SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
--------------
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-----
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-2255
VIRGINIA ELECTRIC AND POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 54-0418825
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
701 EAST CARY STREET
RICHMOND, VIRGINIA 23219 - 3932
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(804) 771-3000
(REGISTRANT'S TELEPHONE NUMBER)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
At April 30, 1999, 171,484 shares of common stock, without par value, of the
registrant were outstanding.
<PAGE>
PAGE 2
VIRGINIA ELECTRIC AND POWER COMPANY
INDEX
Page
Number
PART I. Financial Information
Item 1. Consolidated Financial Statements 3
Consolidated Statements of Income -
Three Months Ended March 31, 1999
and 1998
Consolidated Balance Sheets - 4-5
March 31, 1999 and December 31, 1998
Consolidated Statements of Cash Flows - 6
Three Months Ended March 31, 1999
and 1998
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of 12-17
Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures About 18
Market Risk
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders. 19
Item 5. Other Information 19-20
Company Restructuring
Competition
Future Sources of Power
Item 6. Exhibits and Reports on Form 8-K 20
<PAGE>
PAGE 3
VIRGINIA ELECTRIC AND POWER COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1999 1998
--------- ---------
(Millions)
Revenues:
Electric service $1,044.8 $1,018.7
Other 43.6 32.1
-------- --------
Total 1,088.4 1,050.8
-------- --------
Expenses:
Fuel, net 218.1 226.1
Purchased power capacity, net 209.9 180.8
Operations and maintenance 202.2 192.1
Depreciation and amortization 132.7 139.9
Amortization of terminated
construction project costs 7.7 8.6
Taxes other than income 72.3 69.6
-------- --------
Total 842.9 817.1
-------- --------
Income from operations 245.5 233.7
Other income 9.3 .5
-------- --------
Income before interest and income taxes 254.8 234.2
-------- --------
Interest and related charges:
Interest expense, net 72.2 75.3
Distributions - Preferred
securities of subsidiary trust 2.7 2.7
-------- --------
Total 74.9 78.0
-------- --------
Income before income taxes 179.9 156.2
Income taxes 65.5 57.6
-------- --------
Income before extraordinary item 114.4 98.6
Extraordinary item (net of income taxes
of $197.1) (254.8)
-------- ---------
Net (loss) income (140.4) 98.6
Preferred dividends 8.7 8.9
-------- ---------
Balance available for Common Stock $ (149.1) $89.7
======== =========
The Company had no other comprehensive income reportable in accordance with SFAS
130, REPORTING COMPREHENSIVE INCOME.
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
PAGE 4
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998*
--------- -----------
(Millions)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 67.0 $ 49.6
Accounts receivable:
Customer accounts receivable, net 663.0 777.8
Other 57.9 76.2
Materials and supplies:
Plant and general 144.8 142.0
Fossil fuel 97.0 95.0
Commodity contract assets 162.8 179.8
Other 194.6 149.9
--------- ---------
Total current assets 1,387.1 1,470.3
INVESTMENTS:
Nuclear decommissioning trust funds 743.1 705.1
Other 46.5 45.6
--------- ---------
Total investments 789.6 750.7
DEFERRED DEBITS AND OTHER ASSETS:
Regulatory assets 209.9 620.0
Unamortized debt issuance costs 27.9 28.5
Commodity contract assets 15.3 17.5
Other 19.6 16.0
--------- ---------
Total deferred debits and other assets 272.7 682.0
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Generation and other (includes $251.3 plant
under construction in 1999 and
$214.5 in 1998) 8,475.3 8,383.0
Transmission and distribution (includes
$252.1 plant under construction in 1999
and $234.8 in 1998) 6,793.4 6,824.6
--------- ---------
15,268.7 15,207.6
Less accumulated depreciation 6,410.8 6,278.8
--------- ---------
8,857.9 8,928.8
Nuclear fuel, net 149.9 153.1
--------- ---------
Net property, plant and equipment 9,007.8 9,081.9
--------- ---------
Total assets $11,457.2 $11,984.9
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
* The consolidated balance sheet at December 31, 1998 has been derived from the
audited consolidated financial statements at that date.
<PAGE>
PAGE 5
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998*
---------- -----------
(Millions)
<S> <C> <C>
CURRENT LIABILITIES:
Securities due within one year $ 298.0 $ 321.0
Short-term debt 232.1 221.7
Accounts payable, trade 463.7 566.5
Payrolls accrued 53.5 79.0
Interest accrued 83.0 93.8
Taxes accrued 175.3 48.1
Commodity contract liabilities 232.6 265.8
Other 161.2 178.7
--------- ---------
Total current liabilities 1,699.4 1,774.6
--------- ---------
LONG-TERM DEBT 3,448.0 3,464.7
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes 1,432.8 1,563.6
Deferred investment tax credits 159.2 221.4
Commodity contract liabilities 12.5 11.4
Other 196.1 192.5
--------- ---------
Total deferred credits and other liabilities 1,800.6 1,988.9
--------- ---------
COMMITMENTS AND CONTINGENCIES (See Note (c))
COMPANY OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUST** 135.0 135.0
--------- ---------
PREFERRED STOCK:
Preferred stock subject to mandatory redemption 180.0 180.0
--------- ---------
Preferred stock not subject to mandatory redemption 509.0 509.0
--------- ---------
COMMON STOCKHOLDER'S EQUITY:
Common Stock 2,737.4 2,737.4
Other paid-in capital 16.9 16.9
Earnings reinvested in business 930.9 1,178.4
--------- ---------
Total common stockholder's equity 3,685.2 3,932.7
--------- ---------
Total liabilities and stockholders' equity $11,457.2 $11,984.9
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
* The consolidated balance sheet at December 31, 1998 has been derived from
the audited consolidated financial statements at that date.
** As described in Note (d) to CONSOLIDATED FINANCIAL STATEMENTS, the 8.05%
Junior Subordinated Notes totaling $139.2 million principal amount constitute
100% of the Trust's assets.
<PAGE>
PAGE 6
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1999 1998
--------- ---------
(Millions)
Cash flow from (to) operating activities:
Net (loss) income $ (140.4) $ 98.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 161.6 168.4
Deferred income taxes 13.0 5.5
Deferred investment tax credits, net (4.2) (4.2)
Deferred fuel expenses (7.0) 13.1
Extraordinary item, net of income taxes 254.8
Changes in:
Accounts receivable 133.1 91.0
Materials and supplies (4.8) 7.6
Accounts payable, trade (102.8) (18.9)
Accrued expenses 12.7 60.8
Commodity contract assets and liabilities (12.9) 7.2
Other 17.0 (3.7)
-------- --------
Net cash flow from operating activities 320.1 425.4
-------- --------
Cash flow from (to) financing activities:
Issuance (repayment) of short-term debt 10.4 (146.3)
Repayment of long-term debt (40.0)
Common Stock dividend payments (98.5) (99.7)
Preferred stock dividend payments (8.7) (8.8)
Distribution-preferred securities of subsidiary trust (2.7) (2.7)
Other (.1) 2.4
-------- --------
Net cash flow to financing activities (139.6) (255.1)
-------- --------
Cash flow from (to) investing activities:
Plant expenditures (excluding AFC-other funds) (137.1) (83.7)
Nuclear fuel (excluding AFC-other funds) (18.0) (20.8)
Nuclear decommissioning contributions (7.8) (21.6)
Other (0.2) 3.1
-------- --------
Net cash flow to investing activities (163.1) (123.0)
-------- --------
Increase in cash and cash equivalents 17.4 47.3
Cash and cash equivalents at beginning of period 49.6 36.0
-------- --------
Cash and cash equivalents at end of period $ 67.0 $ 83.3
======== ========
Cash paid during the period for:
Interest (reduced for the net cost of
borrowed funds capitalized as AFC) $ 83.7 $ 84.7
Income taxes 1.8 5.3
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
PAGE 7
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(a) Significant Accounting Policies
GENERAL
Virginia Electric and Power Company is a regulated public utility engaged in
the generation, transmission, distribution and sale of electric energy within a
30,000 square-mile area in Virginia and northeastern North Carolina. It sells
electricity to retail customers (including governmental agencies) and to
wholesale customers such as rural electric cooperatives, municipalities, power
marketers and other utilities. The Virginia service area comprises about 65
percent of Virginia's total land area, but accounts for over 80 percent of its
population. The Company engages in off-system wholesale purchases and sales of
electricity and purchases and sales of natural gas, and is developing trading
relationships beyond the geographic limits of its retail service territory.
Within this document, the terms "Virginia Power" and the "Company" shall refer
to the entirety of Virginia Electric and Power Company, including, without
limitation, its Virginia and North Carolina operations, and all of its
subsidiaries.
In the opinion of the management of Virginia Power, the accompanying
unaudited consolidated financial statements contain all adjustments, including
normal recurring accruals, necessary to present fairly the financial position as
of March 31, 1999, the results of operations for the three-month periods ended
March 31, 1999 and 1998, and the cash flows for the three-month periods ended
March 31, 1999 and 1998. Certain amounts in the 1998 consolidated financial
statements have been reclassified to conform to the 1999 presentation. The
results of operations for the interim period are not necessarily indicative of
the results to be expected for the full year.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, with all significant intercompany transactions and
accounts being eliminated on consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
These financial statements should be read in conjunction with the financial
statements, and notes thereto, included in the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
As discussed in the Company's Form 8-K, filed March 29, 1999, the Company
discontinued the application of Statement of Financial Accounting Standards No.
71 (SFAS No. 71), ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION, to
its generation operations upon enactment of deregulation legislation. The effect
thereof was an after-tax charge of $254.8 million. See note (b) for further
discussion.
(b) Extraordinary Item--Discontinuance of SFAS No. 71
In 1998, the Company negotiated a settlement with the Virginia State
Corporation Commission (Virginia Commission) that resolved then outstanding rate
proceedings. As part of the settlement, the Company agreed to a one-time rate
refund paid to customers in 1998 and a two-phased rate reduction and base rate
freeze through February 2002.
<PAGE>
PAGE 8
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
On March 25, 1999, the Governor of Virginia signed into law legislation
establishing a detailed plan to restructure the electric utility industry in
Virginia. The major elements of the bill included:
| | Phase-in of retail customer choice beginning in 2002 with full retail
customer choice by 2004; the schedule is to be determined by the Virginia
Commission, which has the authority to accelerate or delay implementation
under certain conditions; however, the phase-in of retail customer choice
may not be delayed beyond January 1, 2005;
| | No mandatory divestiture of generating assets;
| | Deregulation of generation in 2002;
| | Capped base rates from January 1, 2001 to July 1, 2007;
| | Recovery of net stranded costs through capped rates or a wires charge paid
by those customers opting, while capped rates are in effect, to purchase
energy from a competitive supplier;
| | Cost-based recovery of fuel expenses until July 2007;
| | Consumer protection safeguards;
| | Establishment of default service beginning January 1, 2004; and
| | Creation of a Legislative Transition Task Force to oversee the
implementation of the statute.
Under this legislation, the Company's base rates will remain unchanged until
July 2007 and recovery of generation-related costs will continue to be provided
through the capped rates. In addition, under companion legislation enacted by
Virginia in 1999, providers of electric service will be subject to corporate
income taxes in lieu of gross receipts taxes effective in 2001.
As discussed in the Company's annual report filed on Form 10-K for the year
ended December 31, 1998, the Company's financial statements reflect regulatory
assets and liabilities under cost-based rate regulation in accordance with SFAS
No. 71. Rate-regulated companies are required to write off regulatory assets
against current earnings whenever changes in facts and circumstances result in
those assets no longer satisfying criteria for recognition as defined by SFAS
No. 71. The legislation's deregulation of generation is an event that requires
discontinuation of SFAS No. 71 for the Company's generation operations in the
first quarter of 1999. The Company's transmission and distribution operations
continue to meet the criteria for recognition of regulatory assets and
liabilities as defined by SFAS No. 71. In addition, fuel continues to be subject
to deferral accounting.
In order to measure the amount of regulatory assets to be written off, the
Company evaluated to what extent recovery of regulatory assets would be provided
through the capped rates during the transition period. Emerging Issues Task
Force Issue No. 97-4, "Deregulation of the Pricing of Electricity Issues Related
to the Application of FASB Statements No. 71, ACCOUNTING FOR THE EFFECTS OF
CERTAIN TYPES OF REGULATION, and No. 101, REGULATED ENTERPRISES - ACCOUNTING FOR
THE DISCONTINUANCE OF APPLICATION OF FASB STATEMENT NO. 71" (EITF Issue 97-4),
provides guidance about writing off regulatory assets when SFAS No. 71 is
discontinued for only a portion of a utility's operations. The provisions of the
Virginia legislation provide an opportunity to recover generation-related costs,
including certain regulatory assets, through capped rates prior to July 2007.
Under EITF Issue 97-4 such generation-related regulatory assets will continue to
be recognized until they are recovered through capped rates. Generation-related
assets and liabilities that will not be recovered through the capped rates were
written off in the first quarter of 1999, resulting in an after-tax charge to
earnings of $254.8 million. The Company's regulatory assets as of March 31,
1999, and December 31, 1998, follow:
<PAGE>
PAGE 9
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
March 31, December 31,
1999 1998
Income taxes recoverable through
future rates $ 57.0 $ 438.8
Cost of decommissioning DOE uranium
enrichment facilities 61.6 61.8
Deferred losses on reacquired debt 18.8 31.2
Nuclear design basis documentation cost 7.6 20.9
North Anna Unit 3 project termination costs 9.8
Deferred fuel 34.7 27.7
Other 30.2 29.8
------- -------
Total $ 209.9 $ 620.0
======= =======
In addition to the write-off of generation-related net regulatory assets
discussed above, the $254.8 million charge included approximately $18 million,
after-tax, of other generation-related assets. Pursuant to EITF Issue 97-4, a
corresponding regulatory asset of $23 million, representing the amount expected
to be recovered during the transition period related to these assets, was
established. The extraordinary item also included the write-off of approximately
$38 million, after-tax, of deferred investment tax credits.
Also, as discussed in the Company's 1998 Form 10-K, the events or changes in
circumstances that cause discontinuance of SFAS No. 71, and write-off of
regulatory assets, also require a review of utility plant assets and long-term
power purchase contracts for possible impairment. This review is based on
estimates of possible future market prices, load growth, competition and many
other assumptions. The Company evaluated its generation assets in accordance
with the provisions of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. These evaluations included
the effects of nuclear decommissioning and other currently identified
environmental expenditures. Based on these analyses which are highly dependent
on the underlying assumptions, no plant write-downs are appropriate at this
time.
The Company reviewed its long-term power purchase commitments for potential
loss in accordance with SFAS No. 5, ACCOUNTING FOR CONTINGENCIES, and Accounting
Research Bulletin No. 43, Chapter 4, INVENTORY PRICING. Based on projections of
possible future market prices for wholesale electricity, the results of the
analyses of the Company's long-term power purchase contracts indicated no loss
recognition is appropriate at this time. Other projections of possible future
market prices indicated a possible loss of $500 million. In the absence of
capped rates as provided by the legislation, the potential exposure related to
the Company's power purchase contracts would be approximately $3.2 billion.
Significant estimates were required in recording the effect of the
deregulation legislation, including the resulting impact on the fair value
determination of generating facilities and estimated purchases under long-term
power purchase contracts. Such projections were based on estimated generation
and estimated future market prices for generation and are subject to future
re-evaluation.
The Company remains subject to numerous risks including, among others,
exposure to long-term power purchase commitment losses, environmental
contingencies, changes in tax laws, decommissioning costs, inflation, increased
capital costs, and recovery of certain other items. Management believes the
stable rates that are provided until July 2007 by the legislation present a
reasonable opportunity to recover a substantial portion of the Company's
potentially stranded costs as more fully described in our 1998 Form 10-K in
Competition--Exposure to Potentially Stranded Costs, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.
<PAGE>
PAGE 10
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(c) Contingencies
NUCLEAR INSURANCE
The Price-Anderson Act limits the public liability of an owner of a nuclear
power plant to $9.7 billion for a single nuclear incident. The Company is a
member of certain insurance programs that provide coverage for property damage
to members' nuclear generating plants, replacement power and liability in the
event of a nuclear incident. The Company may be subject to retrospective
premiums in the event of major incidents at nuclear units owned by covered
utilities (including the Company). For additional information, see Note C to
CONSOLIDATED FINANCIAL STATEMENTS included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
SITE REMEDIATION
The Environmental Protection Agency (EPA) has identified the Company and
several other entities as Potentially Responsible Parties (PRPs) at two
Superfund sites located in Kentucky and Pennsylvania. The estimated future
remediation costs for the sites are in the range of $61.8 million to $69.5
million. The Company's proportionate share of the cost is expected to be in the
range of $1.6 million to $2.2 million, based upon allocation formulas and the
volume of waste shipped to the sites. The Company has accrued a reserve of $1.7
million to meet its obligations at these two sites. Based on a financial
assessment of the PRPs involved at these sites, the Company has determined that
it is probable that the PRPs will fully pay the costs apportioned to them.
The Company generally seeks to recover its costs associated with
environmental remediation from third party insurers. At March 31, 1999, any
pending or possible claims were not recognized as an asset or offset against
such obligations of the Company.
For additional information regarding Contingencies, see Note Q to
CONSOLIDATED FINANCIAL STATEMENTS included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
(d) Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust
In 1995, the Company established Virginia Power Capital Trust I (VP Capital
Trust). VP Capital Trust sold 5,400,000 shares of Preferred Securities for
$135.0 million, representing preferred beneficial interests and 97% beneficial
ownership in the assets held by VP Capital Trust.
Virginia Power issued $139.2 million of its 1995 Series A, 8.05% Junior
Subordinated Notes (the Notes) in exchange for the $135.0 million realized from
the sale of the Preferred Securities and $4.2 million of common securities of VP
Capital Trust. The common securities represent the remaining 3% beneficial
ownership interest in the assets held by VP Capital Trust. The Notes constitute
100% of VP Capital Trust's assets.
(e) Preferred Stock
As of March 31, 1999, there were 1,800,000 and 5,090,140 issued and
outstanding shares of preferred stock subject to mandatory redemption and
preferred stock not subject to mandatory redemption, respectively. There are
10,000,000 authorized shares of the Company's preferred stock.
<PAGE>
PAGE 11
VIRGINIA ELECTRIC AND POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(f) Recently Issued Accounting Standard
In 1998, the Emerging Issues Task Force reached consensus on Issue No.
98-10, ACCOUNTING FOR CONTRACTS INVOLVED IN ENERGY TRADING AND RISK MANAGEMENT
ACTIVITIES (EITF Issue 98-10). EITF Issue 98-10 requires energy trading
contracts to be recorded at fair value on the balance sheet with the changes in
fair value included in earnings and was effective January 1, 1999. The Company
manages a portfolio of energy contracts which have been recorded at fair value
on the balance sheet with the changes in fair value included in earnings as
required by EITF 98-10. Therefore, the effect of the initial application of EITF
Issue 98-10 at January 1, 1999, was not material to the Company's financial
statements.
(g) Business Segments
Virginia Power's principal business is its public utility business which
serves Virginia and northeastern North Carolina and is reported as Utility
Operations. The All Other category includes the Company's wholesale power
group's trading and marketing activities, its telecommunications subsidiary, its
nuclear consulting services subsidiary and its energy services activities.
Management's review of the Company's operations focuses on earnings before
interest and income taxes. The Company purchases and sells power in regions
outside of its traditional service territory, including marketing available
generating capacity not required to serve native load customers. It also markets
natural gas. Revenues from wholesale power trading activities include realized
commodity contract revenues, net of related cost of sales, settlement of futures
contracts, amortization of option premiums and unrealized gains and losses
resulting from marking to market those commodity contracts not yet settled.
Utility All Consolidated
Description Operations Other Total
- --------------------------------------------------------------------------------
(Millions)
THREE MONTHS ENDED MARCH 31, 1999
Revenues $ 1,061.0 $ 27.4 $ 1,088.4
Depreciation and amortization 132.5 .2 132.7
Earnings before interest and taxes 238.0 16.8 254.8
Total assets 10,968.7 488.5 11,457.2
Capital expenditures 154.9 .2 155.1
THREE MONTHS ENDED MARCH 31, 1998
Revenues $ 1,051.3 $ (.5) $ 1,050.8
Depreciation and amortization 139.7 .2 139.9
Earnings before interest and taxes 247.5 (13.3) 234.2
Total assets-DECEMBER 31, 1998 11,174.3 810.6 11,984.9
Capital expenditures 99.0 5.5 104.5
<PAGE>
PAGE 12
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains "forward-looking statements" as defined by the Private
Securities Litigation Reform Act of 1995, including (without limitation)
discussions as to expectations, beliefs, plans, objectives and future financial
performance, or assumptions underlying or concerning matters discussed in this
document. These discussions, and any other discussions, including certain
contingency matters (and their respective cautionary statements) discussed
elsewhere in this report, that are not historical facts, are forward-looking
and, accordingly, involve estimates, projections, goals, forecasts, assumptions
and uncertainties that could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements.
The business and financial condition of Virginia Power are influenced by a
number of factors including political and economic risks, market demand for
energy, inflation, capital market conditions, governmental policies, legislative
and regulatory actions (including those of the Federal Energy Regulatory
Commission (FERC), the Environmental Protection Agency, the Department of
Energy, the Nuclear Regulatory Commission, the Virginia Commission and the North
Carolina Utilities Commission), industry and rate structure and legal and
administrative proceedings. Some other important factors that could cause actual
results or outcomes to differ materially from those discussed in the
forward-looking statements include changes in and compliance with environmental
laws and policies, weather conditions and catastrophic weather-related damage,
present or prospective wholesale and retail competition, competition for new
energy development opportunities, pricing and transportation of commodities,
operation of nuclear power facilities, acquisition and disposition of assets and
facilities, recovery of the cost of purchased power, nuclear decommissioning
costs, the ability of the Company, its suppliers, and its customers to
successfully address Year 2000 compliance issues, exposure to changes in the
fair value of commodity contracts, counter-party credit risk and unanticipated
changes in operating expenses and capital expenditures. All such factors are
difficult to predict, contain uncertainties that may materially affect actual
results, and may be beyond the control of Virginia Power. New factors emerge
from time to time and it is not possible for management to predict all such
factors, nor can it assess the impact of each such factor on Virginia Power.
Any forward-looking statement speaks only as of the date on which such
statement is made, and Virginia Power undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES resulted in $105.3 million decreased cash flow for the
three-month period ended March 31, 1999 as compared to the same period in 1998.
This decrease was primarily attributable to the timing of certain payments
related to normal operations and an increase in fuel expenses for which recovery
was not received in the first quarter. Internal generation of cash exceeded the
Company's capital requirements during the first quarters of 1999 and 1998.
<PAGE>
PAGE 13
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
FINANCING ACTIVITIES for the first three months of 1999 resulted in a net
cash outflow of $139.6 million.
Cash flow from (to) financing activities was as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
-------- ------------
(Millions)
<S> <C> <C>
Issuance (repayment) of short-term debt $ 10.4 $(146.3)
Repayment of long-term debt and preferred stock (40.0)
Payment of dividends (107.2) (108.5)
Other (2.8) (.3)
-------- --------
Total $(139.6) $(255.1)
======== ========
=========================================================================================
</TABLE>
On April 13, 1999, we filed a $400 million medium-term note shelf
registration statement with the Securities and Exchange Commission. The
registration statement became effective on April 30, 1999. The remaining
principal amount of debt that can be issued from the currently effective
medium-term note shelf is only $20 million. We also have $625 million of debt
capacity under two other shelf registration statements. An additional capital
resource of $100 million in preferred stock also is registered with the
Securities and Exchange Commission.
The Company has a commercial paper program that is supported by two credit
facilities totaling $500 million. Proceeds from the sale of commercial paper are
primarily used to provide working capital. Net borrowings under the program were
$232.1 million at March 31, 1999.
INVESTING ACTIVITIES for the first three months of 1999 resulted in a net
cash outflow of $163.1 million primarily due to $137.1 million of construction
expenditures, $18.0 million of nuclear fuel expenditures and $7.8 million of
contributions to nuclear decommissioning trusts. Of the construction
expenditures, the Company spent approximately $70.6 million on transmission and
distribution projects, $56.4 million on production projects and $9.7 million on
general support facilities.
Cash flow from (to) investing activities was as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
-------- ----------
(Millions)
<S> <C> <C>
Plant expenditures (excluding AFC-other funds) $(137.1) $ (83.7)
Nuclear fuel (excluding AFC-other funds) (18.0) (20.8)
Nuclear decommissioning contributions (7.8) (21.6)
Other (.2) 3.1
------- ------
Net cash flow to investing activities $(163.1) $(123.0)
======= =======
</TABLE>
<PAGE>
PAGE 14
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS
REVENUE for the three months ended March 31, 1999 varied from the same
period in the prior year primarily due to the following:
Change
(Millions)
Revenue - Electric Service
Customer growth $ 16.7
Weather 27.8
Base rate variance (28.1)
Fuel rate variance (9.5)
Other retail, net .5
------
Total retail 7.4
Other electric service 18.7
------
Total electric service 26.1
------
Revenue - Other 11.5
------
Total revenue $ 37.6
======
ELECTRIC SERVICE REVENUE consists of sales to retail customers in our
service territory at rates authorized by the Virginia and North Carolina
Commissions and sales to cooperatives and municipalities at wholesale rates
authorized by FERC. The primary factors affecting this revenue in the first
three months of 1999 were customer growth, weather and changes in rates.
Customer growth - There were 41,565 new customer connections in the twelve
months ended March 31, 1999. These additional customers increased our
revenue by $16.7 million in the first quarter of 1999 compared to the same
period in 1998.
Weather - The cooler weather in the first quarter of 1999, as compared to
1998, caused customers to use more electricity for heating, which increased
retail revenue by $27.8 million from the previous year. Heating degree days
were as follows:
1999 1998 NORMAL
Heating degree days 1,933 1,739 2,105
Percentage change 11.2% (6.3)%
compared to prior year
Base rates -- In 1998, as part of the settlement to resolve outstanding rate
proceedings, the Company agreed to a two-phased rate reduction, $100 million
effective March 1, 1998 and an additional $50 million effective March 1,
1999, with a base rate freeze through February 2002. The 1999 deregulation
legislation extended this base rate freeze until July 1, 2007.
Fuel rates - The decrease in fuel rate revenue is attributable to lower fuel
rates in effect during the first quarter of 1999, as compared to the same
period in 1998.
<PAGE>
PAGE 15
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
OTHER REVENUE includes sales of electricity beyond our service territory,
natural gas, nuclear consulting services, energy management services and other
revenue. The growth in power marketing and natural gas revenue for the
three-month period ended March 31, 1999, as compared to the same period in 1998,
is primarily due to favorable changes in commodity prices and higher margins in
1999.
FUEL, NET decreased as compared to the first quarter of 1998 due to
increased deferral of fuel expenses as a result of higher fuel costs from
changes in the Company's generation mix and lower fuel rates in 1999.
PURCHASED POWER CAPACITY, NET increased as compared to the first quarter of
1998, primarily due to increased expenses associated with the restructuring of
certain contracts and the discontinuance of deferral accounting for such
expenses. This accounting change resulted from the 1998 rate settlement with the
Virginia Commission.
OPERATIONS AND MAINTENANCE increased for the three-month period ended March
31, 1999, as compared to the same period in 1998, as a result of increased costs
for significant storm damage in early January.
EXTRAORDINARY ITEM--DISCONTINUANCE OF SFAS NO. 71
On March 25, 1999, the Governor of Virginia signed into law legislation
establishing a detailed plan to restructure the electric utility industry in
Virginia. See Extraordinary Item--Discontinuance of SFAS No. 71, Note (b) to
CONSOLIDATED FINANCIAL STATEMENTS.
Under this legislation, our base rates remain unchanged until July 2007. The
legislation's deregulation of generation is an event that requires
discontinuation of SFAS No. 71 for our generation operations although recovery
of generation-related costs continues to be provided through the capped rates
and the wires charge assessed to those customers opting for alternate suppliers.
Our transmission and distribution operations continue to meet the criteria for
recognition of regulatory assets and liabilities as defined by SFAS No. 71. In
addition, cost-based recovery of fuel expenses continues until July 2007.
Under EITF Issue 97-4 generation-related assets and liabilities that will
not be recovered through the capped rates were written off in March 1999,
resulting in an after-tax charge to earnings of $254.8 million.
CONTINGENCIES
For information on contingencies, see Note (c) to CONSOLIDATED FINANCIAL
STATEMENTS.
FUTURE ISSUES
COMPETITION
On March 25, 1999, the Governor of Virginia signed into law legislation
establishing a detailed plan to restructure the electric utility industry in
Virginia which will provide for customer choice beginning in 2002. Under this
legislation, our base rates will remain unchanged until July 2007 and recovery
of generation-related costs will continue to be provided through the capped
rates and the wires charge assessed to those customers opting for alternate
suppliers. In the absence of the capped rates, we would be exposed, on a pre-tax
basis, to approximately $3.2 billion of potential losses related to long-term
power purchase commitments and an additional $0.5 billion of potential losses in
generation-related regulatory assets.
The legislation's deregulation of generation is an event that requires
discontinuation of SFAS No. 71 for our generation operations. Our transmission
and distribution operations continue to meet the criteria for recognition of
regulatory assets and liabilities as defined by SFAS No. 71. In addition,
cost-based recovery of fuel expenses continues until July 2007.
<PAGE>
PAGE 16
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
We are subject to a base rate freeze at reduced revenue levels until July
2007. In addition, we remain subject to numerous risks including, among others,
exposure to long-term power purchase commitment losses, environmental
contingencies, changes in tax laws, decommissioning costs, inflation, increased
capital costs, and recovery of certain other items. We believe the stable rates
that are provided until July 2007 by the legislation present a reasonable
opportunity to recover a substantial portion of our potentially stranded costs
as more fully described in our 1998 Form 10-K. See Competition--Exposure to
Potentially Stranded Costs, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations.
For additional information, see Extraordinary Item--Discontinuance of SFAS
No. 71, Note (b) to CONSOLIDATED FINANCIAL STATEMENTS.
YEAR 2000 COMPLIANCE
Approximately 96% of our systems identified as critical to our operations
were year 2000 ready on March 31, 1999. We anticipate that 99% of such systems
will be year 2000 ready by July 1999 with 100% completion prior to January 1,
2000. We expect year 2000 costs to be within the range of $30 million to $40
million, of which $14.6 million has been expended as of March 31, 1999. Many of
the expenses not yet incurred relate to pending equipment acceptance and
payments, contingency planning, communications activities, and remediation
validation that will be on-going throughout 1999. Additional expenditures for
non-critical systems will be incurred this year and in the year 2000.
In addition to our remediation programs directed at our critical information
systems, embedded systems and external relationships, our year 2000 readiness
efforts include evaluation of reasonably likely worst case scenarios and the
development of contingency plans to address how we would respond to problems,
should they occur. Our contingency planning efforts to support continuity of
operations into and beyond the year 2000 are essentially complete. Minor updates
and final reviews of our contingency plans will be completed during the second
quarter of 1999. Year 2000 contingency plans will be refined and validated
throughout the remainder of 1999.
As part of our contingency planning process, we have considered and
evaluated, and continue to evaluate, reasonably likely worst case scenarios and
their impact on critical business processes. Based on our evaluations, such
potential scenarios could include the following:
| | Minor variations in voltage or frequency with no significant effect on
electric service;
| | Temporary loss of a portion of generation capacity, including possibly
non-utility generators; however, such loss is not expected to be sufficient
to adversely affect electric service;
| | Temporary loss of some telecommunications functionality and other
services with no impact expected on electric service; and
| | Temporary loss of a small portion of commercial and industrial customer
loads due to customer year 2000 issues with no expected adverse impact on
stability of electric service.
When considering these scenarios or others, we first take into account that
we, and the entire electric power industry, already have extensive contingency
plans in place for many events such as extreme heat, storms, equipment failures,
sudden loss of customer load or sudden loss of a generation unit. Year 2000
contingency planning is an extension of these existing plans. Our year 2000
contingency plans address the scenarios recommended in the NORTH AMERICAN
ELECTRIC RELIABILITY COUNCIL YEAR 2000 CONTINGENCY PLANNING GUIDE, as well as
additional company specific scenarios. For example, one contingency plan
prescribes that in the event voice communications fail, satellite phones will be
used to provide operational information to our operations center and to other
utilities.
