the Trust solely as a result of
the issuance and sale of the Preferred Securities, the consummation
by the Trust of the transactions contemplated in this Agreement and
the Trust Agreement or the compliance by the Trust of its
obligations hereunder and thereunder.
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(x) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than having a Delaware trustee as required by the
Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the
State of Delaware, and assuming that the Trust is treated as a
grantor trust for federal income tax purposes, the Securityholders
(other than those holders of the Preferred Securities who reside or
are domiciled in the State of Delaware) will have no liability for
income taxes imposed by the State of Delaware solely as a result of
their participation in the Trust, and the Trust will not be liable
for any income tax imposed by the State of Delaware.
In rendering the opinion expressed in this paragraph (f), such counsel need
express no opinion concerning the securities laws of the State of Delaware.
(g) You shall have received the opinion or opinions of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the Closing Date, with
respect to the incorporation of the Corporation, the validity of the Notes,
the Registration Statement and the Prospectus, as amended or supplemented,
and other related matters as you may require, and the Corporation shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(h) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension in trading in securities generally or of
the securities of Duke Energy Corporation or the Corporation on the New
York Stock Exchange; or (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; or (iii) the outbreak of hostilities involving the United
States or the declaration by the United States of a national emergency or
war if the effect of any such event specified in this clause (h) in your
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Preferred Securities being delivered at the
Closing Date on the terms and in the manner contemplated in the Prospectus.
(i) You shall have received a certificate of the Chairman of the
Board and President or any Vice President and a principal financial or
accounting officer of the Corporation and a certificate of a trustee or
authorized representative of the Trust, each dated the Closing Date, in
which such officers or trustee or representative, as the case may be, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Corporation and the Trust in
this Agreement are true and correct, that the Corporation and the Trust
have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Date, that the
conditions specified in Section 6(b) and Section 6(c) have been satisfied,
and that no stop order suspending the effectiveness of the Registration
12
Statement has been issued and no proceedings for that purpose have been
instituted or are threatened by the Commission.
(j) On the date of this Agreement, you shall have received a letter
dated the date hereof, in form and substance satisfactory to you, from the
Corporation's independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Prospectus.
13
(k) At the Closing Date you shall have received from the Corporation's
independent public accountants a letter, dated the Closing Date, to the
effect that such accountants reaffirm the statements made in the letter
furnished pursuant to paragraph (j) of this Section 6, except that the
specified date referred to shall be a date not more than three business
days prior to the Closing Date.
The Corporation will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you reasonably request.
7. Indemnification. (a) The Trust and the Corporation, jointly and
---------------
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the prospectus constituting a part of the Registration
Statement in the form in which it became effective or the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with written
information furnished to the Trust or the Corporation by any Underwriter
through you expressly for use in the Registration Statement (or any
amendment thereto) or such Preliminary Prospectus, such prospectus, or the
Prospectus (or any amendment or supplement thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of the
Trust and the Corporation; and
14
(iii) against any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above.
In no case shall the Trust or the Corporation be liable under this
indemnity agreement with respect to any claim made against any Underwriter or
any such controlling person unless the Trust and the Corporation shall be
notified in writing of the nature of the claim within a reasonable time after
the assertion thereof, but failure so to notify the Trust or the Corporation
shall not relieve either of them from any liability which either of them may
have otherwise than on account of this indemnity agreement. The Trust and the
Corporation shall be entitled to participate at their own expense in the
defense, or, if they so elect, within a reasonable time after receipt of such
notice, to assume the defense of any suit brought to enforce any such claim, but
if they so elect to assume the defense, such defense shall be conducted by
counsel chosen by them and approved by the Underwriter or Underwriters or
controlling person or persons, or defendant or defendants in any suit so
brought, which approval shall not be unreasonably withheld. In any such suit,
any Underwriter or any such controlling person shall have the right to employ
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the Trust and
the Corporation and such Underwriter shall have mutually agreed to the
employment of such counsel, or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the Trust or the Corporation and such Underwriter or such
controlling person shall have been advised by such counsel that a conflict of
interest between the Trust or the Corporation and such Underwriter or such
controlling person may arise and for this reason it is not desirable for the
same counsel to represent both the indemnifying party and also the indemnified
party (it being understood, however, that the Trust and the Corporation shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for all such Underwriters
and all such controlling persons, which firm shall be designated in writing by
you). The Trust and the Corporation agree to notify you within a reasonable
time of the assertion of any claim against them, any of their officers,
directors or trustees or any person who controls the Trust or the Corporation
within the meaning of Section 15 of the 1933 Act, in connection with the sale of
the Preferred Securities.