Our contingency planning efforts also include developing precautionary
measures. Precautionary measures are intended to place us in a position to
mitigate the impact of year 2000 related problems, in the unlikely event
problems occur. Examples of precautionary measures include planned additional
staffing in key operational positions to facilitate quick responses to unusual
situations, and having extra supplies or fuel on hand to minimize the impact if
we experience interrupted access to key supplies.
In addition, we are actively participating in industry contingency planning
efforts at the regional and national level. We expect to submit our finalized
contingency plans to the North American Electric Reliability Council in June
1999. We successfully participated in the first nationwide drill by electric
utilities on April 9, 1999, coordinated by the North American Electric
Reliability Council. The exercise simulated the partial failure of some primary
voice and data communications to demonstrate the ability of electric utilities
to communicate operating information using backup systems. No actual
communication systems or generating units were shut down during the exercise.
Service to our customers was not affected. We will participate in the second
nationwide drill on September 8-9, 1999.
For additional information, see Year 2000 Compliance, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
1998 Form 10-K.
RECENTLY ISSUED ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, (SFAS No. 133) is effective for
the Company beginning in 2000. SFAS No. 133 requires that derivative instruments
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at fair
value. The statement requires that changes in a derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met.
The FASB-sponsored Derivatives Implementation Group that is addressing
implementation issues related to SFAS No. 133 has tentatively concluded that
certain long-term power purchase contracts may be considered derivatives under
SFAS No. 133. The Company has not yet quantified the impacts of adopting SFAS
No. 133 and has not yet determined the timing of, or method of, adoption.
<PAGE>
PAGE 17
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
MARKET RISK SENSITIVE INSTRUMENTS AND RISK MANAGEMENT
COMMODITY PRICE RISK
As part of our strategy to market energy from our generation capacity and to
manage related risks, we manage a portfolio of derivative commodity contracts
held for trading purposes. These contracts are sensitive to changes in the
prices of natural gas and electricity. We employ established policies and
procedures to manage the risks associated with these price fluctuations and use
various commodity instruments, such as futures, swaps and options, to reduce
risk by creating offsetting market positions. In addition, we seek to use our
generation capacity, when not needed to serve customers in our service
territory, to satisfy commitments to sell energy.
One of the techniques commonly used to measure risk in a commodity trading
portfolio is sensitivity analysis, which determines a hypothetical change in the
fair value of the portfolio which would result from an assumed changes in the
market prices of the related commodities. The fair value of the portfolio is a
function of the underlying commodity, contract prices and market prices
represented by each derivative commodity contract. For exchange-for-physical
contracts, basis swaps, fixed price forward contracts and options which require
physical delivery of the underlying commodity, market value reflects our best
estimates considering over-the-counter quotations, time value and volatility
factors of the underlying commitments. Exchange-traded futures and options are
marked to market based on closing exchange prices.
We have determined a hypothetical loss by calculating a hypothetical fair
value for each contract assuming a 10 percent unfavorable change in the market
prices of the related commodity and comparing it to the fair value of the
contracts based on market prices at March 31, 1999 and December 31, 1998. This
hypothetical 10 percent change in commodity prices would have resulted in a
hypothetical loss of approximately $7.2 million and $13.5 million in the fair
value of our commodity contracts as of March 31, 1999 and December 31, 1998,
respectively.
The sensitivity analysis does not include the price risks associated with
utility operations and utility fuel requirements, since these costs are
generally provided for through our capped rates, nor does it include risks that
are either non-financial or non-quantifiable. In addition, provisions are made
in the financial statements to address credit risk.
EQUITY PRICE RISK AND INTEREST RATE RISK
Virginia Power is exposed to fluctuations in interest rates related to debt
securities and prices of marketable equity securities held in its Nuclear
Decommissioning Trusts. In addition, the Company is exposed to interest rate
risk through its use of fixed rate and variable rate debt and preferred
securities as sources of capital. For additional information, see Market Risk
Sensitive Instruments and Risk Management under MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
<PAGE>
PAGE 18
VIRGINIA ELECTRIC AND POWER COMPANY
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
See Market Risk Sensitive Instruments and Risk Management under MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
<PAGE>
PAGE 19
VIRGINIA ELECTRIC AND POWER COMPANY
PART II. - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
By consent in lieu of an Annual Meeting, Dominion Resources, Inc., the sole
holder of all the voting Common Stock of the Company on April 16, 1999;
a) approved amendments to the Company's Articles of Incorporation, eliminating
staggered three-year terms for the Board of Directors and reinstating the annual
election of the Board of Directors.
b) elected the following persons to serve as Directors of the Company:
Thomas N. Chewning Thomas F. Farrell, II David L. Heavenridge
James P. O'Hanlon Robert E. Rigsby Edgar M. Roach, Jr.
William G. Thomas
Incumbent Directors, Thos. E. Capps and Jean E. Clary will continue on the Board
with terms expiring in the year 2000.
Item 5. Other Information
COMPANY RESTRUCTURING
In conjunction with the reorganization announced in April, 1999, by the
Company's parent, Dominion Resources, Inc., Virginia Power functionally
separated its operations, effective May 1,with the following areas of focus:
o regulated and unregulated power generation/off-systems transactions;
and
o bulk power delivery and distribution.
By 2002, when deregulation of generation is anticipated in Virginia, the
Company plans to conduct all of its power generation/off-systems businesses
through a new subsidiary of Dominion Resources, Inc. (Dominion Generation, Inc.)
which will also hold generation assets of Dominion Energy, Inc., a subsidiary of
Dominion Resources, Inc. However, none of the Company's generating assets are
expected to be transferred from Virginia Power, nor is it anticipated that these
assets will be operated by any entity other than Virginia Power until
deregulation. During the transition period, both Virginia Power and Dominion
Energy may use the name Dominion Generation to refer to their generation
activities.
Effective May 1, 1999, Norman Askew retired as Chief Executive Officer
of the Company. Thomas F. Farrell II became Chief Executive Officer of the
Company's generation business and Edgar M. Roach, Jr. became Chief Executive
Officer of the Company's bulk power delivery and distribution business.
<PAGE>
Page 20
COMPETITION
For a discussion on Virginia legislation requiring retail competition
beginning in 2002 see Note (b) to CONSOLIDATED FINANCIAL STATEMENTS and Future
Issues-COMPETITION under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (MD&A).
FUTURE SOURCES OF POWER
We have requested approval from the Virginia Commission to construct
four gas-fired turbine generators in Virginia. At a January 1999 hearing the
Virginia Commission determined that the Rules Governing the Use of Bidding
Programs to Purchase Electricity from Other Power Suppliers apply to this
proposed transaction. The Virginia Commission ordered Virginia Power to issue a
Request for Proposals (RFP) and also ordered the Virginia Commission Staff to
review the solicitation process and set an expedited schedule requiring bidders
to submit responses no later than March 26, 1999. After a review of the bids,
the Virginia Commission Staff issued a report to the Virginia Commission with
its recommendations and the Virginia Commission issued another Order allowing
bidders under the RFP to file a response to the report. We are currently
awaiting action by the Virginia Commission. We have obtained the applicable
zoning permits for the construction of the generators and have applied for other
required environmental permits.
VIRGINIA ELECTRIC AND POWER COMPANY
PART II - OTHER INFORMATION
(CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Restated Articles of Incorporation, as amended and restated, effective
May 6, 1999 (filed herewith).
3.2 Bylaws, as amended and effective May 1, 1999 (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K;
The Company filed a Current Report on Form 8-K, dated March 29, 1999,
reporting that the Governor of Virginia signed into law legislation
establishing a detailed plan to restructure the electric utility industry
in Virginia.
<PAGE>
PAGE 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIRGINIA ELECTRIC AND POWER COMPANY
Registrant
May 13, 1999
/S/J.A. Shaw
---------------------------------
J. A. SHAW
Senior Vice President
Chief Financial Officer and Treasurer
Exhibit 3.1
VIRGINIA ELECTRIC AND POWER COMPANY
--------------------
RESTATED ARTICLES OF INCORPORATION, AS AMENDED
As in effect on May 6, 1999
TABLE OF CONTENTS
---------------
Page
I. NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Division A---Preferred Stock . . . . . . . . . . . . . . . . . . . 1
1. Issuance in Series . . . . . . . . . . . . . . . . . . . . . . 1
2. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Preference on Liquidation, etc. . . . . . . . . . . . . . . . 3
4. Redemption and Purchase . . . . . . . . . . . . . . . . . . . 4
5. Restrictions on Certain Corporate Action . . . . . . . . . . . 5
Majority vote or consent of Preferred Stock required
(and sufficient) to:
(a) Authorize or issue any Senior Stock . . . . . . . . . . . 5
(b) Authorize or issue any Parity Stock . . . . . . . . . . . 5
(c) Increase the number of authorized shares of
Preferred Stock . . . . . . . . . . . . . . . . . . . . . 6
(d) Authorize or issue certain convertible securities . . . . 6
(e) Amend Article III so as to affect any preferences or
rights of Preferred Stock . . . . . . . . . . . . . . . . 6
(f) Reduce the amount of capital represented by the
Preferred Stock or, except as stated, reduce the
amount of capital represented by the Junior Stock . . . . 6
(g) Issue authorized but unissued Preferred Stock unless:
(i) after such issuance, capital represented by
Preferred Stock, Senior Stock and Parity Stock
does not exceed capital represented by Common
Stock; and . . . . . . . . . . . . . . . . . . . . 6
(ii) stated income requirements are met . . . . . . . . 6
(h) Merge, consolidate or sell assets as an entirety,
except as stated . . . . . . . . . . . . . . . . . . . . 7
No vote of Preferred Stock of any series required for
issuance of securities to retire all the Preferred
Stock of such series . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
6. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . 8
No right to vote except (a) as provided by (5) above,
(b) as required by Virginia law and (c) that if
dividends for one year shall become in arrears, the
Preferred Stock may elect a majority of the Board of
Directors . . . . . . . . . . . . . . . . . . . . . . . . . 8
Special meetings upon accrual or termination of right of
Preferred Stock to elect directors . . . . . . . . . . . . . 9
Filling vacancies between meetings . . . . . . . . . . . . . . 9
Removal of directors . . . . . . . . . . . . . . . . . . . . . 9
Preferred Stock not to receive notice of meetings unless
entitled to vote . . . . . . . . . . . . . . . . . . . . . . 9
Action that may be taken by either class in absence of
quorum of other class . . . . . . . . . . . . . . . . . . . 9
Preferred Stock to vote as a single class except as
stated . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7. Series of Preferred Stock . . . . . . . . . . . . . . . . . . 10
(a) $5 Dividend Preferred Stock . . . . . . . . . . . . . . . 10
(b) $4.04 Dividend Preferred Stock . . . . . . . . . . . . . 10
(c) $4.20 Dividend Preferred Stock . . . . . . . . . . . . . 11
(d) $4.12 Dividend Preferred Stock . . . . . . . . . . . . . 11
(e) $4.80 Dividend Preferred Stock . . . . . . . . . . . . . 12
(f) $7.72 Dividend Preferred Stock . . . . . . . . . . . . . 12
(g) $7.45 Dividend Preferred Stock . . . . . . . . . . . . . 13
(h) $7.20 Dividend Preferred Stock . . . . . . . . . . . . . 14
(i) $7.72 Dividend Preferred Stock (1972 Series) . . . . . . 14
(j) $7.325 Dividend Preferred Stock . . . . . . . . . . . . . 15
(k) $8.40 Dividend Preferred Stock . . . . . . . . . . . . . 16
(l) $8.20 Dividend Preferred Stock . . . . . . . . . . . . . 18
(m) $8.60 Dividend Preferred Stock . . . . . . . . . . . . . 20
(n) $8.625 Dividend Preferred Stock . . . . . . . . . . . . . 21
(o) $8.925 Dividend Preferred Stock . . . . . . . . . . . . . 23
(p) $10.25 Dividend Preferred Stock . . . . . . . . . . . . . 26
(q) $7.58 Dividend Preferred Stock . . . . . . . . . . . . . 28
Division B---Common Stock . . . . . . . . . . . . . . . . . . . . 29
1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. Distribution of Assets . . . . . . . . . . . . . . . . . . . . 30
3. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . 30
4. Purchase of Junior Stock . . . . . . . . . . . . . . . . . . . 30
Division C---General Provisions . . . . . . . . . . . . . . . . . 30
1. Additional issues by Board of Directors . . . . . . . . . . . 30
<PAGE>
2. Determination of reserves and dividends by Board of
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3. No pre-emptive right . . . . . . . . . . . . . . . . . . . . . 30
4. One vote for each share of any class entitled to vote;
quorum; plurality vote . . . . . . . . . . . . . . . . . . . . 31
5. Allocation to surplus of part of consideration for
additional stock . . . . . . . . . . . . . . . . . . . . . . . 31
IV. OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
V. DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Number of Directors to be fixed by Bylaws . . . . . . . . . . . . 31
Vacancies on the Board of Directors . . . . . . . . . . . . . . . 31
VI. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 31
I.
NAME.
The name of the Corporation is Virginia Electric and Power
Company.
II.
PURPOSES.
The purpose of the Corporation is to engage in the business of a
public service company, including the business of a general electric, power and
lighting company, with all the rights, powers and privileges conferred by the
constitution and laws of the Commonwealth of Virginia as they now are or may
hereafter exist;
And in addition thereto, the Corporation shall have and enjoy all of
the rights, powers and privileges granted to or conferred upon railway, light
and power companies by the laws of the Commonwealth of Virginia; the powers set
forth in or conferred by the charter of the Corporation and all the powers set
forth in the charter, articles of association or certificates of incorporation,
as amended, of each and every other predecessor corporation.
III.
STOCK.
The Corporation shall have authority to issue 10,000,000 shares of
Preferred Stock.
The Corporation shall have authority to issue 300,000 shares of
Common Stock.
<PAGE>
The number of authorized shares of the Corporation of any class may
be increased or decreased in the manner and subject to the conditions and
limitations prescribed by the laws of the Commonwealth of Virginia, as they now
or may hereafter exist, and subject to the provisions hereinafter contained.
The description of said classes of stock, and the designations,
preferences and voting powers of such classes of stock, or restrictions or
qualifications thereof, and the terms on which such stock is to be issued
(together with certain related provisions for the regulation of the business and
for the conduct of the affairs of the Corporation) shall be as hereinafter in
Divisions A, B, and C set forth.
Division A---Preferred Stock
1. Issuance in Series. The Board of Directors is hereby empowered to
cause the Preferred Stock of the Corporation to be issued in series with such of
the variations permitted by clauses (a)-(f), both inclusive, of this Section 1
as shall have been determined by the Board of Directors with respect to any
series prior to the issue of any shares of such series, and to reclassify any of
the authorized but unissued Preferred Stock of a particular series as shares, or
additional shares, of any other series whether then or theretofore created
(except any series as to which it shall have been otherwise provided at the time
of creating such series), subject, however, to the provisions of Sections 2-6,
both inclusive, of this Division A, which shall apply to all series of the
Preferred Stock of the Corporation.
The shares of the Preferred Stock of different series may vary as
to:
(a) The designation of such series, which may be by
distinguishing number, letter or title;
(b) The rate or rates (which may be fixed or variable) at
which dividends are payable on the shares of such series,
hereinafter referred to as the "dividend rate", and the dividend
payment dates of the shares of such series;
(c) The price payable in respect of the shares of such series,
if and when redeemable, in case of the redemption thereof, which
price in respect of any series may, but need not, vary according to
the time or circumstances of such action, said price or prices being
hereinafter referred to as the "redemption price";
(d) The amount payable in respect of the shares of such series
in case of liquidation, dissolution or winding up of the
Corporation, the amount or amounts so fixed being hereinafter
referred to as the "liquidation price", and the amount payable, if
any, in addition to the liquidation price for such series in case
such action be voluntary, the amount or amounts so fixed being
hereinafter referred to as the "liquidation premium"; which
amounts in respect of any series may, but need not, vary according
to the time or circumstances of such action;
(e) The amount of the sinking fund, if any, providing for the
purchase or redemption of the shares of such series; and
<PAGE>
(f) The right, if any, to convert the shares of such series
into shares of any other class or classes or of any other series
of the same or any other class or classes of stock of the
Corporation, and the rate or basis, time, manner and conditions of
conversion or the method by which the same shall be determined.
The shares of all series of Preferred Stock shall be equal in all
respects except as, consistently with this Section 1, shall have been otherwise
determined by the Board of Directors prior to the issuance thereof. All shares
of Preferred Stock of each series shall be equal in all respects.
2. Dividends. The holders of the Preferred Stock of each series
shall be entitled to receive, if and when declared payable by the Board of
Directors, dividends in lawful money of the United States of America at, but not
exceeding, the dividend rate or rates (which may be fixed or variable) for such
series, payable on such dates as shall be prescribed for such series. Such
dividends shall be cumulative (but dividends in arrears shall not bear interest)
and no dividends shall be declared or paid upon or set apart for Junior Stock
(which term means, for the purpose of this Article, the Common Stock and stock
of any other class hereafter created ranking junior to the Preferred Stock in
respect of dividends or assets) unless and until full dividends on the
outstanding Preferred Stock at the dividend rate or rates therefor shall have
been paid or declared and set apart for payment with respect to all past
dividend periods and the current dividend period. Dividends on all shares of the
Preferred Stock of each series shall commence to accrue and be cumulative from
the date of the initial issue of any shares of such series; but (a) all
dividends declared payable to the holders of record of Preferred Stock of any
series as of a date on which shares of Preferred Stock of such series are owned
by the Corporation shall be deemed to have been paid in respect of such shares
owned by the Corporation on such date, and (b) in the event of the issuance of
additional shares of Preferred Stock of any series subsequent to the date of the
initial issuance of shares of such series, all dividends declared payable to the
holders of record of Preferred Stock of such series as of a date prior to such
additional issuance shall be deemed to have been paid in respect of the
additional shares so issued. Unless full dividends with respect to all past
dividend periods on the outstanding Preferred Stock at the dividend rate or
rates therefor shall have been paid or declared and set apart for payment, no
dividends shall be declared on the Preferred Stock of any series unless
dividends are declared on the Preferred Stock of all series then outstanding in
proportion to the aggregate amounts of the deficiencies in payment of such full
dividends for the respective series.
The terms "current dividend period" and "past dividend period", for
the purposes of this Article, mean, if two or more series of Preferred Stock
having different dividend periods are at the time outstanding, the current
dividend period or any past dividend period, as the case may be, with respect to
each such series.
<PAGE>
3. Preference on Liquidation, etc. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of the Preferred Stock
of each series shall be entitled to receive, for each share thereof, the
liquidation price for such series, plus, in case such liquidation, dissolution
or winding up shall have been voluntary, the liquidation premium for such
series, if any, together in all cases with a sum equal to all dividends accrued
or in arrears thereon, before any distribution of the assets shall be made to
holders of Junior Stock; but the holders of the Preferred Stock shall be
entitled to no further participation in such distribution. If, upon any such
liquidation, dissolution or winding up, the assets distributable among the
holders of the Preferred Stock shall be insufficient to permit the payment of
the full preferential amounts aforesaid, then such assets shall be distributed
among the holders of the Preferred Stock then outstanding, ratably in proportion
to the full preferential amounts to which they are respectively entitled. The
expression "dividends accrued or in arrears" means, for the purposes of this
Section 3 and of Section 4 of this Division A, in respect of each share of the
Preferred Stock of any series, that amount which shall be equal to simple
interest upon the sum of one hundred dollars at an annual rate equal to the
percentage that the dividend rate or rates for such series is of one hundred
dollars, from the date from which cumulative dividends thereon commence to
accrue to the date as of which the computation is to be made, less the aggregate
amount of all dividends theretofore paid or deemed to have been paid. Nothing in
this Section 3 shall be deemed to prevent the purchase, acquisition or other
retirement by the Corporation of shares of its Junior Stock consistently with
the restrictions of Section 4 of this Division A, and no such purchase,
acquisition or other retirement of shares of its Junior Stock shall be deemed to
be a liquidation, dissolution or winding up of the Corporation. A merger of the
Corporation into any other corporation, or merger of any other corporation into
the Corporation, or consolidation of the Corporation with any other corporation
or a sale or transfer of the property of the Corporation as or substantially as
an entirety shall not be deemed to be a liquidation, dissolution or winding up
of the Corporation.
4. Redemption and Purchase. The Corporation may, at its option
expressed by resolution of its Board of Directors, at any time or from time to
time, redeem the whole or any part of the Preferred Stock or of any series
thereof which is at the time redeemable, at the redemption price for such
series, together with a sum equal to all dividends accrued or in arrears
thereon. Notice of any proposed redemption of the Preferred Stock shall be given
by publication at least once in one newspaper printed in the English language
and customarily published on each business day and, wherever published, of
general circulation in the City of Richmond, Commonwealth of Virginia, and in
one newspaper printed in the English language and customarily published on each
business day and, wherever published, of general circulation in the Borough of
Manhattan, the City of New York, the publication in each such newspaper to be at
least thirty (30) days, and not more than ninety (90) days, prior to the date
fixed for such redemption. Notice of any proposed redemption of Preferred Stock
shall also be given by the Corporation by mailing a copy of such notice, at
least thirty (30) days, and not more than ninety (90) days, prior to the date
fixed for such redemption, to the holders of record of the Preferred Stock to be
redeemed, at their respective addresses then appearing on the books of the
Corporation; but neither failure to mail such copy nor any defect therein or in
the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of the Preferred Stock so to be redeemed. In case of
the redemption of a part only of any series of the Preferred Stock at the time
outstanding, the Corporation shall select by lot or pro rata the shares so to be
redeemed. The Board of Directors shall have full power and authority, subject to
the limitations and provisions herein contained, to prescribe the manner in
which, and the terms and conditions upon which, the shares of the Preferred
Stock shall be redeemed from time to time.
<PAGE>
On or at any time before the redemption date, the Corporation shall
deposit in trust, for the account of the holders of the shares to be redeemed,
funds necessary for such redemption with a bank or trust company in good
standing, organized under the laws of the United States of America or of the
State of New York, doing business in the Borough of Manhattan, the City of New
York, and having, or being a part of a bank holding company group having,
capital, surplus and undivided profits aggregating at least $500,000,000, or
organized under the laws of the United States of America or of the Commonwealth
of Virginia, doing business in the City of Richmond and having, or being a part
of a bank holding company group having, capital,surplus and undivided profits
aggregating at least $75,000,000, designated or to be designated in such notice
of redemption. Upon completing the publication as hereinabove provided of the
notice of such redemption or upon the earlier delivery to said bank or trust
company of irrevocable authorization and direction to begin promptly and
complete such publication of notice, then all shares with respect to the
redemption of which such deposit shall have been made and such publication
completed or authorization therefor given shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no longer to be
outstanding for any purpose, and all rights with respect to such shares shall
thereupon cease and terminate, except only the right of the holders of the
certificates for such shares to receive, out of the funds so deposited in trust,
from and after the date of such deposit, the amount payable upon the redemption
thereof, without interest. At the expiration of five years after the redemption
date any such moneys then remaining on deposit with such bank or trust company
shall be paid over to the Corporation, free of trust, and thereafter the holders
of the certificates for such shares shall have no claims against such bank or
trust company, but only claims as unsecured creditors against the Corporation,
or against the Commonwealth of Virginia or as otherwise provided by law in the
event of escheat by law, for amounts equal to their pro rata shares of the
moneys so paid over without interest.
The Corporation may also from time to time purchase or otherwise
acquire for a consideration shares of its Preferred Stock at a price or prices
per share not exceeding the price at which the same may be redeemed plus the
usual and customary brokerage commissions paid in connection with the purchase
thereof.
The Corporation shall not, however, at any time redeem, purchase or
otherwise acquire for a consideration less than the whole of its then
outstanding Preferred Stock, or redeem, purchase, or otherwise acquire for a
consideration any shares of any class of stock ranking on a parity with the
Preferred Stock in respect of dividends or assets (such stock being hereinafter
referred to as "Parity Stock"), or redeem, purchase, or otherwise acquire for a
consideration any shares of Junior Stock, unless full dividends at the dividend
rate or rates therefor with respect to all past dividend periods and the current
dividend period in which the date fixed for such redemption, purchase or other
acquisition shall fall shall have been paid or declared and set apart for
payment on all shares of Preferred Stock then outstanding and not then to be
redeemed, purchased or so acquired. Shares of Preferred Stock redeemed, or
purchased or otherwise acquired by the Corporation and cancelled, shall be
retired, but such retirement shall not reduce the maximum authorized amount of
the Preferred Stock. If shares of Preferred Stock purchased or otherwise
acquired by the Corporation shall be held in its treasury, such shares may from
time to time be sold as the Board of Directors may determine consistently with
the restrictions of Section 5 of this Division A.
<PAGE>
5. Restrictions on Certain Corporation Action. So long as any shares
of the Preferred Stock shall remain outstanding, the Corporation shall not,
without the affirmative vote of a majority of the shares of the Preferred Stock
represented at a meeting at which a quorum exists, called for such purpose but
upon such vote, and upon any requisite consent or vote of the holders of the
shares of the Common Stock then outstanding, may:
(a) Authorize or issue any stock ranking prior to the
Preferred Stock in respect of dividends or assets (such stock being
hereinafter referred to as "Senior Stock"), except the issue of
Senior Stock upon conversion of obligations or securities
convertible into, or upon exercise of warrants, rights or options to
purchase or subscribe to, Senior Stock;
(b) Authorize or issue any Parity Stock, except the issue of
Parity Stock upon conversion of obligations or securities
convertible into, or upon exercise of warrants, rights or options to
purchase or subscribe to, Parity Stock;
(c) Increase the number of authorized shares of the Preferred
Stock;
(d) Authorize or issue any obligation or security convertible
into, or any warrants, rights or options to purchase or subscribe
to, shares of Senior Stock, Preferred Stock or Parity Stock;
(e) Amend the provisions of this Article so as to change the
designation, rights, preferences or limitations of the Preferred
Stock; provided, however, that if any such amendment would change
the designation, rights, preferences or limitations of the holders
of one or more, but not all, of the series of the Preferred Stock at
the time outstanding, such consent of the holders of a majority of
the number of shares constituting a quorum of the series affected
shall also be required; or
(f) Reduce the amount of capital represented by the
outstanding Preferred Stock; or reduce the aggregate amount of
capital represented by Junior Stock below the aggregate amount of
capital represented by the outstanding Preferred Stock, Senior Stock
and Parity Stock, except in a case where any State or Federal
regulatory body having jurisdiction shall have required or permitted
the Corporation to reduce the book value of any of its assets and,
in connection therewith, the amount of capital represented by Junior
Stock shall be reduced by an amount or amounts not exceeding in the
aggregate the amount of such reduction in book value of assets.
(g) Issue any shares of its then authorized but unissued
Preferred Stock, unless:
(i) The amount of capital represented by the
outstanding Preferred Stock, Senior Stock and Parity Stock to
be outstanding immediately after the issue, sale or other
disposition of such shares, shall not exceed the amount of
capital represented by the Common Stock, together with the sum
of premiums on capital stock and surplus; and
<PAGE>
(ii) The following earnings limitation shall be
satisfied: (x) the net income of the Corporation, less
dividend requirements on Senior Stock, for any twelve
consecutive calendar months within the fifteen calendar months
immediately preceding the month within which such shares are
to be issued, sold or otherwise disposed of, shall have been
at least two and one-half times the dividend requirements for
a twelve months' period upon all shares of Preferred Stock and
Parity Stock to be outstanding immediately after the issue,
sale or other disposition of such shares, but excluding from
the foregoing computation interest charges on all
indebtedness, and dividends on all shares of Senior Stock, to
be retired through the issue, sale or other disposition of
such shares; and (y) the sum of the net income of the
Corporation and the interest charges deducted in arriving at
such net income shall be at least one and one-half times the
sum of the interest requirements for a twelve months' period
on all debt to be outstanding, and the dividend requirements
for a twelve months' period upon all shares of Preferred
Stock, Parity Stock and Senior Stock to be outstanding,
immediately after the proposed issue, sale or other
disposition of such shares. The net income of the Corporation
for the purposes of this clause (ii) shall be calculated in
accordance with such system of accounts as may be prescribed
by governmental authorities having jurisdiction in the
premises or in the absence thereof in accordance with
recognized accounting practice applicable to companies engaged
in a business similar to that of the Corporation, except that
if the Corporation shall have acquired, within or after the
particular period for which the calculation of net income is
made (such period being hereinafter sometimes referred to as
the calculation period), any plant or system, including any
property used in connection therewith, which was not
constructed or erected by or for the Corporation and which
prior to the purchase or acquisition thereof by the
Corporation had been used or operated by others than the
Corporation (such plant or system being hereinafter sometimes
referred to as an acquired plant or system), or in case the
proceeds of the proposed issue, sale or other disposition are
to be used to acquire any plant or system of similar
character, then, in computing the net income of the
Corporation there shall be included, to the extent that they
may not have been otherwise included, the net earnings or net
losses (computed as if such plant or system had been owned by
the Corporation during the whole of the calculation period,
and computed so as to eliminate all inter-company items, if
any) of such acquired plant or system, or of the plant or
system of similar character to be acquired for the whole of
the calculation period, and if such plant or system was
acquired in exchange for any properties of the Corporation as
a going concern, plant or system, the net earnings or net
losses of such latter property shall be excluded pursuant to
the requirements of the next sentence hereinbelow. In case
during or after the calculation period the Corporation shall
have sold any part of its properties as a going concern, plant
or system, then, in computing the net income of the
Corporation, the net earnings or net losses of such property
for the whole of the calculation period, or for the portion
thereof up to the time of the sale, as the case may be, shall
be excluded to the extent practicable on the basis of actual
net earnings or net losses of such property or on the basis of
such estimates of the net earnings or net losses of such
property as shall be made pursuant to the next sentence
hereinbelow. The net earnings or net losses of any operating
properties so acquired or to be acquired or so sold as a going
concern, plant or system shall, except to the extent that they
may, consistently with the above requirements, have been
separately kept, be determined, consistently with the above
requirements, by an estimate made and certified to the
Corporation by an independent accountant or firm of
independent accountants selected and paid by it. Net earnings
or net losses of any acquired plant or system, or of any plant
or system of similar character to be acquired, or of any part
of the properties of the Corporation that shall have been sold
as a going concern, plant, or system, shall, for the purposes
of this clause (ii), mean the net income or net income
deficit, respectively, of such plant or system or properties.
<PAGE>
(h) Merge the Corporation into any other corporation, merge
any other corporation into the Corporation, consolidate the
Corporation with any other corporation or sell or transfer the
property of the Corporation as or substantially as an entirety,
unless such merger, consolidation, sale or transfer, or the issuance
or assumption of all securities to be issued or assumed in
connection therewith, shall have been ordered, approved or permitted
by the State Corporation Commission of Virginia or any regulatory
authority of the United States having jurisdiction in the premises;
provided that the provisions of this clause shall not apply to a
purchase or other acquisition by the Corporation of the assets or
franchises of another corporation, or to any other transaction which
does not include such a merger, consolidation, sale or transfer of
property.
Notwithstanding anything elsewhere in this Article, if in
connection with the accomplishment of any matter whatever provision
is to be made for the redemption or retirement of all of the
Preferred Stock of any series at the time outstanding, (x) nothing
in this Article shall be construed to confer on the holders of the
Preferred Stock of such series any power or right to vote in respect
of any such matter, and (y) the holders of the Preferred Stock of
such series shall not have any power or right to vote in respect of
any such matter except where, and to the extent that, a right to
vote which can not be waived by the terms hereof is conferred by
then existing laws of the Commonwealth of Virginia on holders of
non-voting stock.
6. Voting Rights. The holders of the Preferred Stock shall not be
entitled to vote except as follows:
<PAGE>
(a) As expressly provided in the preceding Section 5; and
(b) In proceedings as to which a right to vote which cannot be
waived by the terms hereof is conferred by then existing laws of the
Commonwealth of Virginia on holders of non-voting stock; and
(c) If and when dividends on any of the outstanding Preferred
Stock shall be in default in an amount equivalent to full dividends
for one year or more, there shall accrue to holders of outstanding
shares of Preferred Stock the right, as a class, to elect the
smallest number of directors necessary to constitute a majority of
the full board and such holders shall retain such right until full
dividends on the outstanding Preferred Stock at the dividend rate or
rates therefor with respect to all past dividend periods and the
current dividend period shall have been paid or declared and set
apart for payment, at which time such right shall terminate.
So long as holders of the Preferred Stock shall have the
right, voting as a class, to elect a majority of the directors under
the terms of clause (c) of the first sentence of this Section 6, the
holders of the Common Stock voting as a class shall be entitled to
elect the remaining directors.
Whenever the holders of Preferred Stock shall acquire the
right to elect a majority of the directors under the terms of clause
(c) of the first sentence of this Section 6, a special meeting of
the Shareholders shall be called by or on the written request of the
holders of not less than ten percent (10%) of the total number of
shares of Preferred Stock then outstanding, for the purpose of
electing a new Board of Directors, to be held on not less than ten
(10) nor more than sixty (60) days' notice, provided, however, that
no special meeting shall be called if an annual meeting of the
Shareholders is to be held within sixty (60) days after the holders
of the Preferred Stock shall have become entitled to exercise such
voting right. The terms of office of all persons who may be
directors of the Corporation at the time shall terminate upon any
election of directors by the holders of Preferred Stock in
accordance with these provisions, regardless of whether or not the
holders of the Common Stock shall have elected the remaining
directors of the Corporation; and unless and until such remaining
directors of the Corporation shall be elected by the holders of the
Common Stock, the number of directors, for the purpose of
determining the existence of a quorum or the validity of any action
taken, shall, notwithstanding any other provisions hereof, be deemed
to be the number of directors elected by the holders of the
Preferred Stock.
Whenever the holders of Preferred Stock shall have ceased to
have the right to elect a majority of the directors under the terms
of clause (c) of the first sentence of this Section 6, a special
meeting of the Shareholders shall be called by or on the written
request of the holders of not less than ten percent (10%) of the
total number of shares of Common Stock then outstanding, for the
purpose of electing a new Board of Directors, to be held on not less
than ten (10) nor more than sixty (60) days' notice, provided,
however, that no such special meeting shall be called if an annual
meeting of the Shareholders is to be held within sixty (60) days
after the holders of the Preferred Stock shall have ceased to be
entitled to exercise such voting right. The terms of office of all
persons who may be directors of the Corporation at the time shall
terminate upon any election of directors by the holders of Common
Stock in accordance with the provisions of this paragraph.
<PAGE>
If, during any interval between meetings of Shareholders for
the election of directors while the holders of Preferred Stock shall
be entitled to elect any director pursuant to this Section 6, the
number of directors in office who have been elected by the holders
of the Preferred Stock or Common Stock, as the case may be, shall
become less than the total number of directors which the holders of
shares of such class are entitled to elect, whether by reason of the
resignation, death or removal of any director or directors, or an
increase in the total number of directors, the vacancy or vacancies
shall be filled by a majority vote of the remaining directors then
in office who were elected by the holders of shares of such class or
whose predecessors were so elected.
Any director may be removed from office by vote of the holders
of a majority of the shares of the class of stock voted for his
election or for his predecessor in cases where such director was
elected by other directors. A special meeting of holders of shares
of any class may be called by a majority vote of the directors then
in office who were elected by the holders of shares of such class or
whose predecessors were so elected, for the purpose of removing a
director in accordance with the provisions of the preceding
sentence, and shall be called by or on the written request of the
holders of not less than twenty percent (20%) of the outstanding
shares of the class entitled to vote with respect to the removal of
any such director, to be held on not less than ten (10) nor more
than sixty (60) days' notice.
The holders of Preferred Stock shall not be entitled to
receive notice of any meeting of holders of any class of stock at
which they are not entitled to vote, except as notice to holders of
non-voting stock may be required by the laws of the Commonwealth of
Virginia.
At any meeting of Shareholders when the holders of the
Preferred Stock shall be entitled to vote for the election of
directors, the absence of a quorum of the holders of the Preferred
Stock or of the holders of Common Stock shall not prevent an
election at any such meeting or adjournment thereof of directors by
the other such class if the necessary quorum of the holders of stock
of such other class is present in person or by proxy at such
meeting. In the absence of a quorum of the holders of stock of
either such class, a majority of those holders of the stock of such
class who are present in person or by proxy shall have power to
adjourn the election of the directors to be elected by such class
from time to time without notice other than announcement at the
meeting until the holders of the requisite number of shares of such
class shall be present in person or by proxy.
<PAGE>
Except when some provision of law shall be controlling and
except as otherwise provided in clause (e) of Section 5 of this
Division A, whenever shares of two or more series of the Preferred
Stock are outstanding, no particular series of the Preferred Stock
shall be entitled to vote as a separate class on any matter and all
shares of the Preferred Stock of all series shall be deemed to
constitute but one class for any purpose for which the vote of the
shareholders of the Corporation by classes may now or hereafter be
required.
7. Series of Preferred Stock.
(a) $5 Dividend Preferred Stock. The first series of Preferred
Stock is designated as "$5 Dividend Preferred Stock"; the dividend
rate on the shares of such series shall be $5 per share per annum;
the dividend payment dates on the shares of such series shall be
March 20, June 20, September 20 and December 20 of each year; the
redemption price of the shares of such series shall be $112.50 per
share on and after March 20, 1953; the liquidation price of the
shares of such series shall be $100 per share; and the liquidation
premium of the shares of such series shall be $12.50 per share on
and after March 20, 1953. 106,677 shares of the Preferred Stock are
classified as $5 Dividend Preferred Stock.
All such shares shall be deemed to have been issued on May 26, 1944,
except that shares issued in conversion of script certificates for
Preferred Stock of Virginia Railway and Power Company shall be
deemed to have been issued as of the respective dates of the
surrender of such script certificates therefor.
(b) $4.04 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$4.04 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $4.04 per share per annum. The dividend payment dates
on the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1950. All shares of such series issued prior to the record
date for the dividend payable June 20, 1950, shall be deemed
to have been issued on March 14, 1950, and dividends shall be
cumulative from that date.
(iii) The redemption price of the shares of such series
shall be $102.27 per share on and after March 20, 1960.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium of the
shares of such series shall be $2.27 per share on and after
March 20, 1960.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
<PAGE>
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation. The
shares of $4.04 Dividend Preferred Stock shall not have any
special rights other than those specified herein or elsewhere
in the Articles of Incorporation of the Corporation.
(vii) 12,926 shares of the Preferred Stock are
classified as $4.04 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased,
by filing articles of amendment to that effect.
(c) $4.20 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$4.20 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $4.20 per share per annum. The dividend payment dates
on the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1951. All shares of such series issued prior to the record
date for the dividend payable June 20, 1951, shall be deemed
to have been issued on March 14, 1951, and dividends shall be
cumulative from that date.
(iii) The redemption price of the shares of such series
shall be $102.50 per share on and after March 20, 1961.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium of the
shares of such series shall be $2.50 per share on and after
March 20, 1961.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation. The
shares of $4.20 Dividend Preferred Stock shall not have any
special rights other than those specified herein or elsewhere
in the Articles of Incorporation of the Corporation.
(vii) 14,797 shares of the Preferred Stock are
classified as $4.20 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
(d) $4.12 Dividend Preferred Stock.
<PAGE>
(i) The distinctive serial designation of such series
shall be "$4.12 Dividend Preferred Stock, 1955 Series".
(ii) The dividend rate on the shares of such series
shall be $4.12 per share per annum. The dividend payment dates
on the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning March 20,
1956. All shares of such series issued prior to the record
date for the dividend payable March 20, 1956, shall be deemed
to have been issued on December 15, 1955, and dividends shall
be cumulative from that date.
(iii) The redemption price of the shares of such series
shall be $103.73 per share on and after January 1, 1966.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium of the
shares of such series shall be $3.73 per share on and after
January 1, 1966.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation. The
shares of $4.12 Dividend Preferred Stock, 1955 Series, shall
not have any special rights other than those specified herein
or elsewhere in the Articles of Incorporation of the
Corporation.
(vii) 32,534 shares of the Preferred Stock are
classified as $4.12 Dividend Preferred Stock, 1955 Series.
This number may be increased, or upon retirement of shares,
may be decreased by filing articles of amendment to that
effect.
(e) $4.80 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$4.80 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $4.80 per share per annum. The dividend payment dates
on the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning September
20, 1962. The date of the initial issue of shares of such
series shall be August 1, 1962, and dividends shall be
cumulative from that date.
(iii) The redemption price of the shares of such series
shall be $101.00.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium (payable
in addition to the liquidation price in case of voluntary
liquidation, dissolution or winding up) of the shares of such
series shall be $1.00.
<PAGE>
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation. The
shares of $4.80 Dividend Preferred Stock shall not have any
special rights other than those specified herein and in the
Articles of Incorporation.
(vii) 73,206 shares of the Preferred Stock are
classified as $4.80 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
(f) $7.72 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$7.72 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $7.72 per share per annum. Dividends shall be
cumulative from June 12, 1969. The dividend payment dates on
the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning September
20, 1969.
(iii) The redemption price of the shares of such series
shall be $101.50.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium (payable
in addition to the liquidation price in case of voluntary
liquidation, dissolution or winding up) of the shares of such
series shall be $1.50.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of $7.72 Dividend Preferred
Stock shall not have any special rights other than those
specified herein and in the Articles of Incorporation as
heretofore amended.
(vii) 350,000 shares of the Preferred Stock are
classified as $7.72 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
<PAGE>
(g) $7.45 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$7.45 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $7.45 per share per annum. Dividends shall be
cumulative from March 25, 1971. The dividend payment dates on
the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1971.
(iii) The redemption price of the shares of such series
shall be $101.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium (payable
in addition to the liquidation price in case of voluntary
liquidation, dissolution or winding up) of the shares of such
series shall be $1.00.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
power, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of $7.45 Dividend Preferred
Stock shall not have any special rights other than those
specified herein and in the Articles of Incorporation as
heretofore amended.
(vii) 400,000 shares of the Preferred Stock are
classified as $7.45 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
(h) $7.20 Dividend Preferred Stock.
(i) The distinctive serial designation of such series
shall be "$7.20 Dividend Preferred Stock".
(ii) The dividend rate on the shares of such series
shall be $7.20 per share per annum. Dividends shall be
cumulative from February 24, 1972. The dividend payment dates
on the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1972.
(iii) The redemption price of the shares of such series
shall be $101.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium (payable
in addition to the liquidation price in case of voluntary
liquidation, dissolution or winding up) of the shares of such
series shall be $1.00.
<PAGE>
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of $7.20 Dividend Preferred
Stock shall not have any special rights other than those
specified herein and in the Articles of Incorporation as
heretofore amended.
(vii) 450,000 shares of the Preferred Stock are
classified as $7.20 Dividend Preferred Stock. This number may
be increased or, upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
(i) $7.72 Dividend Preferred Stock (1972 Series).
(i) The distinctive serial designation of such series
shall be "$7.72 Dividend Preferred Stock (1972 Series)".
(ii) The dividend rate on the shares of such series
shall be $7.72 per share per annum. Dividends shall be
cumulative from October 4, 1972. The dividend payment dates on
the shares of such series shall be March 20, June 20,
September 20 and December 20 of each year beginning December
20, 1972.
(iii) The redemption price of the shares of such series
shall be $101.
(iv) The liquidation price of the shares of such series
shall be $100 per share; and the liquidation premium (payable
in addition to the liquidation price in case of voluntary
liquidation, dissolution or winding up) of the shares of such
series shall be $1.00.
(v) The shares of such series shall not be entitled to
any sinking fund or right of conversion.
(vi) Except as above provided, the shares of such
series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of $7.72 Dividend Preferred
Stock (1972 Series) shall not have any special rights other
than those specified herein and in the Articles of
Incorporation as heretofore amended.
(vii) 500,000 shares of the Preferred Stock are
classified as $7.72 Dividend Preferred Stock (1972 Series).
This number may be increased or, upon retirement of shares,
may be decreased by filing articles of amendment to that
effect.
<PAGE>
(j) $7.325 Dividend Preferred Stock.
(i) The distinctive serial designation of the $7.325
Series shall be "$7.325 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $7.325
Series shall be $7.325 per share per annum. Dividends shall be
cumulative from March 6, 1973. The dividend payment dates on
the shares of the $7.325 Series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1973.
(iii) The redemption price of the shares of the $7.325
Series in optional redemption shall be $103 per share through
March 31, 1988, and $101 thereafter.
(iv) The liquidation price of the shares of the $7.325
Series shall be $100 per share; and the liquidation premium
(payable in addition to the liquidation price in case of
voluntary liquidation, dissolution or winding up) of the
shares of the $7.325 Series shall be $3.00 per share through
March 31, 1988, and $1.00 thereafter.
(v) The shares of the $7.325 Series shall not be
entitled to any right of conversion.
(vi) The shares of the $7.325 Series shall be entitled
to a sinking fund. The Corporation will on April 1, 1984, and
on each April 1 thereafter through April 1, 2008, out of net
assets legally available therefore, redeem at the price of
$100 per share 4% of the shares originally issued. The sinking
fund shall be cumulative so that if on any such April 1 the
net assets of the Corporation legally available therefore
shall be insufficient to permit such mandatory redemption
payment in full, the amount of such deficiency shall be
applied to the redemption of shares of the $7.325 Series at
the aforesaid price before any dividend shall be paid or
declared, or any distribution made, on any Junior Stock or any
Junior Stock shall be purchased, redeemed or otherwise
acquired by the Corporation. The Corporation will have the
non-cumulative option to as much as double any such mandatory
redemption payment.
(vii) Except as above provided, the shares of the $7.325
Series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $7.325 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
(viii) 616,000 shares of the Preferred Stock are
classified as $7.325 Dividend Preferred Stock. This number may
be increased, or upon retirement of shares, may be decreased
by filing articles of amendment to that effect.
<PAGE>
(k) $8.40 Dividend Preferred Stock.
(i) The distinctive serial designation of the $8.40
Series shall be "$8.40 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $8.40
Series shall be $8.40 per share per annum. Dividends shall be
cumulative from March 12, 1974. The dividend payment dates on
the shares of the $8.40 Series shall be March 20, June 20,
September 20 and December 20 of each year beginning June 20,
1974.
(iii) The redemption price of the shares of the $8.40
Series in optional redemption shall be $105.60 per share
through March 31, 1985; thereafter through March 31, 2004, an
amount per share reduced on each April 1 by $0.28 from the
redemption price on the preceding March 31; and $100 per share
after March 31, 2004.
(iv) The liquidation price of the shares of the $8.40
Series shall be $100 per share; and the liquidation premium
(payable in addition to the liquidation price in case of
voluntary liquidation, dissolution or winding up) of the
shares of the $8.40 Series shall be an amount per share equal
to the premium over $100 at the time payable in optional
redemption.
(v) The shares of the $8.40 Series shall not be
entitled to any right of conversion.
<PAGE>
(vi) The shares of the $8.40 Series shall be entitled
to a sinking fund. The Corporation will on April 1, 1985, and
on each April 1 thereafter through April 1, 2009, out of net
assets legally available therefor under applicable provisions
of the laws of Virginia, redeem at the price of $100 per share
32,000 shares of the $8.40 Series (or the number of shares of
the $8.40 Series then outstanding if less than 32,000);
provided that if the Corporation shall purchase any shares
pursuant to an offer in accordance with paragraph (vii) below,
then the number of shares required to be redeemed on each
April 1 thereafter (after giving effect to any prior reduction
pursuant to this proviso) shall be reduced by a number which
bears (to the nearest full number) the same relation to the
number of shares otherwise required to be redeemed as
aforesaid as the aggregate number of shares so purchased
(since the then most recent reduction) bears to the aggregate
number of shares outstanding immediately prior to giving
effect to such purchase. The sinking fund shall be cumulative
so that if on any such April 1, the net assets of the
Corporation legally available therefor shall (A) be
insufficient to permit payment in full of such mandatory
redemption payment, the amount of such deficiency shall be
paid and applied to the redemption of shares of the $8.40
Series at the aforesaid price before any dividend shall be
paid or declared, or any distribution made, on any Junior
Stock or any Junior Stock shall be purchased, redeemed or
otherwise acquired for consideration by the Corporation, and
(B) be insufficient to permit payment in full of such
mandatory redemption payment and all mandatory sinking fund
payments due on the same date with respect to any other series
of Preferred Stock or any series of Parity Stock, the
Corporation shall not purchase, redeem or otherwise acquire
for consideration any shares of Preferred Stock or Parity
Stock, except that at any time and from time to time funds may
be applied to the purchase or redemption of shares of the
respective series pro rata, as nearly as practicable,
according to the amounts of the respective deficiencies in
mandatory sinking fund payments. The Corporation will have the
non-cumulative option on any aforesaid April 1 to as much as
double any such mandatory redemption payment, provided that
the aggregate number of shares redeemed pursuant to this
option shall not exceed 200,000. No redemption of shares of
the $8.40 Series pursuant to paragraph (iii) above or pursuant
to the foregoing non-cumulative option shall constitute a
redemption of such shares in lieu of or as a credit against
any redemption required by this paragraph (vi).
<PAGE>
(vii) The Corporation shall not redeem, purchase or
otherwise acquire for a consideration any shares of the $8.40
Series except by a redemption thereof pursuant to paragraph
(iii) or paragraph (vi) above or by a purchase thereof
pursuant to an offer to purchase made upon the same terms to
all holders of shares of $8.40 Series, which offer shall
require the Corporation to purchase pro rata, as nearly as
practicable, among the shares tendered, shall remain open for
a period of at least thirty (30) days after copies thereof
have been mailed as set forth below and may contain such other
terms as the Corporation elects. Such offer shall be given by
registered mail to the holders of record of the shares of the
$8.40 Series at their respective addresses appearing on the
books of the Corporation. No shares of the $8.40 Series shall
be purchased pursuant to any such offer between the date of
the giving of notice of any redemption pursuant to paragraph
(iii) or paragraph (vi) above and the date fixed for such
redemption.
(viii) Except as above provided, the shares of the $8.40
Series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $8.40 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
(ix) 736,000 shares of the Preferred Stock are
classified as $8.40 Dividend Preferred Stock. This number may
not be increased but, upon retirement of shares, it may be
decreased by filing articles of amendment to that effect.
<PAGE>
(x) No shares of the $8.40 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $8.40 Series.
(l) $8.20 Dividend Preferred Stock.
(i) The distinctive serial designation of the $8.20
Series shall be "$8.20 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $8.20
Series shall be $8.20 per share per annum. Dividends shall be
cumulative from the date of issue of the shares of the $8.20
Series. The dividend payment dates on the shares of the $8.20
Series shall be March 20, June 20, September 20 and December
20 of each year beginning December 20, 1977.
(iii) The redemption price of the shares of the $8.20
Series in optional redemption shall be $100 per share plus a
premium from time to time as follows:
Time Period Premium Per Share
Prior to September 21, 1987 . . . . . . . . $15.00
September 21, 1987-September 20, 1988 . . . 4.10
September 21, 1988-September 20, 1989 . . . 3.69
September 21, 1989-September 20, 1990 . . . 3.28
September 21, 1990-September 20, 1991 . . . 2.87
September 21, 1991-September 20, 1992 . . . 2.46
September 21, 1992-September 20, 1993 . . . 2.05
September 21, 1993-September 20, 1994 . . . 1.64
September 21, 1994-September 20, 1995 . . . 1.23
September 21, 1995-September 20, 1996 . . . .82
September 21, 1996-September 19, 1997 . . . .41
(iv) The liquidation price of the shares of the $8.20
Series shall be $100 per share; and the liquidation premium
(payable in addition to the liquidation price in case of
voluntary liquidation, dissolution or winding up) of the
shares of the $8.20 Series shall be an amount equal to the
premium per share which would be payable in an optional
redemption pursuant to paragraph (iii) above.
(v) The shares of the $8.20 Series shall not be
entitled to any right of conversion.
<PAGE>
(vi) The shares of the $8.20 Series shall be entitled
to a sinking fund. The Corporation shall on September 20,
1983, and on each September 20 thereafter through September
20, 1996, out of net assets legally available therefor, redeem
at the price of $100 per share 5% of the number of shares
originally issued and on September 20, 1997 shall redeem all
shares still outstanding. The sinking fund shall be cumulative
so that if on any such September 20 the net assets of the
Corporation legally available therefor shall (A) be
insufficient to permit any such mandatory redemption payment
in full, the amount of such deficiency shall be paid and
applied to the redemption of shares of the $8.20 Series at the
aforesaid price before any dividend shall be paid or declared,
or any distribution made, on any Junior Stock or any Junior
Stock shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, and (B) be insufficient to
permit any such mandatory redemption payment in full and all
mandatory sinking fund payments in full due on the same date
with respect to any other series of Preferred Stock or any
series of Parity Stock, the Corporation shall not purchase,
redeem or otherwise acquire for consideration any shares of
Preferred Stock or Parity Stock, except that at any time and
from time to time funds may be applied to the purchase or
redemption of shares of the respective series pro rata, as
nearly as practicable, according to the amounts of the
respective deficiencies in mandatory sinking fund payments. No
redemption of shares of the $8.20 Series pursuant to paragraph
(iii) above shall constitute a redemption of such shares in
lieu of or as a credit against any redemption required by this
paragraph (vi).
(vii) The Corporation shall not redeem, purchase or
otherwise acquire for consideration any shares of the $8.20
Series except by a redemption thereof pursuant to paragraph
(iii) or paragraph (vi) above or by a purchase thereof
pursuant to an offer to purchase made upon the same terms to
all holders of shares of the $8.20 Series, which offer shall
require the Corporation to purchase pro rata, as nearly as
practicable, among the shares tendered, and shall remain open
for a period of at least thirty (30) days after copies thereof
have been mailed as set forth below and may contain such other
terms as the Corporation elects. Such offer shall be given by
registered mail to the holders of record of the shares of the
$8.20 Series at their respective addresses appearing on the
books of the Corporation. No shares of the $8.20 Series shall
be purchased pursuant to any such offer between the date of
the giving of notice of any redemption pursuant to paragraph
(iii) or paragraph (vi) above and the date fixed for such
redemption.
(viii) Except as above provided, the shares of the $8.20
Series shall have all the designations, preferences and voting
powers, and restrictions or qualification thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $8.20 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
<PAGE>
(ix) 600,000 shares of the Preferred Stock are
classified as $8.20 Dividend Preferred Stock. No more than
600,000 shares of the $8.20 Dividend Preferred Stock may be
issued. Upon retirement of shares, this number may be
decreased by filing articles of amendment to that effect.
(x) No shares of the $8.20 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $8.20 Series.
(m) $8.60 Dividend Preferred Stock.
(i) The distinctive serial designation of the $8.60
Series shall be "$8.60 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $8.60
Series shall be $8.60 per share per annum. Dividends shall be
cumulative from December 21, 1977. The dividend payment dates
on the shares of the $8.60 Series shall be March 20, June 20,
September 20 and December 20 of each year beginning March 20,
1978.
(iii) The redemption price of the shares of the $8.60
Series in optional redemption shall be $100 per share plus a
premium from time to time as follows:
Time Period Premium Per Share
Prior to December 19, 1987 . . . . . . . $7.00
December 20, 1987-December 19, 1992 . . . 5.00
December 20, 1992-December 19, 1997 . . . 3.00
and thereafter without premium.
(iv) The liquidation price of the shares of the $8.60
Series shall be $100 per share; and the liquidation premium
(payable in addition to the liquidation price in case of
voluntary liquidation, dissolution or winding up) of the
shares of the $8.60 Series shall be an amount equal to the
premium per share which would be payable in an optional
redemption pursuant to paragraph (iii) above.
(v) The shares of the $8.60 Series shall not be
entitled to any right of conversion.
<PAGE>
(vi) The shares of the $8.60 Series shall be entitled
to a sinking fund. The Corporation shall on December 20, 1978,
and on each December 20 thereafter through December 20, 2010,
out of net assets legally available therefor, redeem by lot at
the price of $100 per share 3% of the number of shares
originally issued and on December 20, 2011 shall redeem all
shares still outstanding. The sinking fund shall be cumulative
so that if on any such December 20 the net assets of the
Corporation legally available therefor shall (A) be
insufficient to permit any such mandatory redemption payment
in full, the amount of such deficiency shall be paid and
applied to the redemption of shares of the $8.60 Series at the
aforesaid price before any dividend shall be paid or declared,
or any distribution made, on any Junior Stock or any Junior
Stock shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, and (B) be insufficient to
permit any such mandatory redemption payment in full and all
mandatory sinking fund payments in full due on the same date
with respect to any other series of Preferred Stock or any
series of Parity Stock, the Corporation shall not purchase,
redeem or otherwise acquire for consideration any shares of
Preferred Stock or Parity Stock, except that at any time and
from time to time funds may be applied to the purchase or
redemption of shares of the respective series pro rata, as
nearly as practicable, according to the amounts of the
respective deficiencies in mandatory sinking fund payments. No
redemption of shares of the $8.60 Series pursuant to paragraph
(iii) above shall constitute a redemption of such shares in
lieu of or as a credit against any redemption required by this
paragraph (vi).
(vii) Except as above provided, the shares of the $8.60
Series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $8.60 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
(viii) 299,768 shares of the Preferred Stock are
classified as $8.60 Dividend Preferred Stock. This number may
be increased or, upon the non-issue or retirement of shares,
may be decreased by filing articles of amendment to that
effect.
(n) $8.625 Dividend Preferred Stock.
(i) The distinctive serial designation of the $8.625
Series shall be "$8.625 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $8.625
Series shall be $8.625 per share per annum. Dividends shall be
cumulative from the date of initial issue of the shares of the
$8.625 Series. The dividend payment dates on the shares of the
$8.625 Series shall be March 20, June 20, September 20 and
December 20 of each year beginning June 20, 1978.
<PAGE>
(iii) The redemption price of the shares of the $8.625
Series in optional redemption shall be $100 per share plus
(except in the case of redemptions pursuant to the fourth
sentence of the following paragraph (vi)) a premium from time
to time as follows:
Time Period Premium Per Share
Prior to June 20, 1987 . . . . . $5.75
June 21, 1987-June 20, 1988 . . . 5.40
June 21, 1988-June 20, 1989 . . . 5.04
June 21, 1989-June 20, 1990 . . . 4.68
June 21, 1990-June 20, 1991 . . . 4.32
June 21, 1991-June 20, 1992 . . . 3.96
June 21, 1992-June 20, 1993 . . . 3.60
June 21, 1993-June 20, 1994 . . . 3.24
June 21, 1994-June 20, 1995 . . . 2.88
June 21, 1995-June 20, 1996 . . . 2.52
June 21, 1996-June 20, 1997 . . . 2.16
June 21, 1997-June 20, 1998 . . . 1.80
June 21, 1998-June 20, 1999 . . . 1.44
June 21, 1999-June 20, 2000 . . . 1.08
June 21, 2000-June 20, 2001 . . . 0.72
June 21, 2001-June 20, 2002 . . . 0.36
After June 20, 2002 . . . . . . . 0.00
provided, however, that said shares shall not be optionally
redeemable pursuant to this paragraph (iii) through June 20,
1988, as a part of, or in anticipation of, a refunding
operation involving the application, directly or indirectly,
of the proceeds (A) from the incurring of indebtedness, or
incident to the incurring of rental or other obligations, or
from the sale of Senior Stock, Preferred Stock or Parity
Stock, in any case at an effective cost of money to the
Corporation of less than 8.625% per annum, or (B) from the
sale of Junior Stock.
(iv) The liquidation price of the shares of the $8.625
Series shall be $100 per share; and the liquidation premium
(payable in addition to the liquidation price in case of
voluntary liquidation, dissolution or winding up) of the
shares of the $8.625 Series shall be an amount equal to the
premium per share which would be payable in an optional
redemption pursuant to paragraph (iii) above.
<PAGE>
(v) The shares of the $8.625 Series shall not be
entitled to any right of conversion.
(vi) The shares of the $8.625 Series shall be entitled
to a sinking fund. The Corporation shall on June 20, 1984, and
on each June 20 thereafter through June 20, 2002, out of net
assets legally available therefor, redeem at the price of $100
per share 5% of the number of shares originally issued and on
June 20, 2003 shall redeem all shares still outstanding. The
sinking fund shall be cumulative so that if on any such June
20 the net assets of the Corporation legally available
therefor shall (A) be insufficient to permit any such
mandatory redemption payment in full, the amount of such
deficiency shall be paid and applied to the redemption of
shares of the $8.625 Series at the aforesaid price before any
dividend shall be paid or declared, or any distribution made,
on any Junior Stock or any Junior Stock shall be purchased,
redeemed or otherwise acquired for consideration by the
Corporation, and (B) be insufficient to permit any such
mandatory redemption payment in full and all mandatory sinking
fund payments in full due on the same date with respect to any
other series of Preferred Stock or any series of Parity Stock,
the Corporation shall not purchase, redeem or otherwise
acquire for consideration any shares of Preferred Stock or
Parity Stock, except that at any time and from time to time
funds may be applied to the purchase or redemption of shares
of the respective series pro rata, as nearly as practicable,
according to the amounts of the respective deficiencies in
mandatory sinking fund payments. The Corporation at its option
may on any June 20 on or after June 20, 1984 to and including
June 20, 2002 redeem at the price of $100 per share, without
payment of any premium, an additional number of shares
constituting a multiple of 500 up to but not exceeding the
aggregate number of shares required by the second sentence of
this paragraph (vi) to be redeemed on such date (or such
lesser number of shares as shall at the time constitute the
total number of shares at the time outstanding and not
theretofore redeemed); provided, however, that such option
shall be noncumulative so that the failure to redeem any
shares pursuant to this sentence on any June 20 shall not
increase the number of shares which the Corporation shall be
entitled to redeem pursuant hereto on any subsequent June 20;
and, provided further, that the maximum number of shares which
may be redeemed in all redemptions pursuant to this sentence
shall be 33.75% of the number of shares of the $8.625 Series
originally issued. No redemption of shares of the $8.625
Series pursuant to the foregoing sentence or to paragraph
(iii) above shall constitute a redemption of such shares in
lieu of or as a credit against any redemption required by the
second sentence of this paragraph (vi).
<PAGE>
(vii) The Corporation shall not redeem, purchase or
otherwise acquire for a consideration any shares of the $8.625
Series except by a redemption thereof pursuant to paragraph
(iii) or paragraph (vi) above or by a purchase thereof
pursuant to an offer to purchase made upon the same terms to
all holders of shares of the $8.625 Series, which offer shall
require the Corporation to purchase pro rata, as nearly as
practicable, among the shares tendered, and shall remain open
for a period of at least thirty (30) days after copies thereof
have been mailed as set forth below and may contain such other
terms as the Corporation elects. Such offer shall be given by
registered mail to the holders of record of the shares of the
$8.625 Series at their respective addresses appearing on the
books of the Corporation. No shares of the $8.625 Series shall
be purchased pursuant to any such offer between the date of
the giving of notice of any redemption pursuant to paragraph
(iii) or paragraph (vi) above and the date fixed for such
redemption.
(viii) Except as above provided, the shares of the $8.625
Series shall have all the designations, preferences and voting
powers, and restrictions and qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $8.625 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
(ix) 296,000 shares of the Preferred Stock are
classified as $8.625 Dividend Preferred Stock. No more than
370,000 shares of the $8.625 Dividend Preferred Stock may be
issued. Upon retirement of shares, this number may be
decreased by filing articles of amendment to that effect.
(x) No shares of the $8.625 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $8.625 Series.
(o) $8.925 Dividend Preferred Stock.
(i) The distinctive serial designation of the $8.925
Series shall be "$8.925 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $8.925
Series shall be $8.925 per share per annum. Dividends shall be
cumulative from the date of initial issue of the shares of the
$8.925 Series. The dividend payment dates on the shares of the
$8.925 Series shall be March 20, June 20, September 20 and
December 20 of each year beginning December 20, 1979.