(b) Each Underwriter severally agrees that it will indemnify and hold
harmless the Trust and the Corporation, their directors, trustees,
representatives and each of the officers of the Corporation who signed the
Registration Statement and each person, if any, who controls them within the
meaning of Section 15 of the 1933 Act to the same extent as the indemnity
contained in subsection (a) of this Section, but only with respect to statements
or omissions made in the Registration Statement (or any amendment thereto) or
any Preliminary Prospectus, such prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Trust or the Corporation by such
15
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto), such Preliminary Prospectus, such prospectus or the
Prospectus (or any amendment or supplement thereto). In case any action shall be
brought against the Trust or the Corporation or any person so indemnified based
on the Registration Statement (or any amendment thereto) or such Preliminary
Prospectus, such prospectus or the Prospectus (or any amendment or supplement
thereto) and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Trust and the Corporation, and the Trust and the Corporation and each person so
indemnified shall have the rights and duties given to the Underwriters, by the
provisions of subsection (a) of this Section.
8. Default by One or More of the Underwriters. (a) If any Underwriter
------------------------------------------
shall default in its obligation to purchase the Preferred Securities which it
has agreed to purchase hereunder on the Closing Date, you may in your discretion
arrange for you or another party or other parties to purchase such Preferred
Securities on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Preferred
Securities, then the Trust and the Corporation shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Preferred Securities on such terms.
In the event that, within the respective prescribed periods, you notify the
Trust and the Corporation that you have so arranged for the purchase of such
Preferred Securities, or the Trust or the Corporation notifies you that it has
so arranged for the purchase of such Preferred Securities, you, the Trust or the
Corporation shall have the right to postpone such Closing Date for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Trust and the Corporation agree to file
promptly any amendments to the Registration Statement or the Prospectus which
may be required. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Preferred
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Preferred Securities of a defaulting Underwriter or Underwriters by you, the
Trust or the Corporation as provided in subsection (a) above, the aggregate
number of such Preferred Securities which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Preferred Securities to be
purchased at such Closing Date, then the Trust and the Corporation shall have
the right to require each non-defaulting Underwriter to purchase the number of
Preferred Securities which such Underwriter agreed to purchase hereunder at such
Closing Date and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Preferred Securities which
such Underwriter agreed to purchase hereunder) of the Preferred Securities of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Preferred Securities of a defaulting Underwriter or Underwriters by you, the
Trust or the Corporation as
16
provided in subsection (a) above, the aggregate number of such Preferred
Securities which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Preferred Securities to be purchased at such Closing Date, or
if the Trust or the Corporation shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Preferred Securities of a defaulting Underwriter or Underwriters, then this
Agreement shall thereupon terminate, without liability on the part of any non-
defaulting Underwriter, the Trust or the Corporation, except for the expenses to
be borne by the Corporation as provided in Section 5(h) hereof and the indemnity
agreement in Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
9. Representations and Indemnities to Survive Delivery. The respective
---------------------------------------------------
indemnities, agreements, representations, warranties and other statements of the
Trust and the Corporation or their officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriters or the Trust and the Corporation, or any of
their officers, directors, trustees, representatives or any controlling person,
and will survive delivery of and payment for the Preferred Securities.
10. Reliance on Your Acts. In all dealings hereunder, you shall act on
---------------------
behalf of each of the Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by you.
11. Notices. All communications hereunder will be in writing and, if sent
-------
to the Underwriters, will be mailed, delivered, or telecopied and confirmed to
you as the representatives in care of at ,
, attention of or, if sent to the Trust or the
Corporation, will be mailed, delivered, or telecopied and confirmed to them at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, telephone number (▇▇▇) ▇▇▇-▇▇▇▇,
attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and Chief Financial
Officer; provided, however, that any notice to an Underwriter pursuant to
Section 7(a) hereof shall be delivered or sent by mail or telecopy to such
Underwriter at its address or telecopy number set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address or
telecopy number will be supplied to the Trust and the Corporation by you. Any
such communications shall take effect upon receipt thereof.
12. Business Day. As used herein, the term "business day" shall mean any
------------
day when the Commission's office in Washington, D.C. is open for business.
13. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Underwriters, the Trust and the Corporation and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and the controlling
persons and the officers, directors, trustees and representatives referred to in
Section 7, and their respective successors, heirs and legal representatives any
legal or equitable right, remedy or
17
claim under or in respect of this Agreement or any provision herein contained;
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and said controlling persons, officers, directors,
trustees and representatives and their respective successors, heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Preferred Securities from any Underwriter shall be deemed to be a
successor or assign by reason merely of such purchase.
14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15. Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of New York.
18
If the foregoing is in accordance with your understanding, kindly sign and
return to us two counterparts hereof, and upon your acceptance on behalf of each
of the Underwriters, this letter and such acceptance will become a binding
agreement between the Trust and the Corporation, on the one hand, and the each
of the Underwriters, on the other hand, in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement Among
Underwriters, the form of which shall be submitted to the Trust and the
Corporation for examination, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
DUKE CAPITAL FINANCING TRUST [ ]
By: ______________________________
DUKE CAPITAL CORPORATION
By: ______________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above
written.
By: ________________________________
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SCHEDULE A
Number of
Preferred
Securities to
Underwriter be Purchased
----------- -------------
-----------
Total...........................................
===========
20