<PAGE>
(iii) The redemption price of the shares of the $8.925
Series in optional redemption shall be $100 per share plus
(except in the case of redemptions pursuant to the fourth
sentence of the following paragraph (vi)) a premium from time
to time as follows:
Time Period Premium Per Share
Prior to September 20, 1987 . . . . . . . . $6.85
September 21, 1987-September 20, 1988 . . . 6.55
September 21, 1988-September 20, 1989 . . . 6.25
September 21, 1989-September 20, 1990 . . . 5.95
September 21, 1990-September 20, 1991 . . . 5.66
September 21, 1991-September 20, 1992 . . . 5.36
September 21, 1992-September 20, 1993 . . . 5.06
September 21, 1993-September 20, 1994 . . . 4.76
September 21, 1994-September 20, 1995 . . . 4.47
September 21, 1995-September 20, 1996 . . . 4.17
September 21, 1996-September 20, 1997 . . . 3.87
September 21, 1997-September 20, 1998 . . . 3.57
September 21, 1998-September 20, 1999 . . . 3.28
September 21, 1999-September 20, 2000 . . . 2.98
September 21, 2000-September 20, 2001 . . . 2.68
September 21, 2001-September 20, 2002 . . . 2.38
September 21, 2002-September 20, 2003 . . . 2.09
September 21, 2003-September 20, 2004 . . . 1.79
September 21, 2004-September 20, 2005 . . . 1.49
September 21, 2005-September 20, 2006 . . . 1.19
September 21, 2006-September 20, 2007 . . . 0.90
September 21, 2007-September 20, 2008 . . . 0.60
September 21, 2008-September 20, 2009 . . . 0.30
After September 20, 2009 . . . . . . . . . 0.00
provided, however, that said shares shall not be optionally
redeemable pursuant to this paragraph (iii) through September
20, 1989, as a part of, or in anticipation of, a refunding
operation involving the application, directly or indirectly,
of the proceeds (A) from the incurring of indebtedness, or
incident to the incurring of rental or other obligations, or
from the sale of Senior Stock, Preferred Stock or Parity
Stock, in any case at an effective cost of money to the
Corporation of less than 8.925% per annum, or (B) from the
sale of Junior Stock.
<PAGE>
(iv) The liquidation price of the shares of the $8.925
Series shall be $100 per share.
(v) The shares of the $8.925 Series shall not be
entitled to any right of conversion.
(vi) The shares of the $8.925 Series shall be entitled
to a sinking fund. The Corporation shall on September 20,
1984, and on each September 20 thereafter through September
20, 2009, out of net assets legally available therefor, redeem
at the price of $100 per share 10,500 of the shares of the
$8.925 Series originally issued and on September 20, 2010
shall redeem all shares still outstanding. The sinking fund
shall be cumulative so that if on any such September 20 the
net assets of the Corporation legally available therefor shall
(A) be insufficient to permit any such mandatory redemption
payment in full, the amount of such deficiency shall be paid
and applied to the redemption of shares of the $8.925 Series
at the aforesaid price before any dividend shall be paid or
declared, or any distribution made, on any Junior Stock or any
Junior Stock shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, and (B) be
insufficient to permit any such mandatory redemption payment
in full and all mandatory sinking fund payments in full due on
the same date with respect to any other series of Preferred
Stock or any series of Parity Stock, the Corporation shall not
purchase, redeem or otherwise acquire for consideration any
shares of Preferred Stock or Parity Stock, except that at any
time and from time to time funds may be applied to the
purchase or redemption of shares of the respective series pro
rata, as nearly as practicable, according to the amounts of
the respective deficiencies in mandatory sinking fund
payments. The Corporation at its option may on any September
20 on or after September 20, 1984 to and including September
20, 2009 redeem at the price of $100 per share, without
payment of any premium, an additional number of shares
constituting a multiple of 500 up to but not exceeding the
aggregate number of shares required by the second sentence of
this paragraph (vi) to be redeemed on such date (or such
lesser number of shares as shall at the time constitute the
total number of shares at the time outstanding and not
theretofore redeemed); provided, however, that such option
shall be noncumulative so that the failure to redeem any
shares pursuant to this sentence on any September 20 shall not
increase the number of shares which the Corporation shall be
entitled to redeem pursuant hereto on any subsequent September
20; and, provided further, that the maximum number of shares
which may be redeemed in all redemptions pursuant to this
sentence shall be 95,000 of the shares of the $8.925 Series
originally issued. No redemption of shares of the $8.925
Series pursuant to the foregoing sentence or pursuant to
paragraph (iii) above shall constitute a redemption of such
shares in lieu of or as a credit against any redemption
required by the second sentence of this paragraph (vi).
<PAGE>
(vii) The Corporation shall not redeem, purchase or
otherwise acquire for a consideration any shares of the $8.925
Series except by a redemption thereof pursuant to paragraph
(iii) or paragraph (vi) above or by a purchase thereof
pursuant to an offer to purchase made upon the same terms to
all holders of shares of the $8.925 Series (but the
Corporation need not make such offer to holders of shares of
the $8.925 Series which have been registered under the
Securities Act of 1933, as amended, or any successor statute,
or any such shares issued in exchange or substitution for such
shares or in any subsequent exchange or substitution), which
offer shall require the Corporation to purchase pro rata, as
nearly as practicable, among the shares tendered, and shall
remain open for a period of at least thirty (30) days after
copies thereof have been mailed as set forth below and may
contain such other terms as the Corporation elects. Such offer
shall be given by registered mail to the holders of record of
the shares of the $8.925 Series entitled to tender shares of
the $8.925 Series thereunder at their respective addresses
appearing on the books of the Corporation. No shares of the
$8.925 Series shall be purchased pursuant to any such offer
between the date of the giving of notice of any redemption
pursuant to paragraph (iii) or paragraph (vi) above and the
date fixed for such redemption.
(viii) Except as above provided, the shares of the $8.925
Series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $8.925 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation as heretofore amended.
(ix) 248,500 shares of the Preferred Stock are
classified as $8.925 Dividend Preferred Stock. No more than
280,000 shares of the $8.925 Dividend Preferred Stock may be
issued. Upon retirement of shares, this number may be
decreased by filing articles of amendment to that effect.
(x) No shares of the $8.925 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $8.925 Series.
(p) $10.25 Dividend Preferred Stock.
(i) The distinctive serial designation of the $10.25
Series shall be "$10.25 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $10.25
Series shall be $10.25 per share per annum. Dividends shall be
cumulative from the date of initial issue of the shares of the
$10.25 Series. The dividend payment dates on the shares of the
$10.25 Series shall be March 20, June 20, September 20 and
December 20 of each year, beginning June 20, 1984.
<PAGE>
(iii) The $10.25 Series shall be subject to mandatory
redemption by the Corporation on April 20, 1991 at the
redemption price of $100 per share, plus accrued and unpaid
dividends. The $10.25 Series shall not be optionally
redeemable prior to April 21, 1988. The redemption price of
the shares of the $10.25 Series in optional redemption (the
Optional Redemption Price) on and after April 21, 1988 shall
be $100 per share plus an amount equal to accrued and unpaid
dividends and a premium from time to time as follows:
Time Period Premium Per Share
April 21, 1988-April 20, 1989 . . . $4.00
April 21, 1989-April 20, 1990 . . . 2.00
April 21, 1990-April 20, 1991 . . . 1.00
(iv) The involuntary liquidation price of the shares of
the $10.25 Series shall be $100 per share plus accrued and
unpaid dividends. The voluntary liquidation price shall be
$105 per share plus accrued and unpaid dividends until April
21, 1988 and the Optional Redemption Price thereafter.
(v) The shares of the $10.25 Series shall not be
entitled to any right of conversion.
(vi) The shares of the $10.25 Series shall be entitled
to a sinking fund. The Corporation shall redeem 50,000 shares
on April 20, 1989, shall redeem 150,000 shares on April 20,
1990 and shall redeem the remaining 50,000 shares on April 20,
1991, out of net assets legally available therefor, at the
price of $100 per share plus accrued and unpaid dividends. The
sinking fund shall be cumulative so that if on any such April
20 the net assets of the Corporation legally available
therefor shall (A) be insufficient to permit any such
mandatory redemption payment in full, the amount of such
deficiency shall be paid and applied to the redemption of
shares of the $10.25 Series at the aforesaid price before any
dividend shall be paid or declared, or any distribution made,
on any Junior Stock (as defined in the Articles of
Incorporation of the Corporation as heretofore amended) or any
Junior Stock shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, and (B) be
insufficient to permit any such mandatory redemption payment
in full and all mandatory sinking fund payments in full due on
the same date with respect to any other series of Preferred
Stock or any series of Parity Stock (as defined in the
Articles of Incorporation of the Corporation as heretofore
amended), the Corporation shall not purchase, redeem or
otherwise acquire for consideration any shares of Preferred
Stock or Parity Stock, except that at any time and from time
to time funds may be applied to the purchase or redemption of
shares of the respective series pro rata, as nearly as
practicable, according to the amounts of the respective
deficiencies in mandatory sinking fund payments. No optional
redemption of shares of the $10.25 Series pursuant to
paragraph (iii) above shall constitute a redemption of such
shares in lieu of or as a credit against any redemption
required by this paragraph (vi).
<PAGE>
(vii) Except as above provided, the shares of the $10.25
Series shall have all the designations, preferences and voting
powers, and restrictions or qualifications thereof, expressed
in the Articles of Incorporation of the Corporation as
heretofore amended. The shares of the $10.25 Series shall not
have any special rights other than those specified herein and
in the Articles of Incorporation, as heretofore amended.
(viii) There are classified as $10.25 Dividend Preferred
Stock 250,000 shares of the Preferred Stock. No more than
250,000 shares of the $10.25 Dividend Preferred Stock may be
issued. Upon retirement of shares of the $10.25 Series, this
number may be decreased by filing articles of amendment to
that effect.
(ix) No shares of the $10.25 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $10.25 Series.
(q) $7.58 Dividend Preferred Stock.
(i) The distinctive serial designation of the $7.58
Series shall be "$7.58 Dividend Preferred Stock".
(ii) The dividend rate on the shares of the $7.58
Series shall be $7.58 per share per annum. Dividends shall be
cumulative from the date of initial issue of the shares of the
$7.58 Series. The dividend payment dates on the shares of the
$7.58 Series shall be March 20, June 20, September 20 and
December 20 of each year, beginning September 20, 1986.
(iii) The liquidation price of the shares of the $7.58
Series shall be $100 per share. The liquidation premium
payable in addition to the liquidation price in the event of a
voluntary liquidation, dissolution or winding up of the
Corporation will be $7.58 per share prior to June 20, 1992,
and $3.79 per share on and after June 20, 1992 and prior to
June 20, 1993. Shares of the $7.58 Series shall not be
entitled to a liquidation premium thereafter.
<PAGE>
(iv) The $7.58 Series shall not be optionally
redeemable (except to the extent otherwise provided for
redemption in liquidation) prior to June 20, 1991. The
redemption price of the shares of the $7.58 Series in optional
redemption on and after June 20, 1991 shall be $100 per share
plus a premium, in the case of an optional redemption prior to
June 20, 1993, from time to time as follows:
Optional Redemption
Time Period Premium Per Share
June 20, 1991-June 19, 1992 . . . $7.58
June 20, 1992-June 19, 1993 . . . 3.79
(v) The shares of the $7.58 Series shall not be
entitled to any right of conversion or any pre-emptive right
to acquire any other security.
(vi) The shares of the $7.58 Series shall be entitled
to a mandatory sinking fund. The Corporation shall on June 20
in each year commencing in 1992 redeem 120,000 shares of the
$7.58 Series out of net assets legally available therefor, at
the price of $100 per share plus accrued and unpaid dividends.
The sinking fund shall be cumulative so that if on any such
sinking fund redemption date the net assets of the Corporation
legally available therefor shall (A) be insufficient to permit
any such mandatory sinking fund redemption payment in full,
the amount of such deficiency shall be paid and applied to the
redemption of shares of the $7.58 Series at the aforesaid
price before any dividend shall be paid or declared, or any
distribution made, on any Junior Stock (as defined in the
Corporation's Articles of Incorporation as amended) or any
Junior Stock shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, and (B) be
insufficient to permit any such mandatory sinking fund
redemption payment in full and all mandatory sinking fund
payments in full due on the same date with respect to any
other series of Preferred Stock or any series of Parity Stock
(in each case as defined in the Corporation's Articles of
Incorporation as amended), the Corporation shall not purchase,
redeem or otherwise acquire for consideration any shares of
Preferred Stock or Parity Stock, except that at any time and
from time to time funds may be applied to the purchase or
redemption of shares of the respective series pro rata, as
nearly as practicable, according to the amounts of the
respective deficiencies in mandatory sinking fund payments. No
optional redemption of shares of the $7.58 Series pursuant to
subparagraph (iv) above shall constitute a redemption of such
shares in lieu of or as a credit against any redemption
required by this subparagraph (vi). The Corporation at its
option on each sinking fund redemption date may redeem on a
non-cumulative basis through the sinking fund not more than
120,000 additional shares of said series upon the same terms.
(vii) Except as otherwise provided, the shares of the
$7.58 Series shall have all the designations, preferences,
limitations and relative rights and voting powers, and
restrictions or qualifications thereof, expressed in the
Articles of Incorporation of the Corporation as heretofore
amended. The shares of the $7.58 Series shall not have any
special rights other than those specified herein and in the
Articles of Incorporation as heretofore amended.
<PAGE>
(viii) There are classified as the series of $7.58
Dividend Preferred Stock 600,000 shares of the Preferred
Stock. No more than 600,000 shares of the $7.58 Series may be
issued. Upon retirement of shares of the $7.58 Series, this
number may be decreased by filing articles of amendment
to that effect.
(ix) No shares of the $7.58 Series redeemed, purchased
or otherwise acquired by the Corporation shall be reissued,
resold or otherwise transferred by the Corporation as shares
of the $7.58 Series.
Division B---Common Stock
1. Dividends. Out of any assets of the Corporation available for
dividends remaining after full dividends on the outstanding Preferred Stock at
the dividend rate or rates therefor, together with the full additional amount
required by any participation right, with respect to all past dividend periods
and the current dividend period shall have been paid or declared and set apart
for payment and all mandatory sinking fund payments that shall have become due
in respect of any series of the Preferred Stock shall have been made, then, and
not otherwise, dividends may be paid upon the Common Stock.
2. Distribution of Assets. In the event of any liquidation,
dissolution or winding up of the Corporation, after there shall have been paid
to or set aside for the holders of the Preferred Stock the full preferential
amounts to which they are respectively entitled under the provisions of Section
3 of Division A hereof, the holders of the Preferred Stock shall have no claim
to any of the remaining assets of the Corporation. In the event of any
liquidation, dissolution or winding up of the Corporation the Board of Directors
may, after satisfaction of the rights of the holders of all shares of Preferred
Stock or the deposit in trust of money adequate for such satisfaction,
distribute in kind to the holders of the Common Stock all then remaining assets
of the Corporation or may sell, transfer or otherwise dispose of all or any of
such remaining assets of the Corporation and receive payment therefor wholly or
partly in cash and/or in stock and/or in obligations and may sell all or any
part of the consideration received therefor and distribute all or the balance
thereof in kind to the holders of the Common Stock.
3. Voting Rights. The holders of the Common Stock shall, to the
exclusion of the holders of the Preferred Stock have the sole and full power to
vote for the election of directors and for all other purposes without limitation
except only as otherwise recited or provided in clauses (a), (b) or (c) of
Section 6 of Division A hereof.
4. Purchase of Junior Stock. Subject to the provisions of Section 4
of Division A hereof, the Corporation may from time to time purchase or
otherwise acquire for a consideration or redeem (if permitted by the terms
thereof) shares of Common Stock or shares of any other class of stock hereafter
created ranking junior to the Preferred Stock in respect of dividends or assets
and any shares so purchased or acquired may be held or disposed of by the
Corporation from time to time for its corporate purposes or may be retired as
provided by law.
<PAGE>
Division C---General Provisions
1. Any and all shares of Preferred Stock and Common Stock of the
Corporation, at the time authorized but not issued and outstanding may be issued
and disposed of by the Board of Directors of the Corporation in any lawful
manner, consistently, in the case of shares of Preferred Stock, with the
requirements of clause (g) of Section 5 of Division A hereof, at any time and
from time to time, for such considerations as may be fixed by the Board of
Directors of the Corporation.
2. The Board of Directors shall have authority from time to time to
set apart out of any assets of the Corporation otherwise available for dividends
a reserve or reserves as working capital or for any other proper purpose or
purposes, and to reduce, abolish or add to any such reserve or reserves from
time to time as said board may deem to be in the interests of the Corporation;
and said board shall likewise have power to determine in its discretion what
part of the assets of the Corporation available for dividends in excess of such
reserve or reserves shall be declared as dividends and paid to the Shareholders
of the Corporation.
3. No Shareholder shall have any pre-emptive right to acquire
unissued shares of the Corporation or to acquire any securities convertible into
or exchangeable for such shares or to acquire any options, warrants or rights to
purchase such shares.
4. Each holder of record of outstanding shares of any class of stock
entitled to vote at any meeting of Shareholders, or of holders of any class of
stock, shall, as to all matters in respect of which such stock has voting power,
be entitled to one vote for each share of such stock held by him, as shown by
the stock books of the Corporation, and may cast such vote in person or by
proxy. Except as herein expressly provided, or mandatorily provided by the laws
of the Commonwealth of Virginia, a quorum of any class of stock entitled to vote
as a class at any meeting shall consist of a majority of such class, and a
plurality vote of such quorum shall govern.
5. The Board of Directors of the Corporation may, by resolution,
determine that only a part of the consideration which it is to receive for any
shares of stock which it shall issue shall be capital and that the balance of
such consideration (not greater, however, than the excess of such consideration
over the par value, if any, of such shares) shall be capital surplus of the
Corporation.
IV.
OFFICE.
The principal office of the Corporation in the Commonwealth of
Virginia is located in the City of Richmond.
<PAGE>
V.
DIRECTORS.
The number of Directors shall be fixed by the Bylaws.
If the office of any Director shall become vacant, the Directors, at
the time in office, whether or not a quorum, may, by a majority vote of the
Directors then in office, choose a successor or successors who shall hold office
for the unexpired term or until the authorized number of Directors is decreased.
Vacancies resulting from an increase in the number of Directors shall be filled
in the same manner.
VI.
INDEMNIFICATION.
1. To the full extent that the Virginia Stock Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors or officers, a Director or officer of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages.
2. To the full extent permitted and in the manner prescribed by the
Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, to
the same extent as if such person were specified as one to whom indemnification
is granted in Section 2.
4. The Corporation may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by any such
person in any such capacity or arising from his status as such, whether or not
the Corporation would have power to indemnify him against such liability under
the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses shall be made by special legal
counsel agreed upon by the Board of Directors and the proposed indemnitee. If
the Board of Directors and the proposed indemnitee are unable to agree upon such
special legal counsel, the Board of Directors and the proposed indemnitee each
shall select a nominee, and the nominees shall select such special legal
counsel.
<PAGE>
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings, commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the Corporation is Virginia Electric and Power Company.
2. The Restated Articles of Incorporation (the Articles) of Virginia
Electric and Power Company (the Company) are hereby amended to create
a series of the Company's Preferred Stock which shall be designated
the January 1987 Series Money Market Cumulative Preferred Stock
(hereinafter sometimes referred to as the New Preferred). In
accordance with the provisions of the Articles of Incorporation as
now in effect, the distinctive designation, preferences, limitations
and relative rights of the New Preferred are determined and fixed as
follows:
(a) The distinctive serial designation of the New Preferred shall be
"January 1987 Series Money Market Cumulative Preferred Stock".
Shares of the New Preferred may only be purchased or transferred
in whole units of 1,000 shares each (Units) and the shares
included in the Units may not be separately purchased or
transferred.
(b) The dividend rate on the shares of the New Preferred for the
Initial Dividend Period (such term and all other capitalized
terms used herein being used as defined in Parts I and II of
these Articles of Amendment) shall be 4.25% per annum. For each
Dividend Period thereafter, the dividend rate will be determined
according to the procedures set forth in Parts I and II of these
Articles of Amendment.
(c) The liquidation price of the shares of the New Preferred shall
be $100 per share. The liquidation premium payable in addition
to the liquidation price in the event of a voluntary
liquidation, dissolution or winding up of the Company will be
$3.00 per share prior to the first anniversary of the Date of
Original Issue, $2.00 per share thereafter and prior to the
second anniversary of the Date of Original Issue, and $1.00 per
share thereafter and prior to the third anniversary of the Date
of Original Issue. Shares of the New Preferred shall not be
entitled to a liquidation premium on or after the third
anniversary of the Date of Original Issue.
<PAGE>
(d) (i) The shares of the New Preferred shall be redeemable
on the second Business Day preceding any Dividend
Payment Date at the option of the Company, as a
whole or in part in whole Units only. The
redemption price of the shares of the New Preferred
in optional redemption shall be $100 per share plus
a premium, in the case of optional redemption prior
to the third anniversary of the Date of Original
Issue, from time to time as follows plus an amount
equal to "dividends accrued or in arrears" as such
term is defined in Section 3 of Division A of the
Articles, to the date fixed for redemption:
Optional Redemption
Time Period Premium Per Share
Prior to the first anniversary date $3.00
of the Date of Original Issue
Thereafter and prior to the second 2.00
anniversary of the Date of Original Issue
Thereafter and prior to the third 1.00
anniversary of the Date of Original Issue
If fewer than all of the outstanding shares of the
New Preferred are to be redeemed pursuant to this
subparagraph (d)(i), the number of shares to be redeemed
shall be determined by the Board and such shares shall be
redeemed in whole Units pro rata from the Holders in
proportion to the number of such shares held by such
Holders. If the pro rata redemption would result in the
redemption of fractional Units, the Units to be redeemed
shall be selected from among the outstanding Units of the
New Preferred in any manner determined by the Trust
Company to be equitable such that the redemption is in
whole Units only.
(ii) The shares of the New Preferred also shall be
redeemable at the option of the Company, as a whole but
not in part, on any Dividend Payment Date at $100 per
share (without premium), plus an amount equal to
"dividends accrued or in arrears", as such term is
defined in Section 3, Division A of the Articles, to
the date fixed for redemption, if the Applicable Rate
for the Dividend Period ending on the day preceding
such Dividend Payment Date equals or exceeds the "AA"
Composite Commercial Paper Rate on the date of
determination of such Applicable Rate.
<PAGE>
(iii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Trust Company, not later than
12:00 Noon, New York City time on the Business Day next
preceding any redemption date, the redemption price in
funds available in the City of New York, New York to be
paid on such redemption date, plus an amount equal to
"dividends accrued or in arrears", as such term is
defined in Section 3 of Division A of the Articles, to
the date fixed for redemption, of any share of the New
Preferred after notice of a redemption is given.
(e) The shares of the New Preferred shall not be entitled to any
right of conversion or any pre-emptive right to acquire any other
security.
(f) The shares of the New Preferred shall not be entitled to a
sinking fund.
(g) Except as otherwise provided, the shares of the New Preferred
shall have all the designations, preferences, limitations and
relative rights and voting powers, and restrictions or
qualifications thereof, expressed in the Articles of
Incorporation of the Company as heretofore amended. The shares
of the New Preferred shall not have any special rights other
than those specified herein and in the Articles of
Incorporation as heretofore amended.
(h) There are hereby classified as the January 1987 Series Money
Market Cumulative Preferred Stock, 500,000 shares of the
Preferred Stock, in 500 Units, with each Unit consisting of
1,000 shares of the New Preferred; no more than 500,000 shares
of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, that number may be, but shall not
be required to be, decreased (by whole Units) by filing
articles of amendment to that effect. In the absence of such
filing, retired shares of the New Preferred shall become
authorized but unissued shares of the Company's Preferred
Stock, undesignated as to series.
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise
transferred by the Company as shares of the New Preferred.
3. The designation of the New Preferred as herein provided has been duly
approved by the Executive Committee of the Board within limits
specifically prescribed by the Board.
<PAGE>
4. The shares of January 1987 Series Money Market Cumulative Preferred
Stock, $100 liquidation value, shall have the further relative rights,
preferences and limitations, in addition to those set forth in the
restated Articles of Incorporation of the Company, as follows, and the
rates, dates, terms and other conditions upon which distributions shall
be payable thereon, hereby are further fixed and determined for all
shares of the New Preferred as follows:
PART I
1. Definitions. As used in Parts I and II hereof, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
(a) "'AA' Composite Commercial Paper Rate", on any date, shall mean
(i) the interest equivalent of the 60-day rate on commercial
paper placed on behalf of issuers whose corporate bonds are
rated "AA" by S&P or the equivalent of such rating by S&P or
another rating agency, as made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
immediately preceding Business Day; or (ii) in the event that
the Federal Reserve Bank of New York does not make available
such a rate, then the arithmetic average of the interest
equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or
otherwise by the Commercial Paper Dealers to the Trust Company
for the close of business on the immediately preceding Business
Day. If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on
the basis of quotations furnished by the remaining Commercial
Paper Dealers and any Substitute Commercial Paper Dealer
selected by the Company to provide such rate not being supplied
by any Commercial Paper Dealer or, if the Company does not
select any such Substitute Commercial Paper Dealer by the
remaining Commercial Paper Dealers; provided, however, that if
the Board shall make the adjustment referred to in the second
sentence of paragraph (b)(i) of Section 2 of this Part I, then
(i) if the Dividend Period Days after such adjustment shall be
70 or more days but fewer than 85 days, such rate shall be
based on the arithmetic average of the interest equivalent of
the 60-day and 90-day rates on such commercial paper, or (ii)
if the number of Dividend Period Days after such adjustment
shall be 85 or more days but 98 or fewer days, such rate shall
be based on the interest equivalent of the 90-day rate on such
commercial paper. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis (a
"discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001) of 1%) of (A) the discount rate
divided by (B) the difference between (x) 1.00 and (y) a
fraction the numerator of which shall be the product of the
discount rate times the number of days in which such commercial
paper matures and the denominator of which shall be 360.
(b) "Applicable Rate" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(e) "Board" shall mean the Board of Directors of the Company or any
duly authorized committee thereof.
<PAGE>
(f) "Business Day" shall mean a day on which the New York Stock
Exchange is open for trading and banks or trust companies in The
City of New York, New York, are not authorized by law to close.
(g) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time
to time.
(h) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co.,
Shearson Lehman Commercial Paper Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc. or,
in lieu of any thereof, their respective affiliates or
successors, if any such entity is a commercial paper dealer.
(i) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(j) "Dividend Payment Date" shall mean a date of payment of Dividends
on the New Preferred.
(k) "Dividend Period" and "Dividend Periods" shall have the
respective meanings specified in subparagraph (c)(i) of Section 2
of this Part I.
(l) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(m) "Holder(s)" shall mean the holder(s) of shares of the New
Preferred as the same appears on the stock books of the Company.
(n) "Initial Dividend Payment Date" shall mean the first Dividend
Payment Date with respect to the New Preferred.
(o) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(p) "LIBOR" shall mean for any Dividend Period the arithmetic average
(rounded to the next higher 1/16 of 1%), computed by the Company,
of the respective rates per annum quoted by each of the Reference
Banks at which United States dollar deposits for a two-month
period in the amount of U.S. $10,000,000 are offered by such
Reference Banks to leading banks in the London
interbank market at approximately 11:00 A.M. (London time) on the
first day of such Dividend Period, or if such day is not a day on
which dealings in United States dollars are transacted in the
London interbank market, then on the next preceding day on which
such dealings are transacted in such market. If any Reference
Bank does not quote a rate required to determine LIBOR, LIBOR
shall be determined on the basis of the quotation or quotations
furnished by the remaining Reference Banks and any Substitute
Reference Banks selected by the Company to provide such
quotations not being supplied by any Reference Bank or, if the
Company does not select any such Substitute Reference Bank, by
the remaining Reference Banks. If the Board shall make the
adjustment referred to in the second sentence of paragraph (b)(i)
of Section 2 of this Part I, then (i) if the Dividend Period Days
after such adjustment shall be 70 or more days but fewer than 85
days, LIBOR shall be based on the arithmetic average (rounded to
the next higher 1/16 of 1%) of the rates per annum quoted for
such United States dollar deposits for two-and three-month
periods, or (ii) if the Dividend Period Days after such
adjustment shall be 85 or more days but 98 or fewer days, such
rate shall be based on the rates per annum quoted for such United
States dollar deposits for a three-month period.
<PAGE>
(q) "LIBOR Event" shall mean the first failure by the Company (A)
to declare or to pay to the Trust Company, not later than 12:00
Noon, New York City time, on the Business Day next preceding
any Dividend Payment Date, in funds immediately available on
such Dividend Payment Date in New York, New York, the full
amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to
the Trust Company, not later than 12:00 Noon, New York City
time on the Business Day next preceding any redemption date,
the redemption price in funds available in New York, New York
to be paid on such redemption date, plus an amount equal to
accrued and unpaid dividends at the Applicable Rate thereon to
such redemption date, of any share of the New Preferred after
notice of a redemption is given.
(r) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(s) "New Preferred" shall mean the series of the Preferred Stock,
$100 liquidation value, of the Company designated as its "January
1987 Series Money Market Cumulative Preferred(TM) Stock".
(t) "Reference Bank" shall mean the principal London offices of each
of Bankers Trust Company, The Bank of Tokyo, Ltd., Barclays Bank
PLC and National Westminster Bank PLC, or their respective
successors.
(u) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(v) "Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall have the respective meanings specified in subparagraph
(c)(i) of Section 2 of this Part I.
(w) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their
respective affiliates or successors, if such dealer or its
affiliate or successor is a commercial paper dealer; provided
that neither such dealer nor any of its affiliates or
successors shall be a Commercial Paper Dealer.
<PAGE>
(x) "Substitute Reference Bank" shall mean the principal London
office of each of The Chase Manhattan Bank (National
Association), Deutsche Bank Aktiengesellschaft, Morgan Guaranty
Trust Company of New York or Swiss Bank Corporation, or their
respective successors, or, if none of such Substitute Reference
Banks are engaged in dealings in United States dollars in the
London interbank market, then a bank or banks, selected by the
Company, engaged in dealings in United States dollars in the
London interbank market.
(y) "Trust Company" shall mean the bank or trust company or other
entity appointed as such by a resolution of the Board.
2. Dividend Methodology. (a) The Holders shall be entitled to receive,
when, as and if declared by the Board, out of funds legally available
therefor, cumulative cash dividends at the Applicable Rate, in
accordance with the method prescribed by the Board as set forth in
subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
(b) (i) Dividends on shares of the New Preferred, at the
Applicable Rate, shall accrue from the Date of
Original Issue and shall be payable commencing on
such Dividend Payment Dates as shall be specified
for the New Preferred by resolutions duly adopted
by the Board in accordance with the method
prescribed by the Board, which Dividend Payment
Dates shall be every 49th day after the Initial
Dividend Payment Date, except that:
(1) if the day that otherwise would be the Dividend
Payment Date is not a Business Day, or the day that
otherwise would be the Dividend Payment Date is
immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next
succeeding Business Day that is immediately succeeded
by a Business Day, provided that
(2) if the determination of the otherwise applicable
Dividend Payment Date in the manner herein above
provided would result in the Dividend Period ending
or commencing nearest said otherwise applicable
Dividend Payment Date having less than the number of
days constituting the minimum holding period
(currently found in Section 246(c) of the Code)
required for taxpayers to be entitled to the
dividends received deduction on preferred stock held
by non-affiliated corporations (currently found in
Section 243(a) of the Code), then the Dividend
Payment Date shall be the first Business Day
preceding such otherwise applicable day that is
itself immediately followed by a Business Day.
<PAGE>
It is provided further, however, that the Board, in the
event of a change in law lengthening the minimum holding
period (currently found in Section 246(c) of the Code)
required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by
non-affiliated corporations (currently found in Section
243(a) of the Code), may adjust the period of the time
between Dividend Payment Dates so as, subject to clauses
(A) and (B) below of this subparagraph (b)(i), to adjust
uniformly the number of days (such number of days without
giving effect to such clauses (A) and (B) being
hereinafter referred to as "Dividend Period Days") in
Dividend Periods commencing after the date of such change
in law to equal or exceed the then current minimum
holding period, subject to the limitations that (A) the
number of Dividend Period Days shall not exceed by more
than nine days the length of such then current minimum
holding period and in no event shall exceed 98 days and
(B) dividends shall continue to be payable on the same
day of the week as the Initial Dividend Payment Date.
Upon any such change in the number of Dividend Period
Days as a result of a change in law, the Company shall
mail notice of such change by first class mail, postage
prepaid, to each Holder at such Holder's address as the
same appears on the stock books of the Company.
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Trust Company no later
than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment
Date, an aggregate amount of funds available on the
next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such
Dividend Payment Date. All such moneys shall be
held in trust for the payment of such dividends by
the Trust Company for the benefit of the Holders
specified in subparagraph (b)(iii) of this Section
2.
(iii) Dividends shall be paid to the Holders of the New
Preferred as they shall appear on the stock books
of the Company on the Business Day next preceding
the Dividend Payment Date; provided, however, that
if such dividend shall have been determined under
the proviso in subparagraph (c)(i) of this Section
2, such dividend shall be paid to the Holders of
record of the New Preferred on such date, not
exceeding 15 days preceding the payment date
thereof, as may be fixed by the Board. Dividends
in arrears for any past Dividend Period may be
declared and paid at any time, without reference to
any regular Dividend Payment Date, to the Holders
of record of the New Preferred as they shall appear
on the stock books of the Company on such date, not
exceeding 15 days preceding the payment date
thereof, as may be fixed by the Board.
<PAGE>
(c) (i) The dividend rate on shares of the New Preferred
during the period from and after the Date of
Original Issue to and including the day preceding
the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 4.25%. Commencing on
the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each
subsequent dividend period (hereinafter referred to
as a "Subsequent Dividend Period" and collectively
as "Subsequent Dividend Periods"; and the Initial
Dividend Period or any Subsequent Dividend Period
being hereinafter referred to as a "Dividend
Period" and collectively as "Dividend Periods")
thereafter, which Subsequent Dividend Periods each
shall commence on a Dividend Payment Date and shall
end on and include the day preceding the next
Dividend Payment Date, shall be equal to the rate
per annum that results from implementation of the
Auction Procedures; provided,
however, that if a LIBOR Event shall have occurred
prior to the first day of such Subsequent Dividend
Period, the dividend rate for all such Subsequent
Dividend Periods shall be a rate per annum equal to
150% of LIBOR (the rate per annum at which
dividends are payable on shares of the New
Preferred for any Dividend Period being herein
referred to as the "Applicable Rate").
(ii) The dividends payable on shares of the New
Preferred for any Dividend Period shall be computed
by multiplying the Applicable Rate for such
Dividend Period by a fraction the numerator of
which shall be the number of days in such Dividend
Period and the denominator of which shall be 360
and applying the rate obtained against $100 per
share of the New Preferred.
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1
shall have the respective meanings specified in Part I hereof. As used
in this Part II, the following terms shall have the following meanings,
unless the context otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the
percentage determined as set forth below based on the prevailing
rating of the New Preferred in effect at the close of business on
the Business Day immediately preceding such Auction Date:
Prevailing Rating Percentage
AA/aa or Above . . . . . . 110%
A/a . . . . . . . . . . . 120%
BBB/baa . . . . . . . . . 130%
Below BBB/baa . . . . . . 150%
<PAGE>
For purposes of this definition, the "prevailing rating" of the
New Preferred shall be (i) AA/aa or Above, if the New Preferred
has a rating of AA- or better by S&P or aa3 or better by Moody's
or the equivalent of either or both of such ratings by such
agencies or substitute rating agencies selected as provided
below, (ii) if not AA/aa or Above, then A/a if the New Preferred
has a rating of A- or better and lower than AA- by S&P or a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if
not AA/aa or Above or A/a, then BBB/baa if the New Preferred has
a rating of BBB- or better and lower than A- by S&P or baa3 or
better and lower than a3 by Moody's or the equivalent, and (iv)
if not AA/aa or Above, A/a or BBB/baa, then Below BBB/baa. The
Company shall take all reasonable action necessary to enable S&P
and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, or neither
S&P nor Moody's shall make such a rating available, Shearson
Lehman Brothers Inc. and The First Boston Corporation or their
successors shall select, as necessary, one or two nationally
recognized statistical rating organizations (as that term is used
in the rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended)
to act as substitute rating agencies and the Company shall take
all reasonable action to enable such rating agencies to provide
ratings for the New Preferred.
(b) "Affiliate" shall mean any Person known to the Trust Company to
be controlled by, in control of or under common control with the
Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is
identified as such in such Bidder's Purchaser's Letter.
(d) "Auction Date" shall mean the Business Day next preceding the
first day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-
Dealer in this Part II, that is a member of, or a participant in,
the Securities Depository, has been selected by the Company and
has entered into a Broker-Dealer Agreement with the Trust Company
that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the
Trust Company and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this
Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Purchaser's
Letter and is listed as the beneficial owner of such shares of
<PAGE>
the New Preferred in the records of the Trust Company.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Maximum Rate," on any Auction Date, shall mean the product of
the "AA" Composite Commercial Paper Rate times the "AA" Rate
Multiple.
(m) "Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(n) "Outstanding" shall mean, as of any date, shares of the New
Preferred theretofore issued by the Company except, without
duplication, (i) any shares of the New Preferred theretofore
cancelled or delivered to the Trust Company for cancellation or
redeemed by the Company or as to which a notice of redemption
shall have been given by the Company, (ii) any shares of the
New Preferred as to which the Company or any Affiliate thereof
(other than a Broker-Dealer Affiliate) shall be an Existing
Holder and (iii) any shares of the New Preferred represented by
any certificate in lieu of which a new certificate has been
executed and delivered by the Company.
(o) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or
political subdivision thereof.
(p) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Purchaser's Letter and (ii)
who may be interested in acquiring shares of the New Preferred
(or, in the case of an Existing Holder, additional shares of the
New Preferred).
(q) "Purchaser's Letter" shall mean a letter addressed to the
Company, the Trust Company, a Broker-Dealer and an Agent Member
in which a Person agrees, among other things, to offer to
purchase, to purchase, to offer to sell and/or to sell shares of
the New Preferred as set forth in this Part II.
(r) "Securities Depository" shall mean the Depository Trust Company
and its successors and assigns or any other securities depository
selected by the Company which agrees to follow the procedures
required to be followed by such securities depository in
connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust
Company as specified by the Trust Company from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
<PAGE>
(v) "Submitted Hold Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in
paragraph (4) of Section 4 of this Part II.
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders. (a) On or prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer
information as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder which such
Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding
Dividend Period;
(B) the number of Outstanding shares, if any, of the New
Preferred which such Existing Holder desires to
continue to hold if the Applicable Rate for the next
succeeding Dividend Period shall not be less than the
rate per annum specified by such Existing Holder;
and/or
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder which such
Existing Holder offers to sell without regard to the
Applicable Rate for the next succeeding Dividend
Period; and
(ii) one or more Broker-Dealers, using lists of
Potential Holders, shall, in good faith for the
purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential
Holders, including Persons that are not Existing
Holders, on such lists to determine the number of
shares, if any, of the New Preferred which each
such Potential Holder offers to purchase if the
Applicable Rate for the next succeeding Dividend
Period shall not be less than the rate per annum
specified by such Potential Holder.
<PAGE>
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii)
of this paragraph (a) is hereinafter referred to as an "Order";
each Existing Holder and each Potential Holder placing an Order
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing
the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
the rate specified therein;
(B) such number or a lesser number of Outstanding shares
of the New Preferred to be determined as set forth in
clause (iv) of paragraph (a) of Section 5 of this
Part II if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New
Preferred to be determined as set forth in clause
(iii) of paragraph (b) of Section 5 of this Part II
if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do
not exist.
(ii) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or a lesser number of outstanding shares
of the New Preferred as set forth in clause (iii) of
paragraph (b) of Section 5 of this Part II if
Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher than
the rate specified therein; or
(B) such number of a lesser number of outstanding shares
of the New Preferred as set forth in clause (v) of
paragraph (a) of Section 5 of this Part II if the
Applicable Rate determined on such Auction Date shall
be equal to the rate specified therein.
<PAGE>
3. Submission of Orders by Broker-Dealers to Trust Company. (a) Each
Broker-Dealer shall submit in writing to the Trust Company prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred
that are the subject to such Order;
(iii) to the extent that such Bidder is an Existing
Holder:
(A) the number of shares, if any, of the New Preferred
subject to any Hold Order placed by such Existing
Holder;
(B) the number of shares, if any, of the New Preferred
subject to any Bid placed by such Existing Holder and
the rate specified in such Bid; and
(C) the number of shares, if any, of the New Preferred
subject to any Sell Order placed by such Existing
Holder; and
(iv) to the extent such Bidder is a Potential Holder, the
rate and number of shares specified in such Potential
Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Trust Company shall round
such rate up to the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of
the New Preferred held by any Existing Holder are not submitted
to the Trust Company prior to the Submission deadline, the
Trust Company shall deem a Hold Order to have been submitted on
behalf of such Existing Holder covering the number of
Outstanding shares of the New Preferred held by such Existing
Holder and not subject to Orders submitted to the Trust
Company.
(d) If one or more Orders covering in the aggregate more than the
number of Outstanding shares of the New Preferred held by any
Existing Holder are submitted to the Trust Company by a Broker-
Dealer, such Orders shall be considered valid as follows and in
the following order of priority:
(i) all Hold Orders shall be considered valid, but only
up to and including in the aggregate the number of
Outstanding shares of the New Preferred held by
such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers
submitting Hold Orders, if the number of shares of
the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New
Preferred held by such Existing Holder, the number
of shares subject to each such Hold Order shall be
reduced pro rata to cover the number of Outstanding
shares of the New Preferred held by such Existing
Holder;
<PAGE>
(ii) (A) any Bid shall be considered valid up to
and including the excess of the number of
Outstanding shares of the New Preferred held
by such Existing Holder over the number of
shares of the New Preferred subject to any
Hold Orders referred to in clause (i) above;
(B) subject to subclause (A), if more than one
Bid with the same rate is submitted on
behalf of such Existing Holder and the
number of Outstanding shares of the
New Preferred subject to such Bids is
greater than such excess, such Bids shall
be considered valid up to and including
the amount of such excess, and, solely for
purposes of allocating compensation among
the Broker-Dealers submitting Bids with
the same rate, the number of shares of the
New Preferred subject to each Bid with the
same rate shall be reduced pro rata to
cover the number of shares of the New
Preferred equal to such excess;
(C) subject to subclause (A), if more than one
Bid with different rates is submitted on
behalf of such Existing Holder, such Bids
shall be considered valid in the ascending
order of their respective rates up to and
including the amount of such excess; and
(D) in any such event, the number, if any, of
such Outstanding shares of the New Preferred
subject to Bids not valid under this clause
(ii) shall be treated as the subject of a
Bid by a Potential Holder at the rate
therein specified; and
(iii) all Sell Orders shall be considered valid up to and
including the excess of the number of Outstanding
shares of the New Preferred held by such Existing
Holder over the sum of the shares of the New
Preferred subject to valid Hold Orders referred to in
clause (i) above and valid Bids by such Existing
Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
and number of shares therein specified.
(f) Orders by Existing Holders and Potential Holders must specify
numbers of shares of the New Preferred in whole Units. Any Order
that specifies a number of shares of the New Preferred other than
in whole Units will not be accepted and will not be considered a
Submitted Order for purposes of an Auction.
<PAGE>
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on
each Auction Date, the Trust Company shall assemble all Orders
submitted or deemed submitted to it by the Broker-Dealers (such
Orders as submitted or deemed submitted by Broker-Dealers being
hereinafter referred to as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted
Orders") and shall determine:
(i) the excess of the total number of outstanding shares
of the New Preferred over the number of Outstanding
shares of the New Preferred that are the subject of
Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Potential
Holders specifying one or more rates equal to or
lower than the Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the
Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred
that are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than
because the number of shares of the New Preferred in
subclauses (B) and (C) above is zero because all of the
Outstanding shares of the New Preferred are the subject
of Submitted Hold Orders), such Submitted Bids in
subclause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(A) (I) each Submitted Bid from Existing Holders
specifying such lowest rate and (II) all other
Submitted Bids from Existing Holders specifying lower
rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New
Preferred that are the subject of such Submitted
Bids; and
<PAGE>
(B) (I) each Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other
Submitted Bids from Potential Holders specifying
lower rates were accepted,
would result in such Existing Holders described in
subclause (A) above continuing to hold an aggregate
number of Outstanding shares of the New Preferred which,
when added to the number of Outstanding shares of the New
Preferred to be purchased by such Potential Holders
described in subclause (B) above, would equal not less
than the available New Preferred.
(b) Promptly after the Trust Company has made the determinations
pursuant to paragraph (a) of this Section 4, the Trust Company
shall advise the Company of the "AA" Composite Commercial Paper
Rate and the Maximum Rate on the Auction Date and, based on such
determinations, the Applicable Rate for the next succeeding
Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to the Winning Bid Rate so
determined;
(ii) if Sufficient Clearing Bids do not exist (other than
because all of the Outstanding shares of the New
Preferred are the subject of Submitted Hold Orders),
that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate;
or
(iii) if all of the Outstanding shares of the New Preferred
are the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Existing Holders shall continue to hold the
shares of the New Preferred that are the subject of Submitted Hold
Orders, and based on the determinations made pursuant to paragraph (a)
of Section 4 of this Part II, the Submitted Bids and submitted Sell
Orders shall be accepted or rejected and the Trust Company shall take
such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell
Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall
be accepted and Existing Holders' Submitted Bids
specifying any rate that is higher than the Winning
Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New
Preferred that are the subject of such Submitted Sell
Orders or Submitted Bids;
<PAGE>
(ii) Existing Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
accepted;
(iv) Each Existing Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
rejected, thus entitling such Existing Holder to
continue to hold the shares of the New Preferred
that are the subject of such Submitted Bid, unless
the number of Outstanding shares of the New
Preferred subject to all such Submitted Bids shall
be greater than the number of shares of New
Preferred ("remaining shares") equal to the excess
of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted
Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of
such Existing Holder shall be accepted in part, and
such Existing Holder shall be required to sell
shares of the New Preferred subject to such
Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding
shares of the New Preferred then held by such
Existing Holder subject to such Submitted Bid and
(B) the number of shares of the New Preferred
obtained by multiplying the number of
remaining shares by a fraction the numerator of
which shall be the number of Outstanding shares of
the New Preferred held by such Existing Holder
subject to such Submitted Bid and the denominator
of which shall be the aggregate number of
Outstanding shares of the New Preferred subject to
such Submitted Bids made by all such Existing
Holders that specified a rate equal
to the Winning Bid Rate; and
(v) each Potential Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number
of shares of the New Preferred obtained by
multiplying the difference between the Available
New Preferred and the number of shares of the New
Preferred subject to Submitted Bids described in
clauses (ii), (iii) and (iv) of this paragraph (a)
by a fraction the numerator of which shall be the
number of Outstanding shares of the New Preferred
subject to such Submitted Bid and the denominator
of which shall be the aggregate number of
Outstanding shares of the New Preferred subject to
such Submitted Bids made by all such Potential
Holders that specified a rate equal to
the Winning Bid Rate.
<PAGE>
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of the New Preferred are
the subject of Submitted Hold Orders), subject to the provisions
of paragraph (d) of this Section 5, Submitted Orders shall be
accepted or rejected as follows in the following order of
priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be rejected, thus entitling such Existing Holders to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any
rate that is higher than the Maximum Rate and the
Submitted Sell Order of each Existing Holder shall
be accepted, but in both cases only in an amount
equal to the difference between (A) the number of
Outstanding shares of the New Preferred then held
by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of
shares of the New Preferred obtained by multiplying
the difference between the Available New Preferred
and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in
clauses (i) and (ii) of this paragraph (b) by a
fraction the numerator of which shall be the number
of Outstanding shares of the New Preferred held by
such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and the denominator of
which shall be the aggregate number of Outstanding
shares of the New Preferred subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of the New Preferred are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or
(b) of this Section 5, any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or
required to purchase shares of the New Preferred other than in
whole Units on any Auction Date, the Trust Company shall, in
such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be
purchased or sold by any Existing Holder or Potential Holder on
such Auction Date so that the number of Units purchased or sold
by each Existing Holder or Potential Holder on such Auction
Date shall be whole Units of the New Preferred.
<PAGE>
(e) If, as a result of the procedures described in paragraph (a) of
this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole Unit on any Auction
Date, the Trust Company shall, in such manner as, in its sole
discretion, it shall determine, allocate Units for purchase
among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential
Holder, even if such allocation results in one or more of such
Potential Holders not purchasing Units of the New Preferred on
such Auction Date.
(f) Based on the results of each Auction, the Trust Company shall
determine the aggregate number of shares of the New Preferred
to be purchased and the aggregate number of shares of the New
Preferred to be sold by Potential Holders and Existing Holders
on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate number of shares to be purchased and such
aggregate number of shares to be sold differ, determine to
which other Broker-Dealer or Broker-Dealers acting for one or
more purchasers such Broker-Dealer shall deliver, or from which
other Broker-Dealer or Broker-Dealers acting for one or more
sellers such Broker-Dealer shall receive, as the case may be,
shares of the New Preferred.
6. Miscellaneous. (a) The Board may interpret the provisions of this Part
II to resolve any inconsistency or ambiguity which may arise or be
revealed in connection with the Auction Procedures provided for herein,
and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board may, in appropriate circumstances, authorize the
filing of a Certificate of Correction.
(b) As long as no LIBOR Event shall have occurred, an Existing
Holder (i) may sell, transfer or otherwise dispose of shares of
the New Preferred only pursuant to a Bid or Sell Order in
accordance with the procedures described in this Part II or to
go through a Broker-Dealer or to a Person that has delivered a
signed copy of a Purchaser's Letter to the Trust Company,
provided that in the case of all transfers other than pursuant
to Auctions, such Existing Holder, its Broker-Dealer or its
Agent Member advises the Trust Company of such transfer, and
(ii) shall have the ownership of the shares of the New
Preferred held by it maintained in book entry form by the
Securities Depository for the account of its Agent Member,
which in turn will maintain records of such Existing Holder's
beneficial ownership. Shares of the New Preferred may be sold
or transferred only in whole Units.
(c) Neither the Company nor any affiliate thereof may submit an
Order in any Auction except as set forth in the next sentence.
Any Broker-Dealer that is an affiliate of the Company may
submit Orders in Auctions but only if such Orders are not for
its own account, except that if such affiliated Broker-Dealer
holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such
shares.
<PAGE>
(d) Commencing with the first day of the first Dividend Period for
which the Applicable Rate is determined by the formula of 150% of
LIBOR, as a result of an occurrence of a LIBOR Event, the Company
or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Trust Company set
forth herein.
Dated: January 15, 1987 VIRGINIA ELECTRIC AND POWER COMPANY
By Linwood R. Robertson
Linwood R. Robertson
Vice President, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company.
2. The Restated Articles of Incorporation, as amended, of Virginia
Electric and Power Company (the Company) hereby are amended to create a
series of the Company's Preferred Stock. In accordance with the
provisions of the Restated Articles of Incorporation, as amended, of
the Company, the distinctive designation, preferences, limitations and
relative rights of said series of Preferred Stock are determined and
fixed as follows:
(a) The distinctive serial designation of the $7.30 Series shall be
"$7.30 Dividend Preferred Stock" (hereinafter sometimes referred
to as the $7.30 Series).
(b) The dividend rate on the shares of the $7.30 Series shall be
fixed at $7.30 per share per annum. Dividends shall be cumulative
from the date of initial issuance of the shares of the $7.30
Series. The payment dates for dividends on the shares of the
$7.30 Series shall be March 20, June 20, September 20 and
December 20 of each year, beginning June 20, 1987.
(c) The fixed liquidation preference of the shares of the $7.30
Series shall be $100 per share. The fixed liquidation premium
on the shares of the $7.30 Series, payable in addition to the
fixed liquidation preference in the event of a voluntary
liquidation, dissolution or winding up of the Company, will be
$7.30 per share prior to April 15, 1993, and thereafter will be
an amount per share equal to the applicable per share premium,
if any, payable in optional redemption.
<PAGE>
(d) The $7.30 Series shall not be optionally redeemable (except to
the extent otherwise provided for redemption in liquidation)
prior to April 15, 1992. The fixed redemption price of the shares
of the $7.30 Series in optional redemption on and after April 15,
1992 shall be $100 per share plus a premium, in the case of an
optional redemption prior to April 15, 2002, from time to time as
follows:
Optional Redemption
Time Period Premium Per Share
April 15, 1992-April 14, 1993 . . . $7.30
April 15, 1993-April 14, 1994 . . . 6.57
April 15, 1994-April 14, 1995 . . . 5.84
April 15, 1995-April 14, 1996 . . . 5.11
April 15, 1996-April 14, 1997 . . . 4.38
April 15, 1997-April 14, 1998 . . . 3.65
April 15, 1998-April 14, 1999 . . . 2.92
April 15, 1999-April 14, 2000 . . . 2.19
April 15, 2000-April 14, 2001 . . . 1.46
April 15, 2001-April 14, 2002 . . . .73
(e) The shares of the $7.30 Series shall not be entitled to any right
of conversion or any preemptive right to acquire any other
security.
(f) The shares of the $7.30 Series shall be entitled to a mandatory
sinking fund. The Company shall on June 20 in each year
commencing in 1992, redeem 15,000 shares of the $7.30 Series
out of net assets legally available therefor, at the price of
$100 per share plus accrued and unpaid dividends. The sinking
fund shall be cumulative so that if on any such sinking fund
redemption date the net assets of the Company legally available
therefor shall (i) be insufficient to permit any such mandatory
sinking fund redemption payment in full, the amount of such
deficiency shall be paid and applied to the redemption of
shares of the $7.30 Series at the aforesaid price before any
dividend shall be paid or declared, or any distribution made,
on any Junior Stock (as defined in the Company's Restated
Articles of Incorporation, as amended) or any Junior Stock
shall be purchased, redeemed or otherwise acquired for
consideration by the Company, and (ii) be insufficient to
permit any such mandatory sinking fund redemption payment in
full and all mandatory sinking fund payments in full due on the
same date with respect to any other series of Preferred Stock
or any series of Parity Stock (in each case as defined in the
Company's Restated Articles of Incorporation, as amended and in
effect at the time), the Company shall not purchase, redeem or
otherwise acquire for consideration any shares of Preferred
Stock or Parity Stock, except that at any time and from time to
time funds may be applied to the purchase or redemption of
shares of the respective series pro rata, as nearly as
practicable, according to the amounts of the respective
deficiencies in mandatory sinking fund payments. No optional
redemption of shares of the $7.30 Series pursuant to
subparagraph (d) above shall constitute a redemption of such
shares in lieu of or as a credit against any redemption
required by this subparagraph (f). The Company, at its option,
on each sinking fund redemption date may redeem on a
noncumulative basis through the sinking fund not more than
15,000 additional shares of the $7.30 Series upon the same
terms.
<PAGE>
(g) Except as above provided, the shares of the $7.30 Series shall
have all the designations, preferences, limitations and
relative rights and voting powers, and restrictions or
qualifications thereof, expressed in the Restated Articles of
Incorporation, as amended, of the Company. The shares of the
$7.30 Series shall not have any special rights other than those
specified herein and in the Restated Articles of Incorporation,
as amended, of the Company.
(h) There are hereby classified as the series of $7.30 Dividend
Preferred Stock 500,000 shares of the Preferred Stock. No more
than 500,000 shares of the $7.30 Series may be issued. Upon
retirement of the shares of the $7.30 Series, this number may be
decreased by filing articles of amendment to that effect.
(i) No shares of the $7.30 Series redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise
transferred by the Company as shares of the $7.30 Series.
3. The designation of the $7.30 Series, as herein provided, has been duly
approved by an Executive Committee on behalf of the Board of Directors
of the Company within and in accordance with limits specifically
prescribed by the Board of Directors.
4. These Articles of Amendment were duly adopted on April 8, 1987 by said
Executive Committee on behalf of the Board of Directors of Virginia
Electric and Power Company and shareholder action was not taken or
required in connection with such adoption.
Dated: April 8, 1987 VIRGINIA ELECTRIC AND POWER COMPANY
By
Vice President, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company
(hereinafter referred to as the Company).
<PAGE>
2. The Restated Articles of Incorporation, as amended (the Articles) of
Virginia Electric and Power Company (the Company) hereby are amended
to create a series of the Company's Preferred Stock which shall be
designated the June 1987 Series Money Market Cumulative Preferred
Stock (hereinafter sometimes referred to as the New Preferred). In
accordance with the provisions of the Articles, the distinctive
designation, preferences, limitations and relative rights of the New
Preferred are determined and fixed as follows:
(a) The distinctive serial designation of the New Preferred shall be
"June 1987 Series Money Market Cumulative Preferred Stock."
Shares of the New Preferred may only be purchased or transferred
in whole units of 1,000 shares each (Units) or integral multiples
thereof and the shares included in the Units may not be
separately purchased or transferred.
(b) The dividend rate on the shares of the New Preferred for the
Initial Dividend Period (such term and all other capitalized
terms used herein being used, unless otherwise expressly provided
herein, as defined in Parts I and II of these Articles of
Amendment) shall be 4.80% per annum. For each Dividend Period
thereafter, the dividend rate will be determined according to the
procedures set forth in said Parts I and II.
(c) The liquidation price of the shares of the New Preferred shall
be $100 per share. The liquidation premium payable in addition
to the liquidation price in the event of a voluntary
liquidation, dissolution or winding up of the Company will be
$3.00 per share prior to the first anniversary of the Date of
Original Issue, $2.00 per share thereafter and prior to the
second anniversary of the Date of Original Issue, and $1.00 per
share thereafter and prior to the third anniversary of the Date
of Original Issue. Shares of the New Preferred shall not be
entitled to a liquidation premium on or after the third
anniversary of the Date of Original Issue.
(d) (i) The shares of the New Preferred shall be redeemable
on the second Business Day preceding any Dividend
Payment Date at the option of the Company, as a
whole or in part, in whole Units only. The
redemption price of the shares of the New Preferred
in optional redemption shall be $100 per share plus
a premium, in the case of optional redemption prior
to the third anniversary of the Date of Original
Issue, from time to time as follows, plus an amount
equal to "dividends accrued or in arrears" (such
phrase being used in these Articles of Amendment as
defined in Section 3 of the Division A of the
Articles) to the date fixed for redemption:
Optional Redemption
Time Period Premium Per Share
Prior to the first anniversary date $3.00
of the Date of Original Issue
Thereafter and prior to the second 2.00
anniversary of the Date of Original Issue
Thereafter and prior to the third 1.00
anniversary of the Date of Original Issue
<PAGE>
If fewer than all of the outstanding shares of the
New Preferred are to be redeemed pursuant to this
subparagraph (d)(i), the number of shares to be redeemed
shall be determined by the Board of Directors of the
Company and such shares shall be redeemed in whole Units
pro rata from the Holders in proportion to the number of
such shares held by such Holders. If such pro rata
redemption would result in the redemption of fractional
Units, the Units to be redeemed shall be selected from
among the outstanding Units of the New Preferred in any
manner determined by the Trust Company to be equitable,
such that the redemption is in whole Units only.
(ii) The shares of the New Preferred also shall be
redeemable at the option of the Company, as a whole
but not in part, on any Dividend Payment Date at
$100 per share (without premium), plus an amount
equal to dividends accrued or in arrears to the
date fixed for redemption, if the Applicable Rate
for the Dividend Period ending on the day preceding
such Dividend Period ending on the day preceding
such Dividend Payment Date equals or exceeds the
"AA" Composite Commercial Paper Rate on the date of
determination of such Applicable Rate.
(iii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Trust Company, no later
than 12:00 Noon, New York City time on the Business
Day next preceding any redemption date, the
redemption price in funds available in the City of
New York, New York to be paid on such redemption
date, plus an amount equal to dividends accrued or
in arrears to the date fixed for redemption, of any
share of the New Preferred after notice of a
redemption is given.
(e) The shares of the New Preferred shall not be entitled to any
right of conversion or any preemptive right to acquire any other
security.
(f) The shares of the New Preferred shall not be entitled to a
sinking fund.
(g) Except as otherwise provided in these Articles of Amendment,
the shares of the New Preferred shall have all the
designations, preferences, limitations and relative rights and
voting power, and restrictions or qualifications thereof,
expressed in the Articles as presently in effect. The shares
of the New Preferred shall not have any special rights other
than those specified herein and in the Articles as presently in
effect.
(h) There are hereby classified as the June 1987 Series Money
Market Cumulative Preferred Stock, 750,000 shares of the
Preferred Stock, in 750 Units, with each Unit consisting of
1,000 shares of the New Preferred; no more than 750,000 shares
of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, such number of shares may be, but
shall not be required to be, decreased (in whole Units) by
filing articles of amendment to that effect. In the absence of
such filing, retired shares of the New Preferred shall become
authorized but unissued shares of the Company's class of
Preferred Stock, undesignated as to series.
<PAGE>
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise
transferred by the Company as shares of the New Preferred.
3. The shares of June 1987 Series Money Market Cumulative Preferred Stock,
$100 liquidation value, shall have the further relative rights,
preferences and limitations set forth in Sections 1 through 6 of
Division A of Article III of the Articles, and the rates, dates, terms
and other conditions upon which distributions shall be payable thereon
shall be as set forth in Parts I and II of these Articles of Amendment.
4. The designation of the New Preferred as herein provided has been duly
approved, and these Articles of Amendment have been duly adopted, by an
Executive Committee of the Board of Directors of the Company, within
limits specifically prescribed by the Board of Directors of the
Company. No shareholder action was taken, or was required to be taken,
in connection with the adoption of these Articles of Amendment.
PART I
1. Definitions. As used in Parts I and II hereof, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
<PAGE>
(a) "'AA' Composite Commercial Paper Rate", on any date, shall mean
(i) the interest equivalent of the 60-day rate on commercial
paper placed on behalf of issuers whose corporate bonds are
rated "AA" by S&P or the equivalent of such rating by S&P or
another rating agency, as made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
immediately preceding Business Day; or (ii) in the event that
the Federal Reserve Bank of New York does not make available
such a rate, then the arithmetic average of the interest
equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or
otherwise by the Commercial Paper Dealers to the Trust Company
for the close of business on the immediately preceding Business
Day. If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on
the basis of quotations furnished by the remaining Commercial
Paper Dealers and any Substitute Commercial Paper Dealer
selected by the Company to provide such rate not being supplied
by any Commercial Paper Dealer or, if the Company does not
select any such Substitute Commercial Paper Dealer by the
remaining Commercial Paper Dealers; provided, however, that if
the Board shall make the adjustment referred to in the second
sentence of paragraph (b)(i) of Section 2 of this Part I, then
(i) if the Dividend Period Days after such adjustment shall be
70 or more days but fewer than 85 days, such rate shall be
based on the arithmetic average of the interest equivalent of
the 60-day and 90-day rates on such commercial paper, or (ii)
if the number of Dividend Period Days after such adjustment
shall be 85 or more days but 98 or fewer days, such rate shall
be based on the interest equivalent of the 90-day rate on such
commercial paper. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis (a
"discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001) of 1%) of (A) the discount rate
divided by (B) the difference between (x) 1.00 and (y) a
fraction of the numerator of which shall be the product of the
discount rate times the number of days in which such commercial
paper matures and the denominator of which shall be 360.
(b) "Applicable Rate" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(e) "Board" shall mean the Board of Directors of the Company or any
duly authorized committee thereof.
(f) "Business Day" shall mean a day on which the New York Stock
Exchange is open for trading and banks or trust companies in The
City of New York, New York, are not authorized by law to close.
(g) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time
to time.
(h) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co.,
Shearson Lehman Commercial Paper Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc. or,
in lieu of any thereof, their respective affiliates or
successors, if any such entity is a commercial paper dealer.
(i) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(j) "Dividend Payment Date" shall mean a date of payment of Dividends
on the New Preferred.
(k) "Dividend Period" and "Dividend Periods" shall have the
respective meanings specified in subparagraph (c)(i) of Section 2
of this Part I.
<PAGE>
(l) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(m) "Holder" shall mean the holder(s) of shares of the New Preferred
as the same appear(s) on the stock books of the Company.
(n) "Initial Dividend Payment Date" shall mean the first Dividend
Payment Date with respect to the New Preferred.
(o) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(p) "LIBOR" shall mean for any Dividend Period the arithmetic
average (rounded to the next higher 1/16 of 1%), computed by
the Company, of the respective rates per annum quoted by each
of the Reference Banks at which United States dollar deposits
for a two-month period in the amount of U.S. $10,000,000 are
offered by such Reference Banks to leading banks in the London
interbank market at approximately 11:00 A.M. (London time) on
the first day of such Dividend Period, or if such day is not a
day on which dealings in United States dollars are transacted
in the London interbank market, then on the next preceding day
on which such dealings are transacted in such market. If any
Reference Bank does not quote a rate required to determine
LIBOR, LIBOR shall be determined on the basis of the quotation
or quotations furnished by the remaining Reference Banks and
any Substitute Reference Banks selected by the Company to
provide such quotations not being supplied by any Reference
Bank or, if the Company does not select any such Substitute
Reference Bank, by the remaining Reference Banks. If the Board
shall make the adjustment referred to in the second sentence of
paragraph (b)(i) of Section 2 of this Part I, then (i) if the
Dividend Period Days after such adjustment shall be 70 or more
days but fewer than 85 days, LIBOR shall be based on the
arithmetic average (rounded to the next higher 1/16 of 1%) of
the rates per annum quoted for such United States dollar
deposits for two-and three-month periods, or (ii) if the
Dividend Period Days after such adjustment shall be 85 or more
days but 98 or fewer days, such rate shall be based on the
rates per annum quoted for such United States dollar deposits
for a three-month period.
(q) "LIBOR Event" shall mean the first failure by the Company (A)
to declare or to pay to the Trust Company, not later than 12:00
Noon, New York City time, on the Business Day next preceding
any Dividend Payment Date, in funds immediately available on
such Dividend Payment Date in New York, New York, the full
amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to
the Trust Company, no later than 12:00 Noon, New York City time
on the Business Day next preceding any redemption date, the
redemption price in funds available in New York, New York to be
paid on such redemption date, plus an amount equal to accrued
and unpaid dividends at the Applicable Rate thereon to such
redemption date, of any share of the New Preferred after notice
of a redemption is given.
<PAGE>
(r) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(s) "New Preferred" shall mean the series of the Preferred Stock,
$100 liquidation value, of the Company designated as its "June
1987 Series Money Market Cumulative Preferred(TM) Stock".
(t) "Reference Bank" shall mean the principal London offices of each
of Bankers Trust Company, The Bank of Tokyo, Ltd., Barclays Bank
PLC and National Westminster Bank PLC, or their respective
successors.
(u) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(v) "Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall have the respective meanings specified in subparagraph
(c)(i) of Section 2 of this Part I.
(w) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their
respective affiliates or successors, if such dealer or its
affiliate or successor is a commercial paper dealer; provided
that neither such dealer nor any of its affiliates or successors
shall be a Commercial Paper Dealer.
(x) "Substitute Reference Bank" shall mean the principal London
office of each of The Chase Manhattan Bank (National
Association), Deutsche Bank Aktiengesellschaft, Morgan Guaranty
Trust Company of New York or Swiss Bank Corporation, or their
respective successors, or, if none of such Substitute Reference
Banks are engaged in dealings in United States dollars in the
London interbank market, then a bank or banks, selected by the
Company, engaged in dealings in United States dollars in the
London interbank market.
(y) "Trust Company" shall mean the bank or trust company or other
entity appointed as such by a resolution of the Board.
2. Dividend Methodology. (a) The Holders shall be entitled to receive,
when, as and if declared by the Board, out of funds legally available
therefor, cumulative cash dividends at the Applicable Rate, in
accordance with the method prescribed by the Board as set forth in
subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
(b) (i) Dividends on shares of the New Preferred, at the
Applicable Rate, shall accrue from the Date of
Original Issue and shall be payable commencing on
such Dividend Payment Dates as shall be specified
for the New Preferred by resolutions duly adopted
by the Board in accordance with the method
prescribed by the Board, which Dividend Payment
Dates shall be every 49th day after the Initial
Dividend Payment Date, except that:
<PAGE>
(1) if the day that otherwise would be the Dividend
Payment Date is not a Business Day, or the day that
otherwise would be the Dividend Payment Date is
immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next
succeeding Business Day that is immediately succeeded
by a Business Day, provided that
(2) if the Securities Depository shall make available to
its participants and members, in funds immediately
available in the City of New York on a Dividend
Payment Date, the amount due as dividends on such
Dividend Payment Date (and the Securities depository
shall have so advised the Trust Company), and if the
day that otherwise would be such Dividend Payment
Date is not a Business Day, then the Dividend Payment
Date shall be the next succeeding Business Day,
provided that
(3) if the determination of the otherwise applicable
Dividend Payment Date in the manner herein above
provided would result in the Dividend Period
commencing on said otherwise applicable Dividend
Payment Date having less than the number of days
constituting the minimum holding period (currently
found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends received
deduction on preferred stock held by non-affiliated
corporations (currently found in Section 243(a) of
the Code), then the Board of Directors or a Committee
thereof shall make such adjustment to the next
succeeding Dividend Payment Date as shall be
necessary to cause such Dividend Period to have the
minimum number of days constituting the minimum
holding period.
It is provided further, however, that the Board, in the
event of a change in law lengthening the minimum holding
period (currently found in Section 246(c) of the Code)
required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by
non-affiliated corporations (currently found in Section
243(a) of the Code), may adjust the period of the time
between Dividend Payment Dates so as, subject to clauses
(A) and (B) below of this subparagraph (b)(i), to adjust
uniformly the number of days (such number of days without
giving effect to such clauses (A) and (B) being
hereinafter referred to as "Dividend Period Days") in
Dividend Periods commencing after the date of such change
in law to equal or exceed the then current minimum
holding period, subject to the limitations that (A) the
number of Dividend Period Days shall not exceed by more
than nine days the length of such then current minimum
holding period and in no event shall exceed 98 days and
(B) dividends shall continue to be payable on the same
day of the week as the Initial Dividend Payment Date.
Upon any such change in the number of Dividend Period
Days as a result of a change in law, the Company shall
mail notice of such change by first class mail, postage
prepaid, to each Holder at such Holder's address as the
same appears on the stock books of the Company.
<PAGE>
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Trust Company no later
than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment
Date, an aggregate amount of funds available on the
next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such
Dividend Payment Date. All such moneys shall be
held in trust for the payment of such dividends by
the Trust Company for the benefit of the Holders
specified in subparagraph (b)(iii) of this Section
2.
(iii) Each dividend shall be paid to the Holders of the
New Preferred as they shall appear on the stock
books of the Company on the Business Day next
preceding the Dividend Payment Date therefor;
provided, however, that if such dividend shall have
been determined under the proviso in subparagraph
(c)(i) of this Section 2, such dividend shall be
paid to the Holders of record of the New Preferred
on such date, not exceeding 15 days preceding the
payment date thereof, as may be fixed by the
Board. Dividends in arrears for any past Dividend
Period may be declared and paid at any time,
without reference to any regular Dividend Payment
Date, to the Holders of record of the New Preferred
as they shall appear on the stock books of the
Company on such date, not exceeding 15 days
preceding the payment date thereof, as may be
fixed by the Board.
(c) (i) The dividend rate on shares of the New Preferred
during the period from and after the Date of
Original Issue to and including the day preceding
the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 4.80%. Commencing on
the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each
subsequent dividend period (each such period being
hereinafter referred to as a "Subsequent Dividend
Period", and such periods being hereinafter
referred to collectively as "Subsequent
Dividend Periods") which Subsequent Dividend
Periods each shall commence on a Dividend Payment
Date and shall end on and include the day preceding
the next Dividend Payment Date, shall be equal to
the rate per annum that results from implementation
of the Auction Procedures; provided, however, that
if a LIBOR Event shall have occurred prior to the
first day of such Subsequent Dividend Period, the
dividend rate for all such Subsequent Dividend
Periods shall be a rate per annum equal to 150% of
LIBOR (the rate per annum at which dividends are
payable on shares of the New Preferred for any
Dividend Period being herein referred to as the
"Applicable Rate").
<PAGE>
(ii) The dividends payable on shares of the New
Preferred for any Dividend Period shall be computed
by multiplying the Applicable Rate for such
Dividend Period by a fraction the numerator of
which shall be the number of days in such Dividend
Period and the denominator of which shall be 360
and applying the rate obtained against $100 per
share of the New Preferred.
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1
shall have the respective meanings specified in Part I hereof. As used
in this Part II, the following terms shall have the following meanings,
unless the context otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the
percentage determined as set forth below based on the prevailing
rating of the New Preferred in effect at the close of business on
the Business Day immediately preceding such Auction Date:
Prevailing Rating Percentage
AA/aa or Above . . . . . . 110%
A/a . . . . . . . . . . . 120%
BBB/baa . . . . . . . . . 130%
Below BBB/baa . . . . . . 175%
For purposes of this definition, the "prevailing rating" of the
New Preferred shall be (i) AA/aa or Above, if the New Preferred
has a rating of AA- or better by S&P or aa3 or better by Moody's
or the equivalent of either or both of such ratings by such
agencies or substitute rating agencies selected as provided
below, (ii) if not AA/aa or Above, then A/a if the New Preferred
has a rating of A- or better and lower than AA- by S&P or a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if
not AA/aa or Above or A/a, then BBB/baa if the New Preferred has
a rating of BBB- or better and lower than A- by S&P or baa3 or
better and lower than a3 by Moody's or the equivalent, and (iv)
if not AA/aa or Above, A/a or BBB/baa, then Below BBB/baa. The
Company shall take all reasonable action necessary to enable S&P
and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, or neither
S&P nor Moody's shall make such a rating available, Shearson
Lehman Brothers Inc. and The First Boston Corporation or their
successors shall select, as necessary, one or two nationally
recognized statistical rating organizations (as that term is used
in the rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended)
to act as substitute rating agencies and the Company shall take
all reasonable action to enable such rating agencies to provide
ratings for the New Preferred.
<PAGE>
(b) "Affiliate" shall mean any Person known to the Trust Company to
be controlled by, in control of or under common control with the
Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is
identified as such in such Bidder's Purchaser's Letter.
(d) "Auction Date" shall mean the Business Day next preceding the
first day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-
Dealer in this Part II, that is a member of, or a participant in,
the Securities Depository, has been selected by the Company and
has entered into a Broker-Dealer Agreement with the Trust Company
that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the
Trust Company and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this
Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Purchaser's
Letter and is listed as the beneficial owner of such shares of
the New Preferred in the records of the Trust Company.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Maximum Rate," on any Auction Date, shall mean the product of
the "AA" Composite Commercial Paper Rate times the "AA" Rate
Multiple.
(m) "Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(n) "Outstanding" shall mean, as of any date, shares of the New
Preferred theretofore issued by the Company except, without
duplication, (i) any shares of the New Preferred theretofore
cancelled or delivered to the Trust Company for cancellation or
redeemed by the Company or as to which a notice of redemption
shall have been given by the Company, (ii) any shares of the
New Preferred as to which the Company or any Affiliate thereof
(other than a Broker-Dealer Affiliate) shall be an Existing
Holder and (iii) any shares of the New Preferred represented by
any certificate in lieu of which a new certificate has been
executed and delivered by the Company.
<PAGE>
(o) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or
political subdivision thereof.
(p) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Purchaser's Letter and (ii)
who may be interested in acquiring shares of the New Preferred
(or, in the case of an Existing Holder, additional shares of the
New Preferred).
(q) "Purchaser's Letter" shall mean a letter addressed to the
Company, the Trust Company, a Broker-Dealer and an Agent Member
in which a Person agrees, among other things, to offer to
purchase, to purchase, to offer to sell and/or to sell shares of
the New Preferred as set forth in this Part II.
(r) "Securities Depository" shall mean the Depository Trust Company
and its successors and assigns or any other securities depository
selected by the Company which agrees to follow the procedures
required to be followed by such securities depository in
connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Trust
Company as specified by the Trust Company from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
(v) "Submitted Hold Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in
paragraph (4) of Section 4 of this Part II.
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
<PAGE>
2. Orders by Existing Holders and Potential Holders. (a) On or prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer
information as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding
Dividend Period;
(B) the number of Outstanding shares, if any, of the New
Preferred which such Existing Holder desires to
continue to hold if the Applicable Rate for the next
succeeding Dividend Period shall not be less than the
rate per annum specified by such Existing Holder;
and/or
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder offers to sell without regard to the
Applicable Rate for the next succeeding Dividend
Period; and
(ii) one or more Broker-Dealers, using lists of
Potential Holders, shall, in good faith for the
purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential
Holders, including Persons that are not Existing
Holders, on such lists to determine the number of
shares, if any, of the New Preferred that each such
Potential Holder offers to purchase if the
Applicable Rate for the next succeeding Dividend
Period shall be not less than the rate per annum
specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii)
of this paragraph (a) is hereinafter referred to as an "Order";
each Existing Holder and each Potential Holder placing an Order
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing
the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
the rate specified therein;
<PAGE>
(B) such number or a lesser number of Outstanding shares
of the New Preferred to be determined as set forth in
clause (iv) of paragraph (a) of Section 5 of this
Part II if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New
Preferred to be determined as set forth in clause
(iii) of paragraph (b) of Section 5 of this Part II
if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do
not exist.
(ii) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or lesser number of Outstanding shares of
the New Preferred as set forth in clause (iii) of
paragraph (b) of Section 5 of this Part II if
Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher than
the rate specified therein; or
(B) such number of a lesser number of outstanding shares
of the New Preferred as set forth in clause (v) of
paragraph (a) of Section 5 of this Part II if the
Applicable Rate determined on such Auction Date shall
be equal to the rate specified therein.
3. Submission of Orders by Broker-Dealers to Trust Company. (a) Each
Broker-Dealer shall submit in writing to the Trust Company prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred
that are the subject to such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of the New Preferred
subject to any Hold Order placed by such Existing
Holder;
<PAGE>
(B) the number of shares, if any, of the New Preferred
subject to any Bid placed by such Existing Holder and
the rate specified in such Bid; and
(C) the number of shares, if any, of the New Preferred
subject to any Sell Order placed by such Existing
Holder; and
(iv) to the extent such Bidder is a Potential Holder, the
rate and number of shares specified in such Potential
Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Trust Company shall round
such rate up to the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of
the New Preferred held by any Existing Holder are not submitted
to the Trust Company prior to the Submission deadline, the
Trust Company shall deem a Hold Order to have been submitted on
behalf of such Existing Holder covering the number of
Outstanding shares of the New Preferred held by such Existing
Holder and not subject to an Order submitted to the Trust
Company.
(d) If one or more Orders covering, in the aggregate, more than the
number of Outstanding shares of the New Preferred held by any
Existing Holder are submitted to the Trust Company by a Broker-
Dealer, such Orders shall be considered valid as follows and in
the following order of priority:
(i) all Hold Orders shall be considered valid, but only
up to and including in the aggregate the number of
Outstanding shares of the New Preferred held by
such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers
submitting Hold Orders, if the number of shares of
the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New
Preferred held by such Existing Holder, the number
of shares subject to each such Hold Order shall be
reduced pro rata to cover the number of Outstanding
shares of the New Preferred held by such Existing
Holder;
(ii) (A) any Bid shall be considered valid up to
and including the excess of the number of
Outstanding shares of the New Preferred held
by such Existing Holder over the number of
shares of the New Preferred subject to any
Hold Orders referred to in clause (i) above;
<PAGE>
(B) subject to subclause (A), if more than one
Bid with the same rate is submitted on
behalf of such Existing Holder and the
number of Outstanding shares of the New
Preferred subject to such Bids is greater
than such excess, such Bids shall be
considered valid up to and including the
amount of such excess, and, solely for
purposes of allocating compensation
among the Broker-Dealers submitting Bids
with the same rate, the number of shares
of the New Preferred subject to each bid
with the same rate shall be reduced pro
rata to cover the number of shares of
the New Preferred equal to such excess;
(C) subject to subclause (A), if more than one
Bid with different rates is submitted on
behalf of such Existing Holder, such Bids
shall be considered valid in the ascending
order of their respective rates up to and
including the amount of such excess; and
(D) in any such event, the number, if any, of
such Outstanding shares of the New Preferred
subject to Bids not valid under this clause
(ii) shall be treated as the subject of a
Bid by a Potential Holder at the rate herein
specified; and
(iii) all Sell Orders shall be considered valid up to and
including the excess of the number of Outstanding
shares of the New Preferred held by such Existing
Holder over the sum of the shares of the New
Preferred subject to valid Hold Orders referred to in
clause (i) above and valid Bids by such Existing
Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
and number of shares therein specified.
(f) Orders by Existing Holders and Potential Holders must specify
numbers of shares of the New Preferred in whole Units. Any Order
that specifies a number of shares of the New Preferred other than
in whole Units will not be accepted and will not be considered a
Submitted Order for purposes of an Auction.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on
each Auction Date, the Trust Company shall assemble all Orders
submitted or deemed submitted to it by the Broker-Dealers (such
Orders as submitted or deemed submitted by Broker-Dealers being
hereinafter referred to as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted
Orders") and shall determine:
(i) the excess of the total number of Outstanding shares
of the New Preferred over the number of Outstanding
shares of the New Preferred that are the subject of
Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
<PAGE>
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Potential
Holders specifying one or more rates equal to or
lower than the Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the
Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred
that are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than
because the number of shares of the New Preferred in
subclauses (B) and (C) above is zero because all of the
Outstanding shares of the New Preferred are the subject
of Submitted Hold Orders), such Submitted Bids in
subclause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(A) (I) each Submitted Bid from Existing Holders
specifying such lowest rate and (II) all other
Submitted Bids from Existing Holders specifying lower
rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New
Preferred that are the subject of such Submitted
Bids; and
(B) (I) each Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other
Submitted Bids from Potential Holders specifying
lower rates were accepted.
would result in such Existing Holders described in
subclause (A) above continuing to hold an aggregate
number of Outstanding shares of the New Preferred which,
when added to the number of Outstanding shares of the New
Preferred to be purchased by such Potential Holders
described in subclause (B) above, would equal not less
than the available New Preferred.
<PAGE>
(b) Promptly after the Trust Company has made the determinations
pursuant to paragraph (a) of this Section 4, the Trust Company
shall advise the Company of the "AA" Composite Commercial Paper
Rate and the Maximum Rate on the Auction Date and, based on such
determinations, the Applicable Rate for the next succeeding
Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to the Winning Bid Rate so
determined;
(ii) if Sufficient Clearing Bids do not exist (other than
because all of the Outstanding shares of the New
Preferred are the subject of Submitted Hold Orders),
that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate;
or
(iii) if all of the Outstanding shares of the New Preferred
are the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Existing Holders shall continue to hold the
shares of the New Preferred that are the subject of Submitted Hold
Orders, and based on the determinations made pursuant to paragraph (a)
of Section 4 of this Part II, the Submitted Bids and submitted Sell
Orders shall be accepted or rejected and the Trust Company shall take
such other actions as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell
Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall
be accepted and Existing Holders' Submitted Bids
specifying any rate that is higher than the Winning
Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New
Preferred that are the subject of such Submitted Sell
Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
accepted;
<PAGE>
(iv) Each Existing Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
rejected, thus entitling such Existing Holder to
continue to hold the shares of the New Preferred
that are the subject of such Submitted bid, unless
the number of Outstanding shares of the New
Preferred subject to all such Submitted Bids shall
be greater than the number of shares of New
Preferred ("remaining shares") equal to the excess
of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted
Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of
such Existing Holder shall be accepted in part, and
such Existing Holder shall be required to sell
shares of the New Preferred subject to such
Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding
shares of the New Preferred then held by such
Existing Holder subject to such Submitted Bid and
(B) the number of shares of the New Preferred
obtained by multiplying the number of
remaining shares by a fraction the numerator of
which shall be the number of Outstanding shares of
the New Preferred held by such Existing Holder
subject to such Submitted Bid and the denominator
of which shall be the aggregate number of
Outstanding shares of the New Preferred subject to
such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning
Bid Rate; and
(v) each Potential Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number
of shares of the New Preferred obtained by
multiplying the difference between the Available
New Preferred and the number of shares of the New
Preferred subject to Submitted Bids described in
clauses (ii), (iii) and (iv) of this paragraph (a)
by a fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred
subject to such Potential Holder's Submitted Bid
and the denominator of which shall be the aggregate
number of Outstanding shares of the New Preferred
subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to
the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of the New Preferred are
the subject of Submitted Hold Orders), subject to the provisions
of paragraph (d) of this Section 5, Submitted Orders shall be
accepted or rejected as follows in the following order of
priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be rejected, thus entitling such Existing Holders to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
<PAGE>
(ii) Potential Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any
rate that is higher than the Maximum Rate and the
Submitted Sell Order of each Existing Holder shall
be accepted, but in both cases only in an amount
equal to the difference between (A) the number of
Outstanding shares of the New Preferred then held
by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of
shares of the New Preferred obtained by multiplying
the difference between the Available New Preferred
and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in
clauses (i) and (ii) of this paragraph (b) by a
fraction the numerator of which shall be the number
of Outstanding shares of the New Preferred held by
such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and the denominator of
which shall be the aggregate number of Outstanding
shares of the New Preferred subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of the New Preferred are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or
(b) of this Section 5, any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or
required to purchase shares of the New Preferred other than in
whole Units on any Auction Date, the Trust Company shall, in
such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be
purchased or sold by any Existing Holder or Potential Holder on
such Auction Date so that the number of Units purchased or sold
by each Existing Holder or Potential Holder on such Auction
Date shall be whole Units of the New Preferred.
(e) If, as a result of the procedures described in paragraph (a) of
this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole Unit on any Auction
Date, the Trust Company shall, in such manner as, in its sole
discretion, it shall determine, allocate Units for purchase
among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential
Holder, even if such allocation results in one or more of such
Potential Holders not purchasing Units of the New Preferred on
such Auction Date.
<PAGE>
(f) Based on the results of each Auction, the Trust Company shall
determine the aggregate number of shares of the New Preferred
to be purchased and the aggregate number of shares of the New
Preferred to be sold by Potential Holders and Existing Holders
on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate number of shares of the purchased and such
aggregate number of shares to be sold differ, determine to
which other Broker-Dealer or Broker-Dealers acting for one or
more purchasers such Broker-Dealer shall deliver, or from which
other Broker-Dealer or Broker-Dealers acting for one or more
sellers such Broker-Dealer shall receive, as the case may be,
shares of the New Preferred.
6. Miscellaneous. (a) The Board may interpret the provisions of this Part
II to resolve any inconsistency or ambiguity which may arise or be
revealed in connection with the Auction Procedures provided for herein,
and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board may, in appropriate circumstances, authorize the
filing of an instrument to correct or resolve such inaccurate
provision.
(b) As long as no LIBOR Event shall have occurred, an Existing
Holder (i) may sell, transfer or otherwise dispose of shares of
the New Preferred only pursuant to a Bid or Sell Order in
accordance with the procedures described in this Part II or to
go through a Broker-Dealer or to a Person that has delivered a
signed copy of a Purchaser's Letter to the Trust Company,
provided that in the case of all transfers other than pursuant
to Auctions, such Existing Holder, its Broker-Dealer or its
Agent Member advises the Trust Company of such transfer, and
(ii) shall have the ownership of the shares of the New
Preferred held by it maintained in book entry form by the
Securities Depository for the account of its Agent Member,
which in turn will maintain records of such Existing Holder's
beneficial ownership. Shares of the New Preferred may be sold
or transferred only in whole Units.
(c) Neither the Company nor any affiliate thereof may submit an
Order in any Auction except as set forth in the next sentence.
Any Broker-Dealer that is an affiliate of the Company may
submit Orders in Auctions but only if such Orders are not for
its own account, except that if such affiliated Broker-Dealer
holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such
shares.
(d) Commencing with the first day of the first Dividend Period for
which the Applicable Rate is determined by the formula of 150% of
LIBOR, as a result of an occurrence of a LIBOR Event, the Company
or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Trust Company set
forth herein.
<PAGE>
Dated: June 17, 1987 VIRGINIA ELECTRIC AND POWER COMPANY
By
Linwood R. Robertson
Vice President, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company
(hereinaf ter referred to as the Company).
2. The Restated Articles of Incorporation, as amended (the Articles) of
Virginia Electric and Power Company (the Company) hereby are amended
to create a series of the Company's Preferred Stock which shall be
designated the October 1988 Series Money Market Cumulative
Preferred(TM) Stock (hereinafter sometimes referred to as the New
Preferred). In accordance with the provisions of the Articles, the
distinctive designation, preferences, limitations and relative rights
of the New Preferred are determined and fixed as follows:
(a) The distinctive serial designation of the New Preferred shall be
"October 1988 Series Money Market Cumulative Preferred(TM)
Stock." Shares of the New Preferred may only be purchased or
transferred in whole units of 1,000 shares each (Units) or
integral multiples thereof and the shares included in the Units
may not be separately purchased or transferred.
(b) The dividend rate on the shares of the New Preferred for the
Initial Dividend Period (such term and all other capitalized
terms used herein being used, unless otherwise expressly provided
herein, as defined in Parts I and II of these Articles of
Amendment) shall be 6.50% per annum. For each Dividend Period
thereafter, the dividend rate will be determined according to the
procedures set forth in said Parts I and II.
(c) The liquidation preference of the shares of the New Preferred
shall be $100 per share, payable in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the
Company.
(d) (i) The shares of the New Preferred shall be redeemable
on the second Business Day preceding any Dividend
Payment Date at the option of the Company, as a
whole or in part, in whole Units only at a
redemption price of $100 per share (without
premium), plus an amount equal to "dividends
accrued or in arrears" (such phrase being used in
these Articles of Amendment as defined in Section 3
of the Division A of the Articles).
<PAGE>
If fewer than all of the outstanding shares of the
New Preferred are to be redeemed pursuant to this
subparagraph (d)(i), the number of shares to be redeemed
shall be determined by the Board of Directors of the
Company and such shares shall be redeemed in whole Units
pro rata from the Holders in proportion to the number of
such shares held by such Holders. If such pro rata
redemption would result in the redemption of fractional
Units, the Units to be redeemed shall be selected from
among the outstanding Units of the New Preferred in any
manner determined by the Auction Agent to be equitable,
such that the redemption is in whole Units only.
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Auction Agent, no later
than 12:00 Noon, New York City time, on the
Business Day next preceding any redemption date,
the redemption price in funds available in The City
of New York, New York, to be paid on such
redemption date, plus an amount equal to dividends
accrued or in arrears to the date fixed for
redemption of any share of the New Preferred after
notice of a redemption is given.
(e) The shares of the New Preferred shall not be entitled to any
right of conversion or any preemptive right to acquire any other
security.
(f) The shares of the New Preferred shall not be entitled to a
sinking fund.
(g) Except as otherwise provided in these Articles of Amendment,
the shares of the New Preferred shall have all the
designations, preferences, limitations and relative rights and
voting power, and restrictions or qualifications thereof,
expressed in the Articles as presently in effect. The shares
of the New Preferred shall not have any special rights other
than those specified herein and in the Articles as presently in
effect.
(h) There are hereby classified as the October 1988 Series Money
Market Cumulative Preferred Stock, 750,000 shares of the
Preferred Stock, in 750 Units, with each Unit consisting of
1,000 shares of the New Preferred; not more than 750,000 shares
of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, such number of shares may be, but
shall not be required to be, decreased (in whole Units) by
filing articles of amendment to that effect. In the absence of
such filing, retired shares of the New Preferred shall become
authorized but unissued shares of the Company's class of
Preferred Stock, undesignated as to series.
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise
transferred by the Company as shares of the New Preferred.
<PAGE>
3. The shares of the New Preferred shall have the further relative rights,
preferences and limitations set forth in Sections 1 through 6 of
Division A of Article III of the Articles, and the rates, dates, terms
and other conditions upon which distributions shall be payable thereon
shall be as set forth in Parts I and II of these Articles of Amendment.
4. The designation of the New Preferred, as herein provided, has been duly
approved, and these Articles of Amendment have been duly adopted, by an
Executive Committee of the Board of Directors of the Company, within
limits specifically prescribed by the Board of Directors of the
Company. No shareholder action was taken, or was required to be taken,
in connection with the adoption of these Articles of Amendment.
PART I
1. Definitions. As used in Parts I and II hereof, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
(a) "'AA' Composite Commercial Paper Rate", on any date, shall mean
(i) the interest equivalent of the 60-day rate on commercial
paper placed on behalf of issuers whose corporate bonds are
rated "AA" by S&P or the equivalent of such rating by S&P or
another rating agency, as made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
immediately preceding Business Day; or (ii) in the event that
the Federal Reserve Bank of New York does not make available
such a rate, then the arithmetic average of the interest
equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or
otherwise by the Commercial Paper Dealers to the Auction Agent
for the close of business on the immediately preceding Business
Day. If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on
the basis of quotations furnished by the remaining Commercial
Paper Dealers and any Substitute Commercial Paper Dealer
selected by the Company to provide such rate not being supplied
by any Commercial Paper Dealer or, if the Company does not
select any such Substitute Commercial Paper Dealer, by the
remaining Commercial Paper Dealers; provided, however, that if
the Board shall make the adjustment referred to in the second
sentence of paragraph (b)(i) of Section 2 of this Part I, then
(i) if the Dividend Period Days after such adjustment shall be
70 or more days but fewer than 85 days, such rate shall be
based on the arithmetic average of the interest equivalent of
the 60-day and 90-day rates on such commercial paper, or (ii)
if the number of Dividend Period Days after such adjustment
shall be 85 or more days but 98 or fewer days, such rate shall
be based on the interest equivalent of the 90-day rate on such
commercial paper. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis (a
"discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001) of 1%) of (A) the discount rate
divided by (B) the difference between (x) 1.00 and (y) a
fraction, the numerator of which shall be the product of the
discount rate times the number of days in which such commercial
paper matures and the denominator of which shall be 360.
<PAGE>
(b) "Applicable Rate" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Agent" shall mean the bank or trust company or other
entity appointed as such by a resolution of the Board.
(e) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(f) "Board" shall mean the Board of Directors of the Company or any
duly authorized committee thereof.
(g) "Business Day" shall mean a day on which the New York Stock
Exchange is open for trading and banks or trust companies in the
City of New York, New York, are not authorized by law to close.
(h) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time
to time.
(i) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co.,
Shearson Lehman Commercial Paper Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated or, in lieu of any thereof,
their respective affiliates or successors, if any such entity is
a commercial paper dealer.
(j) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(k) "Dividend Payment Date" shall mean a date of payment of Dividends
on the New Preferred.
(l) "Dividend Period" and "Dividend Periods" shall have the
respective meanings specified in subparagraph (c)(i) of Section 2
of this Part I.
(m) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(n) "Holder" shall mean the holder(s) of shares of the New Preferred
as the same appear(s) on the stock books of the Company.
(o) "Initial Dividend Payment Date" shall mean the first Dividend
Payment Date with respect to the New Preferred.
(p) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
<PAGE>
(q) "LIBOR" shall mean for any Dividend Period the arithmetic
average (rounded to the next higher 1/16 of 1%), computed by
the Company, of the respective rates per annum quoted by each
of the Reference Banks at which United States dollar deposits
for a two-month period in the amount of U.S. $10,000,000 are
offered by such Reference Banks to leading banks in the London
interbank market at approximately 11:00 A.M. (London time) on
the first day of such Dividend Period, or if such day is not a
day on which dealings in United States dollars are transacted
in the London interbank market, then on the next preceding day
on which such dealings are transacted in such market. If any
Reference Bank does not quote a rate required to determine
LIBOR, LIBOR shall be determined on the basis of the quotation
or quotations furnished by the remaining Reference Banks and
any Substitute Reference Banks selected by the Company to
provide such quotations not being supplied by any Reference
Bank or, if the Company does not select any such Substitute
Reference Bank, by the remaining Reference Banks. If the Board
shall make the adjustment referred to in the second sentence of
paragraph (b)(i) of Section 2 of this Part I, then (i) if the
Dividend Period Days after such adjustment shall be 70 or more
days but fewer than 85 days, LIBOR shall be based on the
arithmetic average (rounded to the next higher 1/16 of 1%) of
the rates per annum quoted for such United States dollar
deposits for two-and three-month periods, or (ii) if the
Dividend Period Days after such adjustment shall be 85 or more
days but 98 or fewer days, such rate shall be based on the
rates per annum quoted for such United States dollar deposits
for a three-month period.
(r) "LIBOR Event" shall mean the first failure by the Company (A)
to declare or to pay to the Auction Agent, not later than 12:00
Noon, New York City time, on the Business Day next preceding
any Dividend Payment Date, in funds immediately available on
such Dividend Payment Date in New York, New York, the full
amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to
the Auction Agent, no later than 12:00 Noon, New York City time
on the Business Day next preceding any redemption date, the
redemption price in funds available in New York, New York to be
paid on such redemption date, plus an amount equal to accrued
and unpaid dividends at the Applicable Rate thereon to such
redemption date, of any share of the New Preferred after notice
of a redemption is given.
(s) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(t) "New Preferred" shall mean the series of the Preferred Stock,
$100 liquidation value, of the Company designated as its "October
1988 Series Money Market Cumulative Preferred(TM) Stock".
(u) "Reference Bank" shall mean the principal London offices of each
of Bankers Trust Company, Bank of Tokyo, Ltd., Barclays Bank PLC
and National Westminster Bank PLC, or their respective
successors.
<PAGE>
(v) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(w) "Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall have the respective meanings specified in subparagraph
(c)(i) of Section 2 of this Part I.
(x) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their
respective affiliates or successors, if such dealer or its
affiliate or successor is a commercial paper dealer; provided
that neither such dealer nor any of its affiliates or successors
shall be a Commercial Paper Dealer.
(y) "Substitute Reference Bank" shall mean the principal London
office of each of The Chase Manhattan Bank (National
Association), Deutsche Bank Aktiengesellschaft, Morgan Guaranty
Trust Company of New York or Swiss Bank Corporation, or their
respective successors, or, if none of such Substitute Reference
Banks are engaged in dealings in United States dollars in the
London interbank market, then a bank or banks, selected by the
Company, engaged in dealings in United States dollars in the
London interbank market.
2. Dividend Methodology. (a) The Holders shall be entitled to receive,
when, as and if declared by the Board, out of funds legally available
therefor, cumulative cash dividends at the Applicable Rate, in
accordance with the method prescribed by the Board as set forth in
subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
(b) (i) Dividends on shares of the New Preferred, at the
Applicable Rate, shall accrue from the Date of
Original Issue and shall be payable commencing on
such Dividend Payment Dates as shall be specified
for the New Preferred by resolutions duly adopted
by the Board in accordance with the method
prescribed by the Board, which Dividend Payment
Dates shall be every 49th day after the Initial
Dividend Payment Date, except that:
(1) if the day that otherwise would be the Dividend
Payment Date is not a Business Day, or the day that
otherwise would be the Dividend Payment Date is
immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next
succeeding Business Day that is immediately succeeded
by a Business Day, provided that
(2) if the Securities Depository shall make available to
its participants and members, in funds immediately
available in the City of New York on a Dividend
Payment Date, the amount due as dividends on such
Dividend Payment Date (and the Securities Depository
shall have so advised the Auction Agent), and if the
day that otherwise would be such Dividend Payment
Date is not a Business Day, then the Dividend Payment
Date shall be the next succeeding Business Day,
provided that
<PAGE>
(3) if the determination of the otherwise applicable
Dividend Payment Date in the manner herein above
provided would result in the Dividend Period
commencing on said otherwise applicable Dividend
Payment Date having less than the number of days
constituting the minimum holding period (currently
found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends received
deduction on preferred stock held by non-affiliated
corporations (currently found in Section 243(a) of
the Code), then the Board of Directors or a Committee
thereof shall make such adjustment to the next
succeeding Dividend Payment Date as shall be
necessary to cause such Dividend Period to have the
minimum number of days constituting the minimum
holding period.
It is provided further, however, that the Board, in the
event of a change in law lengthening the minimum holding
period (currently found in Section 246(c) of the Code)
required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by
non-affiliated corporations (currently found in Section
243(a) of the Code), may adjust the period of the time
between Dividend Payment Dates so as, subject to clauses
(A) and (B) below of this subparagraph (b)(i), to adjust
uniformly the number of days (such number of days without
giving effect to such clauses (A) and (B) being
hereinafter referred to as "Dividend Period Days") in
Dividend Periods commencing after the date of such change
in law to equal or exceed the then current minimum
holding period, subject to the limitations that (A) the
number of Dividend Period Days shall not exceed by more
than nine days the length of such then current minimum
holding period and in no event shall exceed 98 days and
(B) dividends shall continue to be payable on the same
day of the week as the Initial Dividend Payment Date.
Upon any such change in the number of Dividend Period
Days as a result of a change in law, the Company shall
mail notice of such change by first class mail, postage
prepaid, to each Holder at such Holder's address as the
same appears on the stock books of the Company.
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Auction Agent no later
than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment
Date, an aggregate amount of funds available on the
next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such
Dividend Payment Date. All such moneys shall be
held in trust for the payment of such dividends by
the Auction Agent for the benefit of the Holders
specified in subparagraph (b)(iii) of this Section
2.
<PAGE>
(iii) Each dividend shall be paid to the Holders of the
New Preferred as they shall appear on the stock
books of the Company on the Business Day next
preceding the Dividend Payment Date therefor;
provided, however, that if such dividend shall have
been determined under the proviso in subparagraph
(c)(i) of this Section 2, such dividend shall be
paid to the Holders of record of the New Preferred
on such date, not exceeding 15 days preceding the
payment date thereof, as may be fixed by the Board.
Dividends in arrears for any past Dividend Period may
be declared and paid at any time, without reference
to any regular Dividend Payment Date, to the Holders
of record of the New Preferred as they shall appear
on the stock books of the Company on such date, not
exceeding 15 days preceding the payment date thereof,
as may be fixed by the Board.
(c) (i) The dividend rate on shares of the New Preferred
during the period from and after the Date of
Original Issue to and including the day preceding
the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 6.50%. Commencing on
the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each
subsequent dividend period (each such period being
hereinafter referred to as a "Subsequent Dividend
Period" and such periods being hereinafter referred
to collectively as "Subsequent Dividend Periods")
which Subsequent Dividend Periods each shall
commence on a Dividend Payment Date and shall end
on and include the day preceding the next
Dividend Payment Date, shall be equal to the rate
per annum that results from implementation of the
Auction Procedures; provided, however, that if a
LIBOR Event shall have occurred prior to the first
day of such Subsequent Dividend Period, the
dividend rate for all such Subsequent Dividend
Periods shall be a rate per annum equal to 200% of
LIBOR (the rate per annum at which dividends are
payable on shares of the New Preferred for any
Dividend Period being herein referred to as the
"Applicable Rate").
(ii) The dividends payable on shares of the New
Preferred for any Dividend Period shall be computed
by multiplying the Applicable Rate for such
Dividend Period by a fraction, the numerator of
which shall be the number of days in such Dividend
Period and the denominator of which shall be 360
and applying the rate obtained against $100 per
share of the New Preferred.
<PAGE>
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1
shall have the respective meanings specified in Part I hereof. As used
in this Part II, the following terms shall have the following meanings,
unless the context otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the
percentage determined as set forth below based on the prevailing
rating of the New Preferred in effect at the close of business on
the Business Day immediately preceding such Auction Date:
Prevailing Rating Percentage
AA/aa or Above . . . . . . 110%
A/a . . . . . . . . . . . 125%
BBB/baa . . . . . . . . . 150%
Below BBB/baa . . . . . . 200%
For purposes of this definition, the "prevailing rating" of the
New Preferred shall be (i) AA/aa or Above, if the New Preferred
has a rating of AA- or better by S&P or aa3 or better by Moody's
or the equivalent of either or both of such ratings by such
agencies or substitute rating agencies selected as provided
below, (ii) if not AA/aa or Above, then A/a if the New Preferred
has a rating of A- or better and lower than AA- by S&P or a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if
not AA/aa or Above or A/a, then BBB/baa if the New Preferred has
a rating of BBB- or better and lower than A- by S&P or baa3 or
better and lower than a3 by Moody's or the equivalent, and (iv)
if not AA/aa or Above, A/a or BBB/baa, then Below BBB/baa. The
Company shall take all reasonable action necessary to enable S&P
and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, or neither
S&P nor Moody's shall make such a rating available, Shearson
Lehman Hutton Inc. and The First Boston Corporation or their
respective successors shall select, as necessary, one or two
nationally recognized statistical rating organizations (as that
term is used in the rules and regulations of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended) to act as substitute rating agencies and the Company
shall take all reasonable action to enable such rating agencies
to provide ratings for the New Preferred.
(b) "Affiliate" shall mean any Person known to the Auction Agent to
be controlled by, in control of or under common control with the
Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is
identified as such in such Bidder's Master Purchaser's Letter.
<PAGE>
(d) "Auction Date" shall mean the Business Day next preceding the
first day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-
Dealer in this Part II, that is a member of, or a participant in,
the Securities Depository, has been selected by the Company and
has entered into a Broker-Dealer Agreement with the Auction Agent
that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the
Auction Agent and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this
Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Master
Purchaser's Letter and is listed as the beneficial owner of such
shares of the New Preferred in the records of the Auction Agent.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Master Purchaser's Letter" shall mean a letter addressed to the
Company, the Auction Agent, a Broker-Dealer and an Agent Member
in which a Person agrees, among other things, to offer to
purchase, to purchase, to offer to sell and/or to sell shares of
the New Preferred as set forth in this Part II.
(m) "Maximum Rate," on any Auction Date, shall mean the product of
the "AA" Composite Commercial Paper Rate times the "AA" Rate
Multiple.
(n) "Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(o) "Outstanding" shall mean, as of any date, shares of the New
Preferred theretofore issued by the Company except, without
duplication, (i) any shares of the New Preferred theretofore
cancelled or delivered to the Auction Agent for cancellation or
redeemed by the Company or as to which a notice of redemption
shall have been given by the Company, (ii) any shares of the
New Preferred as to which the Company or any Affiliate thereof
(other than a Broker-Dealer Affiliate) shall be an Existing
Holder and (iii) any shares of the New Preferred represented by
any certificate in lieu of which a new certificate has been
executed and delivered by the Company.
<PAGE>
(p) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or
political subdivision thereof.
(q) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Master Purchaser's Letter
and (ii) who may be interested in acquiring shares of the New
Preferred (or, in the case of an Existing Holder, additional
shares of the New Preferred).
(r) "Securities Depository" shall mean the Depository Trust Company
and its successors and assigns or any other securities depository
selected by the Company which agrees to follow the procedures
required to be followed by such securities depository in
connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Auction
Agent as specified by the Auction Agent from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
(v) "Submitted Hold Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders. (a) On or prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer
information as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding
Dividend Period;
<PAGE>
(B) the number of Outstanding shares, if any, of the New
Preferred that such Existing Holder desires to
continue to hold if the Applicable Rate for the next
succeeding Dividend Period shall not be less than the
rate per annum specified by such Existing Holder;
and/or
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder offers to sell without regard to the
Applicable Rate for the next succeeding Dividend
Period; and
(ii) one or more Broker-Dealers, using lists of
Potential Holders, shall, in good faith for the
purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential
Holders, including Persons that are not Existing
Holders, on such lists to determine the number of
shares, if any, of the New Preferred that each such
Potential Holder offers to purchase if the
Applicable Rate for the next succeeding Dividend
Period shall not be less than the rate per annum
specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii)
of this paragraph (a) is hereinafter referred to as an "Order";
each Existing Holder and each Potential Holder placing an Order
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing
the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
the rate specified therein;
(B) such number or a lesser number of Outstanding shares
of the New Preferred to be determined as set forth in
clause (iv) of paragraph (a) of Section 5 of this
Part II if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New
Preferred to be determined as set forth in clause
(iii) of paragraph (b) of Section 5 of this Part II
if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do
not exist.
<PAGE>
(ii) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or a lesser number of outstanding shares
of the New Preferred as set forth in clause (iii) of
paragraph (b) of Section 5 of this Part II if
Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher than
the rate specified therein; or
(B) such number or a lesser number of outstanding shares
of the New Preferred as set forth in clause (v) of
paragraph (a) of Section 5 of this Part II if the
Applicable Rate determined on such Auction Date shall
be equal to the rate specified therein.
3. Submission of Orders by Broker-Dealers to Auction Agent. (a) Each
Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred
that are the subject to such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of the New Preferred
subject to any Hold Order placed by such Existing
Holder;
(B) the number of shares, if any, of the New Preferred
subject to any Bid placed by such Existing Holder and
the rate specified in such Bid; and
(C) the number of shares, if any, of the New Preferred
subject to any Sell Order placed by such Existing
Holder; and
(iv) to the extent such Bidder is a Potential Holder, the
rate and number of shares specified in such Potential
Holder's Bid.
<PAGE>
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of
the New Preferred held by any Existing Holder are not submitted
to the Auction Agent prior to the Submission deadline, the
Auction Agent shall deem a Hold Order to have been submitted on
behalf of such Existing Holder covering the number of Outstanding
shares of the New Preferred held by such Existing Holder not
subject to an Order submitted to the Auction Agent.
(d) If one or more Orders covering in the aggregate more than the
number of Outstanding shares of the New Preferred held by any
Existing Holder are submitted to the Auction Agent by a Broker-
Dealer, such Orders shall be considered valid as follows and in
the following order of priority:
(i) all Hold Orders shall be considered valid, but only
up to and including in the aggregate the number of
Outstanding shares of the New Preferred held by
such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers
submitting Hold Orders, if the number of shares of
the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New
Preferred held by such Existing Holder, the number
of shares subject to each such Hold Order shall be
reduced pro rata to cover the number of Outstanding
shares of the New Preferred held by such Existing
Holder;
(ii) (A) any Bid shall be considered valid up to
and including the excess of the number of
Outstanding shares of the New Preferred held
by such Existing Holder over the number of
shares of the New Preferred subject to any
Hold Orders referred to in clause (i) above;
(B) subject to subclause (A), if more than one Bid with
the same rate is submitted on behalf of such Existing
Holder and the number of Outstanding shares of the
New Preferred subject to such Bids is greater than
such excess, such Bids shall be considered valid up
to and including the amount of such excess, and,
solely for purposes of allocating compensation among
the Broker-Dealers submitting Bids with the same
rate, the number of shares of the New Preferred
subject to each Bid with the same rate shall be
reduced pro rata to cover the number of shares of the
New Preferred equal to such excess;
<PAGE>
(C) subject to subclause (A), if more than one Bid with
different rates is submitted on behalf of such
Existing Holder, such Bids shall be considered valid
in the ascending order of their respective rates up
to and including the amount of such excess; and
(D) in any such event, the number, if any, of such
Outstanding shares of the New Preferred subject to
Bids not valid under this clause (ii) shall be
treated as the subject of a Bid by a Potential Holder
at the rate herein specified; and
(iii) all Sell Orders shall be considered valid up to and
including the excess of the number of Outstanding
shares of the New Preferred held by such Existing
Holder over the sum of the shares of the New
Preferred subject to valid Hold Orders referred to in
clause (i) above and valid Bids by such Existing
Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
and number of shares therein specified.
(f) Orders by Existing Holders and Potential Holders must specify
numbers of shares of the New Preferred in whole Units. Any Order
that specifies a number of shares of the New Preferred other than
in whole Units will not be accepted and will not be considered a
Submitted Order for purposes of an Auction.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on
each Auction Date, the Auction Agent shall assemble all Orders
submitted or deemed submitted to it by the Broker-Dealers (such
Orders submitted or deemed submitted by Broker-Dealers being
hereinafter referred to as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted
Orders") and shall determine:
(i) the excess of the total number of Outstanding shares
of the New Preferred over the number of Outstanding
shares of the New Preferred that are the subject of
Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Potential
Holders specifying one or more rates equal to or
lower than the Maximum Rate;
<PAGE>
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the
Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred
that are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than
because the number of shares of the New Preferred in
subclauses (B) and (C) above is zero because all of the
Outstanding shares of the New Preferred are the subject
of Submitted Hold Orders), such Submitted Bids in
subclause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(A) (I) each Submitted Bid from Existing Holders
specifying such lowest rate and (II) all other
Submitted Bids from Existing Holders specifying lower
rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New
Preferred that are the subject of such Submitted
Bids; and
(B) (I) each Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other
Submitted Bids from Potential Holders specifying
lower rates were accepted,
would result in such Existing Holders described in
subclause (A) above continuing to hold an aggregate
number of Outstanding shares of the New Preferred which,
when added to the number of Outstanding shares of the New
Preferred to be purchased by such Potential Holders
described in subclause (B) above, would equal not less
than the Available New Preferred.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 4, the Auction Agent
shall advise the Company of the "AA" Composite Commercial Paper
Rate and the Maximum Rate on the Auction Date and, based on such
determinations, the Applicable Rate for the next succeeding
Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to the Winning Bid Rate so
determined;
(ii) if Sufficient Clearing Bids do not exist (other than
because all of the Outstanding shares of the New
Preferred are the subject of Submitted Hold Orders),
that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate;
or
<PAGE>
(iii) if all of the Outstanding shares of the New Preferred
are the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Existing Holders shall continue to hold the
shares of the New Preferred that are the subject of Submitted Hold
Orders, and based on the determinations made pursuant to paragraph (a)
of Section 4 of this Part II, the Submitted Bids and submitted Sell
Orders shall be accepted or rejected and the Auction Agent shall take
such other actions as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell
Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall
be accepted and Existing Holders' Submitted Bids
specifying any rate that is higher than the Winning
Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New
Preferred that are the subject of such Submitted Sell
Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
accepted;
(iv) Each Existing Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
rejected, thus entitling such Existing Holder to
continue to hold the shares of the New Preferred
that are the subject of such Submitted bid, unless
the number of Outstanding shares of the New
Preferred subject to all such Submitted Bids shall
be greater than the number of shares of New
Preferred ("remaining shares") equal to the excess
of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted
Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of
such Existing Holder shall be accepted in part, and
such Existing Holder shall be required to sell
shares of the New Preferred subject to such
Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding
shares of the New Preferred then held by such
Existing Holder subject to such Submitted Bid and
(B) the number of shares of the New Preferred
obtained by multiplying the number of remaining
shares by a fraction the numerator of which
shall be the number of Outstanding shares of the
New Preferred held by such Existing Holder subject
to such Submitted Bid and the denominator of which
shall be the aggregate number of Outstanding shares
of the New Preferred subject to such Submitted Bids
made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate; and
<PAGE>
(v) each Potential Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number
of shares of the New Preferred obtained by
multiplying the difference between the Available
New Preferred and the number of shares of the New
Preferred subject to Submitted Bids described in
clauses (ii), (iii) and (iv) of this paragraph (a)
by a fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred
subject to such Potential Holder's Submitted Bid
and the denominator of which shall be the aggregate
number of Outstanding shares of the New Preferred
subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to
the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of the New Preferred are
the subject of Submitted Hold Orders), subject to the provisions
of paragraph (d) of this Section 5, Submitted Orders shall be
accepted or rejected as follows in the following order of
priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be rejected, thus entitling such Existing Holders to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any
rate that is higher than the Maximum Rate and the
Submitted Sell Order of each Existing Holder shall
be accepted, but in both cases only in an amount
equal to the difference between (A) the number of
Outstanding shares of the New Preferred then held
by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of
shares of the New Preferred obtained by multiplying
the difference between the Available New Preferred
and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in
clauses (i) and (ii) of this paragraph (b) by a
fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred
held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate number
of Outstanding shares of the New Preferred subject
to all such Submitted Bids and Submitted Sell
Orders.
<PAGE>
(c) If all of the Outstanding shares of the New Preferred are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or
(b) of this Section 5, any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or
required to purchase shares of the New Preferred other than in
whole Units on any Auction Date, the Auction Agent shall, in
such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be
purchased or sold by any Existing Holder or Potential Holder on
such Auction Date so that the number of Units purchased or sold
by each Existing Holder or Potential Holder on such Auction
Date shall be whole Units of the New Preferred.
(e) If, as a result of the procedures described in paragraph (a) of
this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole Unit on any Auction
Date, the Auction Agent shall, in such manner as, in its sole
discretion, it shall determine, allocate Units for purchase
among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential
Holder, even if such allocation results in one or more of such
Potential Holders not purchasing Units of the New Preferred on
such Auction Date.
(f) Based on the results of each Auction, the Auction Agent shall
determine the aggregate number of shares of the New Preferred
to be purchased and the aggregate number of shares of the New
Preferred to be sold by Potential Holders and Existing Holders
on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate number of shares of the purchased and such
aggregate number of shares to be sold differ, determine to
which other Broker-Dealer or Broker-Dealers acting for one or
more purchasers such Broker-Dealer shall deliver, or from which
other Broker-Dealer or Broker-Dealers acting for one or more
sellers such Broker-Dealer shall receive, as the case may be,
shares of the New Preferred.
<PAGE>
6. Miscellaneous. (a) The Board may interpret the provisions of this Part
II to resolve any inconsistency or ambiguity that may arise or be
revealed in connection with the Auction Procedures provided for herein,
and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board may, in appropriate circumstances, authorize the
filing of an instrument to correct or resolve such inaccurate
provision.
(b) An Existing Holder (i) may sell, transfer or otherwise dispose
of shares of the New Preferred only pursuant to a Bid or Sell
Order in accordance with the procedures described in this
Part II or to go through a Broker-Dealer or to a Person that
has delivered a signed copy of a Master Purchaser's Letter to
the Auction Agent, provided that in the case of all transfers
other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Agent Member advises the Auction Agent of
such transfer, and (ii) shall have the ownership of the shares
of the New Preferred held by it maintained in book entry form
by the Securities Depository for the account of its Agent
Member, which in turn will maintain records of such Existing
Holder's beneficial ownership. Shares of the New Preferred
may be sold or transferred only in whole Units.
(c) Neither the Company nor any affiliate thereof may submit an
Order in any Auction except as set forth in the next sentence.
Any Broker-Dealer that is an affiliate of the Company may
submit Orders in Auctions but only if such Orders are not for
its own account, except that if such affiliated Broker-Dealer
holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such
shares.
(d) Commencing with the first day of the first Dividend Period for
which the Applicable Rate is determined by the formula of 200% of
LIBOR, as a result of an occurrence of a LIBOR Event, the Company
or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Auction Agent set
forth herein.
Dated: October 6, 1988 VIRGINIA ELECTRIC AND POWER COMPANY
By
Linwood R. Robertson
Vice President, Treasurer and
Corporate Secretary
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company
(hereinafter referred to as the Company).
2. The Restated Articles of Incorporation, as amended (the Articles) of
Virginia Electric and Power Company (the Company) hereby are amended
to create a series of the Company's Preferred Stock which shall be
designated the June 1989 Series Money Market Cumulative Preferred(TM)
Stock (hereinafter sometimes referred to as the New Preferred). In
accordance with the provisions of the Articles, the distinctive
designation, preferences, limitations and relative rights of the New
Preferred are determined and fixed as follows:
(a) The distinctive serial designation of the New Preferred shall be
"June 1989 Series Money Market Cumulative Preferred(TM) Stock."
Shares of the New Preferred may only be purchased or transferred
in whole units of 1,000 shares each (Units) or integral multiples
thereof and the shares included in the Units may not be
separately purchased or transferred.
(b) The dividend rate on the shares of the New Preferred for the
Initial Dividend Period (such term and all other capitalized
terms used herein being used, unless otherwise expressly provided
herein, as defined in Parts I and II of these Articles of
Amendment) shall be 7.20% per annum. For each Dividend Period
thereafter, the dividend rate will be determined according to the
procedures set forth in said Parts I and II.
(c) The liquidation preference of the shares of the New Preferred
shall be $100 per share, payable in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the
Company.
(d) (i) The shares of the New Preferred shall be redeemable
on the second Business Day preceding any Dividend
Payment Date at the option of the Company, as a
whole or in part, in whole Units only at a
redemption price of $100 per share (without
premium), plus an amount equal to "dividends
accrued or in arrears" (such phrase being used in
these Articles of Amendment as defined in Section 3
of the Division A of the Articles).
If fewer than all of the outstanding shares of the New
Preferred are to be redeemed pursuant to this
subparagraph (d)(i), the number of shares to be redeemed
shall be determined by the Board of Directors of the
Company and such shares shall be redeemed in whole Units
pro rata from the Holders in proportion to the number of
such shares held by such Holders. If such pro rata
redemption would result in the redemption of fractional
Units, the Units to be redeemed shall be selected from
among the outstanding Units of the New Preferred in any
manner determined by the Auction Agent to be equitable,
such that the redemption is in whole Units only.
<PAGE>
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Auction Agent, no later
than 12:00 Noon, New York City time, on the
Business Day next preceding any redemption date,
the redemption price in funds available in The City
of New York, New York, to be paid on such
redemption date, plus an amount equal to dividends
accrued or in arrears to the date fixed for
redemption of any share of the New Preferred after
notice of a redemption is given and shall give the
Auction Agent irrevocable instructions to apply
such funds and, if applicable, the income and
proceeds therefrom, to the payment of the
redemption price for such shares upon surrender of
the certificate or certificates therefor. The
Company may direct the Auction Agent to invest any
such available funds in Short-Term Money Market
Instruments provided that the proceeds of any such
investment will be available in The City of New
York, New York at the opening of business on such
redemption date. All funds held by the Auction
Agent pursuant to this clause (ii) (to the extent
necessary to pay the full amount of the redemption
price for such shares) shall be held in trust for
the Holders of such shares.
(e) The shares of the New Preferred shall not be entitled to any
right of conversion or any preemptive right to acquire any other
security.
(f) The shares of the New Preferred shall not be entitled to a
sinking fund.
(g) Except as otherwise provided in these Articles of Amendment,
the shares of the New Preferred shall have all the
designations, preferences, limitations and relative rights and
voting power, and restrictions or qualifications thereof,
expressed in the Articles as presently in effect. The shares
of the New Preferred shall not have any special rights other
than those specified herein and in the Articles as presently in
effect.
(h) There are hereby classified as the June 1989 Series Money
Market Cumulative Preferred Stock, 750,000 shares of the
Preferred Stock, in 750 Units, with each Unit consisting of
1,000 shares of the New Preferred; not more than 750,000 shares
of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, such number of shares may be, but
shall not be required to be, decreased (in whole Units) by
filing articles of amendment to that effect. In the absence of
such filing, retired shares of the New Preferred shall become
authorized but unissued shares of the Company's class of
Preferred Stock, undesignated as to series.
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise
transferred by the Company as shares of the New Preferred.
3. The shares of the New Preferred shall have the further relative rights,
preferences and limitations set forth in Sections 1 through 6 of
Division A of Article III of the Articles, and the rates, dates, terms
and other conditions upon which distributions shall be payable thereon
shall be as set forth in Parts I and II of these Articles of Amendment.
<PAGE>
4. The designation of the New Preferred, as herein provided, has been duly
approved, and these Articles of Amendment have been duly adopted, by an
Executive Committee of the Board of Directors of the Company within
limits specifically prescribed by the Board of Directors of the
Company. No shareholder action was taken, or was required to be taken,
in connection with the adoption of these Articles of Amendment.
PART I
1. Definitions. As used in Parts I and II hereof, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
(a) "'AA' Composite Commercial Paper Rate", on any date, shall mean
(i) the interest equivalent of the 60-day rate on commercial
paper placed on behalf of issuers whose corporate bonds are
rated "AA" by S&P or the equivalent of such rating by S&P or
another rating agency, as made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the
immediately preceding Business Day; or (ii) in the event that
the Federal Reserve Bank of New York does not make available
such a rate, then the arithmetic average of the interest
equivalent of the 60-day rate on commercial paper placed on
behalf of such issuers, as quoted on a discount basis or
otherwise by the Commercial Paper Dealers to the Auction Agent
for the close of business on the immediately preceding Business
Day. If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper Rate,
the "AA" Composite Commercial Paper Rate shall be determined on
the basis of quotations furnished by the remaining Commercial
Paper Dealers and any Substitute Commercial Paper Dealer
selected by the Company to provide such rate not being supplied
by any Commercial Paper Dealer or, if the Company does not
select any such Substitute Commercial Paper Dealer by the
remaining Commercial Paper Dealers; provided, however, that if
the Board shall make the adjustment referred to in the second
sentence of paragraph (b)(i) of Section 2 of this Part I, then
(i) if the Dividend Period Days after such adjustment shall be
70 or more days but fewer than 85 days, such rate shall be
based on the arithmetic average of the interest equivalent of
the 60-day and 90-day rates on such commercial paper, or (ii)
if the number of Dividend Period Days after such adjustment
shall be 85 or more days but 98 or fewer days, such rate shall
be based on the interest equivalent of the 90-day rate on such
commercial paper. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis (a
"discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next
higher one-thousandth (.001) of 1%) of (A) the discount rate
divided by (B) the difference between (x) 1.00 and (y) a
fraction, the numerator of which shall be the product of the
discount rate times the number of days in which such commercial
paper matures and the denominator of which shall be 360.
<PAGE>
(b) "Applicable Rate" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Agent" shall mean the bank or trust company or other
entity appointed as such by a resolution of the Board.
(e) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(f) "Board" shall mean the Board of Directors of the Company or any
duly authorized committee thereof.
(g) "Business Day" shall mean a day on which the New York Stock
Exchange is open for trading and banks or trust companies in The
City of New York, New York, are not authorized by law to close.
(h) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time
to time.
(i) "Commercial Paper Dealers" shall mean Goldman, Sachs & Co.,
Shearson Lehman Commercial Paper Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated or, in lieu of any thereof,
their respective affiliates or successors, if any such entity is
a commercial paper dealer.
(j) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(k) "Dividend Payment Date" shall mean a date of payment of Dividends
on the New Preferred.
(l) "Dividend Period" and "Dividend Periods" shall have the
respective meanings specified in subparagraph (c)(i) of Section 2
of this Part I.
(m) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(n) "Holder" shall mean the holder(s) of shares of the New Preferred
as the same appear(s) on the stock books of the Company.
(o) "Initial Dividend Payment Date" shall mean the first Dividend
Payment Date with respect to the New Preferred.
(p) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
<PAGE>
(q) "LIBOR" shall mean for any Dividend Period the arithmetic
average (rounded to the next higher 1/16 of 1%), computed by
the Company, of the respective rates per annum quoted by each
of the Reference Banks at which United States dollar deposits
for a two-month period in the amount of U.S. $10,000,000 are
offered by such Reference Banks to leading banks in the London
interbank market at approximately 11:00 A.M. (London time) on
the first day of such Dividend Period, or if such day is not a
day on which dealings in United States dollars are transacted
in the London interbank market, then on the next preceding day
on which such dealings are transacted in such market. If any
Reference Bank does not quote a rate required to determine
LIBOR, LIBOR shall be determined on the basis of the quotation
or quotations furnished by the remaining Reference Banks and
any Substitute Reference Banks selected by the Company to
provide such quotations not being supplied by any Reference
Bank or, if the Company does not select any such Substitute
Reference Bank, by the remaining Reference Banks. If the Board
shall make the adjustment referred to in the second sentence of
paragraph (b)(i) of Section 2 of this Part I, then (i) if the
Dividend Period Days after such adjustment shall be 70 or more
days but fewer than 85 days, LIBOR shall be based on the
arithmetic average (rounded to the next higher 1/16 of 1%) of
the rates per annum quoted for such United States dollar
deposits for two- and three-month periods, or (ii) if the
Dividend Period Days after such adjustment shall be 85 or more
days but 98 or fewer days, such rate shall be based on the
rates per annum quoted for such United States dollar deposits
for a three-month period.
(r) "LIBOR Event" shall mean the first failure by the Company (A)
to declare or to pay to the Auction Agent, not later than 12:00
Noon, New York City time, on the Business Day next preceding
any Dividend Payment Date, in funds immediately available on
such Dividend Payment Date in New York, New York, the full
amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to
the Auction Agent, no later than 12:00 Noon, New York City time
on the Business Day next preceding any redemption date, the
redemption price in funds available in New York, New York to be
paid on such redemption date, plus an amount equal to accrued
and unpaid dividends at the Applicable Rate thereon to such
redemption date, of any share of the New Preferred after notice
of a redemption is given.
(s) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(t) "New Preferred" shall mean the series of the Preferred Stock,
$100 liquidation value, of the Company designated as its "June
1989 Series Money Market Cumulative Preferred(TM) Stock".
(u) "Reference Bank" shall mean the principal London offices of each
of Bankers Trust Company, Bank of Tokyo, Ltd., Barclays Bank PLC
and National Westminster Bank PLC, or their respective
successors.
<PAGE>
(v) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(w) "Short-Term Money Market Instruments" shall mean the following
types of instruments if, on the date of determination, the
remaining terms to maturity thereof are not in excess of 90 days:
(i) GNMA, FNMA and FHLMC Certificates and U.S. Treasury
Securities;
(ii) demand or time deposits in, or bankers acceptances
or certificates of deposit issued by, (A) a
depository institution or trust company
incorporated under the laws of the United States of
America, any state thereof of the District of
Columbia or (B) a United States branch office or
agency of a foreign depository institution
(provided that such branch office or agency is
subject to banking regulation under the laws of the
United States, any state thereof or the District of
Columbia), if, in each case, the commercial paper,
if any, and the long-term unsecured debt
obligations (other than such obligations whose
rating is based on the credit of a person or entity
other than such institution or trust company) of
such depository institution or trust company, at
the time of the Company's investment therein or
contractual commitment providing for such
investment, have credit ratings from Moody's and
Standard & Poor's of at least P-1 and A-1+,
respectively, in the case of commercial paper, and,
if the long-term unsecured debt obligations of such
institution are rated by Moody's, a credit rating
from Moody's of at least Aa3 in the case of such
long-term unsecured debt obligations; provided,
however, that in the case of any such investment
that matures in no more than one Business Day from
the date of purchase or other acquisition by the
Company, all of the foregoing requirements shall be
rating of such depository institution or trust
company from Moody's shall be at least A2; and
provided further, however, that time deposits,
bankers acceptances and certificates of deposit
shall be deemed to be Short-Term Money Market
Instruments only to the extent that they are
insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan
Insurance Corporation;
(iii) commercial paper that is exempted from the
provisions of the Securities Act of 1933, as
amended, by Section 3(a)(3) thereof and that is
rated at the time of the Company's investment
therein or contractual commitment providing for
such investment, at least P-1 and A-1+ by Moody's
and Standard & Poor's, respectively, and issued by
an obligor whose other long-term unsecured debt
obligations, if rated by Moody's (other than such
obligations whose rating is based on the credit of
a person or entity other than such obligor), are
rated at least Aa3 by Moody's;
<PAGE>
(iv) repurchase obligations with respect to any U.S.
Treasury Security or any GNMA, FNMA or FHLMC
Certificate entered into with a depository
institution, trust company or securities dealer
(acting as principal) which meets the credit rating
requirements for commercial paper and long-term
unsecured debt obligations specified in clause (ii)
above; and
(v) eurodollar demand deposits in the head office or a
branch office of a depository institution or trust
company meeting the credit rating requirements for
commercial paper and long-term unsecured debt
obligations specified in clause (ii) above;
provided, that the interest receivable by the
Company on such investment is not subject to
withholding or similar taxes imposed by the country
of situs of such investment.
(x) "Subsequent Dividend Period" and "Subsequent Dividend Periods"
shall have the respective meanings specified in subparagraph
(c)(i) of Section 2 of this Part I.
(y) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their
respective affiliates or successors, if such dealer or its
affiliate or successor is a commercial paper dealer; provided
that neither such dealer nor any of its affiliates or successors
shall be a Commercial Paper Dealer.
(z) "Substitute Reference Bank" shall mean the principal London
office of each of The Chase Manhattan Bank (National
Association), Deutsche Bank Aktiengesellschaft, Morgan Guaranty
Trust Company of New York or Swiss Bank Corporation, or their
respective successors, or, if none of such Substitute Reference
Banks are engaged in dealings in United States dollars in the
London interbank market, then a bank or banks, selected by the
Company, engaged in dealings in United States dollars in the
London interbank market.
2. Dividend Methodology. (a) The Holders shall be entitled to receive,
when, as and if declared by the Board, out of funds legally available
therefor, cumulative cash dividends at the Applicable Rate, in
accordance with the method prescribed by the Board as set forth in
subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
<PAGE>
(b) (i) Dividends on shares of the New Preferred, at the
Applicable Rate, shall accrue from the Date of
Original Issue and shall be payable commencing on
such Dividend Payment Dates as shall be specified
for the New Preferred by resolutions duly adopted
by the Board in accordance with the method
prescribed by the Board, which Dividend Payment
Dates shall be every 49th day after the Initial
Dividend Payment Date, except that:
(1) if the day that otherwise would be the Dividend
Payment Date is not a Business Day, or the day that
otherwise would be the Dividend Payment Date is
immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next
succeeding Business Day that is immediately succeeded
by a Business Day, provided that
(2) if the Securities Depository shall make available to
its participants and members, in funds immediately
available in the City of New York on a Dividend
Payment Date, the amount due as dividends on such
Dividend Payment Date (and the Securities Depository
shall have so advised the Auction Agent), and if the
day that otherwise would be such Dividend Payment
Date is not a Business Day, then the Dividend Payment
Date shall be the next succeeding Business Day,
provided that
(3) if the determination of the otherwise applicable
Dividend Payment Date in the manner hereinabove
provided would result in the Dividend Period
commencing on said otherwise applicable Dividend
Payment Date having less than the number of days
constituting the minimum holding period (currently
found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends received
deduction on preferred stock held by non-affiliated
corporations (currently found in Section 243(a) of
the Code), then the Board or a Committee thereof
shall make such adjustment to the next succeeding
Dividend Payment Date as shall be necessary to cause
such Dividend Period to have the minimum number of
days constituting the minimum holding period.
It is provided further, however, that the Board, in the
event of a change in law lengthening the minimum holding
period (currently found in Section 246(c) of the Code)
required for taxpayers to be entitled to the dividends
received deduction on preferred stock held by
non-affiliated corporations (currently found in Section
243(a) of the Code), may adjust the period of the time
between Dividend Payment Dates so as, subject to clauses
(A) and (B) below of this subparagraph (b)(i), to adjust
uniformly the number of days (such number of days without
giving effect to such clauses (A) and (B) being
hereinafter referred to as "Dividend Period Days") in
Dividend Periods commencing after the date of such change
in law to equal or exceed the then current minimum
holding period, subject to the limitations that (A) the
number of Dividend Period Days shall not exceed by more
than nine days the length of such then current minimum
holding period and in no event shall exceed 98 days and
(B) dividends shall continue to be payable on the same
day of the week as the Initial Dividend Payment Date.
Upon any such change in the number of Dividend Period
Days as a result of a change in law, the Company shall
mail notice of such change by first class mail, postage
prepaid, to each Holder at such Holder's address as the
same appears on the stock books of the Company.
<PAGE>
(ii) So long as no LIBOR Event shall have occurred, the
Company shall pay to the Auction Agent no later
than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment
Date, an aggregate amount of funds available on the
next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such
Dividend Payment Date. All such moneys shall be
held in trust for the payment of such dividends by
the Auction Agent for the benefit of the Holders
specified in subparagraph (b)(iii) of this Section
2.
(iii) Each dividend shall be paid to the Holders of the
New Preferred as they shall appear on the stock
books of the Company on the Business Day next
preceding the Dividend Payment Date therefor;
provided, however, that if such dividend shall have
been determined under the proviso in subparagraph
(c)(i) of this Section 2, such dividend shall be
paid to the Holders of record of the New Preferred
on such date, not exceeding 15 days preceding the
payment date thereof, as may be fixed by the Board.
Dividends in arrears for any past Dividend Period
may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to
the Holders of record of the New Preferred as they
shall appear on the stock books of the Company on
such date, not exceeding 15 days preceding the
payment date thereof, as may be fixed by the Board.
(c) (i) The dividend rate on shares of the New Preferred
during the period from and after the Date of
Original Issue to and including the day preceding
the Initial Dividend Payment Date (the "Initial
Dividend Period") shall be 7.20%. Commencing on
the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each
subsequent dividend period (each such period being
hereinafter referred to as a "Subsequent Dividend
Period", and such periods being hereinafter
referred to collectively as "Subsequent Dividend
Periods") which Subsequent Dividend Periods
each shall commence on a Dividend Payment Date and
shall end on and include the day preceding the next
Dividend Payment Date, shall be equal to the rate
per annum that results from implementation of the
Auction Procedures; provided, however, that if a
LIBOR Event shall have occurred prior to the first
day of such Subsequent Dividend Period, the
dividend rate for all such Subsequent Dividend
Periods shall be a rate per annum equal to 200% of
LIBOR (the rate per annum at which dividends are
payable on shares of the New Preferred for any
Dividend Period being herein referred to as the
"Applicable Rate").
<PAGE>
(ii) The dividends payable on shares of the New
Preferred for any Dividend Period shall be computed
by multiplying the Applicable Rate for such
Dividend Period by a fraction, the numerator of
which shall be the number of days in such Dividend
Period and the denominator of which shall be 360
and applying the rate obtained against $100 per
share of the New Preferred.
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1
shall have the respective meanings specified in Part I hereof. As used
in this Part II, the following terms shall have the following meanings,
unless the context otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the
percentage determined as set forth below based on the prevailing
rating of the New Preferred in effect at the close of business on
the Business Day immediately preceding such Auction Date:
Prevailing Rating Percentage
AA/aa or Above . . . . . . 110%
A/a . . . . . . . . . . . 125%
BBB/baa . . . . . . . . . 150%
Below BBB/baa . . . . . . 200%
For purposes of this definition, the "prevailing rating" of the
New Preferred shall be (i) AA/aa or Above, if the New Preferred
has a rating of AA- or better by S&P or aa3 or better by Moody's
or the equivalent of either or both of such ratings by such
agencies or substitute rating agencies selected as provided
below, (ii) if not AA/aa or Above, then A/a if the New Preferred
has a rating of A- or better and lower than AA- by S&P or a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if
not AA/aa or Above or A/a, then BBB/baa if the New Preferred has
a rating of BBB- or better and lower than A- by S&P or baa3 or
better and lower than a3 by Moody's or the equivalent, and (iv)
if not AA/aa or Above, A/a or BBB/baa, then Below BBB/baa. The
Company shall take all reasonable action necessary to enable S&P
and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, Shearson
Lehman Hutton Inc. and Merrill Lynch Capital Markets or their
respective successors shall select, as necessary, one or two
nationally recognized statistical rating organizations (as that
term is used in the rules and regulations of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended) to act as substitute rating agencies and the Company
shall take all reasonable action to enable such rating agencies
to provide ratings for the New Preferred.
<PAGE>
(b) "Affiliate" shall mean any Person known to the Auction Agent to
be controlled by, in control of or under common control with the
Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is
identified as such in such Bidder's Master Purchaser's Letter.
(d) "Auction Date" shall mean the Business Day next preceding the
first day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-
Dealer in this Part II, that is a member of, or a participant in,
the Securities Depository, has been selected by the Company and
has entered into a Broker-Dealer Agreement with the Auction Agent
that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the
Auction Agent and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this
Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Master
Purchaser's Letter and is listed as the beneficial owner of such
shares of the New Preferred in the records of the Auction Agent.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Master Purchaser's Letter" shall mean a letter addressed to the
Company, the Auction Agent, a Broker-Dealer and an Agent Member
in which a Person agrees, among other things, to offer to
purchase, to purchase, to offer to sell and/or to sell shares of
the New Preferred as set forth in this Part II.
<PAGE>
(l) "Maximum Rate," on any Auction Date, shall mean the product of
the "AA" Composite Commercial Paper Rate times the "AA" Rate
Multiple.
(m) "Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(n) "Outstanding" shall mean, as of any date, shares of the New
Preferred theretofore issued by the Company except, without
duplication, (i) any shares of the New Preferred theretofore
cancelled or delivered to the Auction Agent for cancellation or
redeemed by the Company or as to which a notice of redemption
shall have been given by the Company, (ii) any shares of the
New Preferred as to which the Company or any Affiliate thereof
(other than a Broker-Dealer Affiliate) shall be an Existing
Holder and (iii) any shares of the New Preferred represented by
any certificate in lieu of which a new certificate has been
executed and delivered by the Company.
(o) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
venture or other entity or a government or any agency or
political subdivision thereof.
(p) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Purchaser's Letter and (ii)
who may be interested in acquiring shares of the New Preferred
(or, in the case of an Existing Holder, additional shares of the
New Preferred).
(r) "Securities Depository" shall mean The Depository Trust Company
and its successors and assigns or any other securities depository
selected by the Company which agrees to follow the procedures
required to be followed by such securities depository in
connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time,
on any Auction Date or such other time on any Auction Date by
which Broker-Dealers are required to submit Orders to the Auction
Agent as specified by the Auction Agent from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
(v) "Submitted Hold Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
<PAGE>
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders. (a) On or prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer
information as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding
Dividend Period;
(B) the number of Outstanding shares, if any, of the New
Preferred which such Existing Holder desires to
continue to hold if the Applicable Rate for the next
succeeding Dividend Period shall not be less than the
rate per annum specified by such Existing Holder;
and/or
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such
Existing Holder offers to sell without regard to the
Applicable Rate for the next succeeding Dividend
Period; and
(ii) one or more Broker-Dealers, using lists of
Potential Holders, shall, in good faith for the
purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential
Holders, including Persons that are not Existing
Holders, on such lists to determine the number of
shares, if any, of the New Preferred that each such
Potential Holder offers to purchase if the
Applicable Rate for the next succeeding Dividend
Period shall be not less than the rate per annum
specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i)(A), (i)(B), (i)(C) or (ii)
of this paragraph (a) is hereinafter referred to as an "Order";
each Existing Holder and each Potential Holder placing an Order
is hereinafter referred to as a "Bidder"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing
the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order."
<PAGE>
(b) (i) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
the rate specified therein;
(B) such number or a lesser number of Outstanding shares
of the New Preferred to be determined as set forth in
clause (iv) of paragraph (a) of Section 5 of this
Part II if the Applicable Rate determined on such
Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New
Preferred to be determined as set forth in clause
(iii) of paragraph (b) of Section 5 of this Part II
if the rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing Bids do
not exist.
(ii) A Sell Order by an Existing Holder shall constitute
an irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or lesser number of Outstanding shares of
the New Preferred as set forth in clause (iii) of
paragraph (b) of Section 5 of this Part II if
Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher than
the rate specified therein; or
(B) such number or a lesser number of Outstanding shares
of the New Preferred as set forth in clause (v) of
paragraph (a) of Section 5 of this Part II if the
Applicable rate determined on such Auction date shall
be equal to the rate specified therein.
3. Submission of Orders by Broker-Dealers to Auction Agent. (a) Each
Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred
that are the subject to such Order;
<PAGE>
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of the New Preferred
subject to any Hold Order placed by such Existing
Holder;
(B) the number of shares, if any, of the New Preferred
subject to any Bid placed by such Existing Holder and
the rate specified in such Bid; and
(C) the number of shares, if any, of the New Preferred
subject to any Sell Order placed by such Existing
Holder; and
(iv) to the extent such Bidder is a Potential Holder, the
rate and number of shares specified in such Potential
Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of
the New Preferred held by any Existing Holder are not submitted
to the Auction Agent prior to the Submission deadline, the
Auction Agent shall deem a Hold Order to have been submitted on
behalf of such Existing Holder covering the number of
Outstanding shares of the New Preferred held by such Existing
Holder and not subject to an Order submitted to the Auction
Agent.
(d) If one or more Orders covering, in the aggregate, more than the
number of Outstanding shares of the New Preferred held by any
Existing Holder are submitted to the Auction Agent by a Broker-
Dealer, such Orders shall be considered valid as follows and in
the following order of priority:
(i) all Hold Orders shall be considered valid, but only
up to and including in the aggregate the number of
Outstanding shares of the New Preferred held by
such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers
submitting Hold Orders, if the number of shares of
the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New
Preferred held by such Existing Holder, the number
of shares subject to each such Hold Order shall be
reduced pro rata to cover the number of Outstanding
shares of the New Preferred held by such Existing
Holder;
(ii) (A) any Bid shall be considered valid up to
and including the excess of the number of
Outstanding shares of the New Preferred held
by such Existing Holder over the number of
shares of the New Preferred subject to any
Hold Orders referred to in clause (i) above;
<PAGE>
(B) subject to subclause (A), if more than one
Bid with the same rate is submitted on
behalf of such Existing Holder and the
number of Outstanding shares of the New
Preferred subject to such Bids is greater
than such excess, such Bids shall be
considered valid up to and including the
amount of such excess, and, solely for
purposes of allocating compensation among
the Broker-Dealers submitting Bids with
the same rate, the number of shares of the
New Preferred subject to each Bid with the
same rate shall be reduced pro rata to
cover the number of shares of the New
Preferred equal to such excess;
(C) subject to subclause (A), if more than one
Bid with different rates is submitted on
behalf of such Existing Holder, such Bids
shall be considered valid in the ascending
order of their respective rates up to and
including the amount of such excess; and
(D) in any such event, the number, if any, of
such Outstanding shares of the New Preferred
subject to Bids not valid under this clause
(ii) shall be treated as the subject of a
Bid by a Potential Holder at the rate herein
specified; and
(iii) all Sell Orders shall be considered valid up to and
including the excess of the number of Outstanding
shares of the New Preferred held by such Existing
Holder over the sum of the shares of the New
Preferred subject to valid Hold Orders referred to in
clause (i) above and valid Bids by such Existing
Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
and number of shares therein specified.
(f) Orders by Existing Holders and Potential Holders must specify
numbers of shares of the New Preferred in whole Units. Any Order
that specifies a number of shares of the New Preferred other than
in whole Units will not be accepted and will not be considered a
Submitted Order for purposes of an Auction.
<PAGE>
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on each
Auction Date, the Auction Agent shall assemble all Orders submitted or
deemed submitted to it by the Broker-Dealers (such Orders submitted or
deemed submitted by Broker-Dealers being hereinafter referred to as
"Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders,"
as the case may be, or as "Submitted Orders") and shall determine:
(i) the excess of the total number of Outstanding shares
of the New Preferred over the number of Outstanding
shares of the New Preferred that are the subject of
Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Potential
Holders specifying one or more rates equal to or
lower than the Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred
that are the subject of Submitted Bids by Existing
Holders specifying one or more rates higher than the
Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred
that are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than
because the number of shares of the New Preferred in
subclauses (B) and (C) above is zero because all of the
Outstanding shares of the New Preferred are the subject
of Submitted Hold Orders), such Submitted Bids in
subclause (A) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(A) (I) each Submitted Bid from Existing Holders
specifying such lowest rate and (II) all other
Submitted Bids from Existing Holders specifying lower
rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New
Preferred that are the subject of such Submitted
Bids; and
(B) (I) each Submitted Bid from Potential Holders
specifying such lowest rate and (II) all other
Submitted Bids from Potential Holders specifying
lower rates were accepted.
would result in such Existing Holders described in
subclause (A) above continuing to hold an aggregate
number of Outstanding shares of the New Preferred which,
when added to the number of Outstanding shares of the New
Preferred to be purchased by such Potential Holders
described in subclause (B) above, would equal not less
than the Available New Preferred.
<PAGE>
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 4, the Auction Agent
shall advise the Company of the "AA" Composite Commercial Paper
Rate and the Maximum Rate on the Auction Date and, based on such
determinations, the Applicable Rate for the next succeeding
Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to the Winning Bid Rate so
determined;
(ii) if Sufficient Clearing Bids do not exist (other than
because all of the Outstanding shares of the New
Preferred are the subject of Submitted Hold Orders),
that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate;
or
(iii) if all of the Outstanding shares of the New Preferred
are the subject of Submitted Hold Orders, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Existing Holders shall continue to hold the
shares of the New Preferred that are the subject of Submitted Hold
Orders, and based on the determinations made pursuant to paragraph (a)
of Section 4 of this Part II, the Submitted Bids and Submitted Sell
Orders shall be accepted or rejected and the Auction Agent shall take
such other actions as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell
Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall
be accepted and Existing Holders' Submitted Bids
specifying any rate that is higher than the Winning
Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New
Preferred that are the subject of such Submitted Sell
Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
rejected, thus entitling each such Existing Holder to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
<PAGE>
(iii) Potential Holders' Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be
accepted;
(iv) Each Existing Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
rejected, thus entitling such Existing Holder to
continue to hold the shares of the New Preferred
that are the subject of such Submitted bid, unless
the number of Outstanding shares of the New
Preferred subject to all such Submitted Bids shall
be greater than the number of shares of New
Preferred ("remaining shares") equal to the excess
of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted
Bids described in clauses (ii) and (iii) of this
paragraph (a), in which event such Submitted Bid of
such Existing Holder shall be accepted in part, and
such Existing Holder shall be required to sell
shares of the New Preferred subject to such
Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding
shares of the New Preferred then held by such
Existing Holder subject to such Submitted Bid and
(B) the number of shares of the New Preferred
obtained by multiplying the number of
remaining shares by a fraction the numerator of
which shall be the number of Outstanding shares of
the New Preferred held by such Existing Holder
subject to such Submitted Bid and the denominator
of which shall be the aggregate number of
Outstanding shares of the New Preferred subject to
such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning
Bid Rate; and
(v) each Potential Holder's Submitted Bid specifying a
rate that is equal to the Winning Bid Rate shall be
accepted but only in an amount equal to the number
of shares of the New Preferred obtained by
multiplying the difference between the Available
New Preferred and the number of shares of the New
Preferred subject to Submitted Bids described in
clauses (ii), (iii) and (iv) of this paragraph (a)
by a fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred
subject to such Potential Holder's Submitted Bid
and the denominator of which shall be the aggregate
number of Outstanding shares of the New Preferred
subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to
the Winning Bid Rate.
<PAGE>
(b) If Sufficient Clearing Bids have not been made (other than
because all of the Outstanding shares of the New Preferred are
the subject of Submitted Hold Orders), subject to the provisions
of paragraph (d) of this Section 5, Submitted Orders shall be
accepted or rejected as follows in the following order of
priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be rejected, thus entitling such Existing Holders to
continue to hold the shares of the New Preferred that
are the subject of such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any rate
that is equal to or lower than the Maximum Rate shall
be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any
rate that is higher than the Maximum Rate and the
Submitted Sell Order of each Existing Holder shall
be accepted, but in both cases only in an amount
equal to the difference between (A) the number of
Outstanding shares of the New Preferred then held
by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of
shares of the New Preferred obtained by multiplying
the difference between the Available New Preferred
and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in
clauses (i) and (ii) of this paragraph (b) by a
fraction the numerator of which shall be the number
of Outstanding shares of the New Preferred held by
such Existing Holder subject to such Submitted Bid
or Submitted Sell Order and the denominator of
which shall be the aggregate number of Outstanding
shares of the New Preferred subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding shares of the New Preferred are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or
(b) of this Section 5, any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or
required to purchase shares of the New Preferred other than in
whole Units on any Auction Date, the Auction Agent shall, in
such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be
purchased or sold by any Existing Holder or Potential Holder on
such Auction Date so that the number of Units purchased or sold
by each Existing Holder or Potential Holder on such Auction
Date shall be whole Units of the New Preferred.
(e) If, as a result of the procedures described in paragraph (a) of
this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole Unit on any Auction
Date, the Auction Agent shall, in such manner as, in its sole
discretion, it shall determine, allocate Units for purchase
among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential
Holder, even if such allocation results in one or more of such
Potential Holders not purchasing Units of the New Preferred on
such Auction Date.
<PAGE>
(f) Based on the results of each Auction, the Auction Agent shall
determine the aggregate number of shares of the New Preferred
to be purchased and the aggregate number of shares of the New
Preferred to be sold by Potential Holders and Existing Holders
on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate number of shares of the purchased and such
aggregate number of shares to be sold differ, determine to
which other Broker-Dealer or Broker-Dealers acting for one or
more purchasers such Broker-Dealer shall deliver, or from which
other Broker-Dealer or Broker-Dealers acting for one or more
sellers such Broker-Dealer shall receive, as the case may be,
shares of the New Preferred.
6. Miscellaneous. (a) The Board may interpret the provisions of this Part
II to resolve any inconsistency or ambiguity which may arise or be
revealed in connection with the Auction Procedures provided for herein,
and if such inconsistency or ambiguity reflects an inaccurate provision
hereof, the Board may, in appropriate circumstances, authorize the
filing of an instrument to correct or resolve such inaccurate
provision.
(b) An Existing Holder (i) may sell, transfer or otherwise dispose
of shares of the New Preferred only pursuant to a Bid or Sell
Order in accordance with the procedures described in this
Part II or to go through a Broker-Dealer or to a Person that
has delivered a signed copy of a Master Purchaser's Letter to
the Auction Agent, provided that in the case of all transfers
other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Agent Member advises the Auction Agent of
such transfer, and (ii) shall have the ownership of the shares
of the New Preferred held by it maintained in book entry form
by the Securities Depository for the account of its Agent
Member, which in turn will maintain records of such Existing
Holder's beneficial ownership. Shares of the New Preferred may
be sold or transferred only in whole Units.
(c) Neither the Company nor any affiliate thereof may submit an
Order in any Auction except as set forth in the next sentence.
Any Broker-Dealer that is an affiliate of the Company may
submit Orders in Auctions but only if such Orders are not for
its own account, except that if such affiliated Broker-Dealer
holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such
shares.
(d) Commencing with the first day of the first Dividend Period for
which the Applicable Rate is determined by the formula of 200% of
LIBOR, as a result of an occurrence of a LIBOR Event, the Company
or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Auction Agent set
forth herein.
Dated: June 13, 1989 VIRGINIA ELECTRIC AND POWER COMPANY
Linwood R. Robertson
Vice President, Treasurer and
Corporate Secretary
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company.
2. The Restated Articles of Incorporation, as amended, of Virginia Electric
and Power Company (the Company) hereby are amended to create a series of
the Company's Preferred Stock. In accordance with the provisions of the
Restated Articles of Incorporation, as amended, of the Company, the
distinctive designation, preferences, limitations and relative rights of
said series of Preferred Stock are determined and fixed as follows:
(a) The distinctive serial designation of the $6.35 Series shall be
"$6.35 Dividend Preferred Stock" (hereinafter referred to as the $6.35
Series).
(b) The dividend rate on the shares of the $6.35 Series shall be
fixed at $6.35 per share per annum. Dividends shall be cumulative from
the date of initial issuance of the shares of the $6.35 Series. The
payment dates for the dividends on the shares of the $6.35 Series shall
be March 20, June 20, September 20 and December 20 of each year,
beginning September 20, 1992.
(c) The fixed liquidation preference of the shares of the $6.35
Series shall be $100 per share.
(d) The $6.35 Series shall not be redeemable (except to the extent
otherwise provided for redemption in liquidation) prior to September 1,
2000.
(e) The shares of the $6.35 Series shall not be entitled to any
sinking fund or right of conversion or any preemptive right to acquire
any other security.
(f) Except as above provided, the shares of the $6.35 Series shall
have all the designations, preferences, limitations and relative rights
and voting powers, and restrictions or qualifactions thereof, expressed
in the Restated Articles of Incorporation, as amended, of the Company.
The shares of the $6.35 Series shall not have any special rights other
than those specified herein and in the Restated Articles of
Incorporation, as amended, of the Company.
(g) There are hereby classified as the series of $6.35 Preferred
Stock 1,400,000 shares of the Preferred Stock. No more than 1,400,000
shares of the $6.35 Series may be issued. Upon retirement of the shares
of the $6.35 Series, this number may be decreased by filing articles of
amendment to that effect.
<PAGE>
(h) No shares of the $6.35 Series purchased or otherwise acquired by
the Company shall be reissued, resold or otherwise transferred by the
Company as shares of the $6.35 Series.
3. The designation of the $6.35 Series, as herein provided, has been duly
approved by the Executive Committee on behalf of the Board of Directors
of the Company within and in accordance with limits specifically
prescribed by the Board of Directors.
4. These Artiles of Amendment were duly adopted on August 4, 1992 by said
Executive Committee on behalf of the Board of Directors of Virginia
Electric and Power Company and shareholder action was not required in
connection with such adoption.
Dated: August 4, 1992
VIRGINIA ELECTRIC AND POWER COMPANY
By Thomas N. Chewning
Vice president, Treasurer
and Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company
(hereinafter referred to as the Company).
2. The Restated Articles of Incorporation, as amended (the Articles) of
Virginia Electric and Power Company (the Company) hereby are amended to
create a series of the Company's Preferred Stock which shall be
designated the September 1992A Series Auction Market Preferred Stock
(hereinafter sometimes referred to as the New Preferred). In
accordance with the provisions of the Articles, the distinctive
designation, preferences, limitations and relative rights of the New
Preferred are determined and fixed as follows:
(a) The distinctive serial designation of the New Preferred shall be
"September 1992A Series Auction Market Preferred Stock." Shares of the New
Preferred may only be purchased or transferred in whole units of 1,000 shares
each (Units) or integral multiples thereof and the shares included in the
Units may not be separately purchased or transferred.
(b) The dividend rate on the shares of the New Preferred for the Initial
Dividend Period (such term and all other capitalized terms used herein being
used, unless otherwise expressly provided herein, as defined in Parts I and
II of these Articles of Amendment) shall be 2.80% per annum. For each
Dividend Period thereafter, the dividend rate will be determined according to
the procedures set forth in Parts I and II.
(c) The liquidation preference of the shares of the New Preferred shall
be $100 per share, payable in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Company.
<PAGE>
(d) (i) The shares of the New Preferred shall be redeemable on the second
Business Day preceding any Dividend Payment Date at the option of the
Company, as a whole or in part, in whole Units only at a redemption price of
$100,000 per Unit ($100 per share) (without premium), plus an amount equal to
"dividends accrued or in arrears" (such phrase being used in these Articles
of Amendment as defined in Section 3 of the Division A of the Articles).
If fewer than all of the outstanding shares of the New Preferred are to
be redeemed pursuant to this subparagraph (d)(i), the number of shares to be
redeemed shall be determined by the Board of Directors of the Company and
such shares shall be redeemed in whole Units pro rata from the Holders in
proportion to the number of such shares held by such Holders. If such pro
rata redemption would result in the redemption of fractional Units, the Units
to be redeemed shall be selected from among the outstanding Units of the New
Preferred in any manner determined by the Auction Agent to be equitable, such
that the redemption is in whole Units only.
(ii) So long as no Default shall have occurred, the Company shall pay to
the Auction Agent, no later than 12:00 Noon, New York City time, on the
Business Day next preceding any redemption date, the redemption price in
funds available in The City of New York, New York, to be paid on such
redemption date, plus an amount equal to dividends accrued or in arrears to
the date fixed for redemption of any share of the New Preferred after notice
of a redemption is given and shall give the Auction Agent irrevocable
instructions to apply such funds and, if applicable, the income and proceeds
therefrom, to the payment of the redemption price for such shares upon
surrender of the certificate or certificates therefor. The Company may direct
the Auction Agent to invest any such available funds in Short-Term Money
Market Instruments provided that the proceeds of any such investment will be
available in The City of New York, New York at the opening of business on
such redemption date. All funds held by the Auction Agent pursuant to this
clause (ii) (to the extent necessary to pay the full amount of the redemption
price for such shares) shall be held in trust for the Holders of such shares.
(e) The shares of the New Preferred shall not be entitled to any right of
conversion or any preemptive right to acquire any other security.
(f) The shares of the New Preferred shall not be entitled to a sinking
fund.
(g) Except as otherwise provided in these Articles of Amendment, the
shares of the New Preferred shall have all the designations, preferences,
limitations and relative rights and voting power, and restrictions or
qualifications thereof, expressed in the Articles as presently in effect. The
shares of the New Preferred shall not have any special rights other than
those specified herein and in the Articles as presently in effect.
(h) There are hereby classified as the September 1992A Series Auction
Market Preferred Stock, 500,000 shares of the Preferred Stock,in 1,000 Units,
with each Unit consisting of 1,000 shares of the New Preferred; not more than
500,000 shares of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, such number of shares may be, but shall not be
required to be, decreased (in whole Units) by filing articles of amendment to
that effect. In the absence of such filing, retired shares of the New
Preferred shall become authorized but unissued shares of the Company's class
of Preferred Stock, undesignated as to series.
<PAGE>
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise transferred by
the Company as shares of the New Preferred.
3. The shares of the New Preferred shall have the further relative rights,
preferences and limitations set forth in Sections 1 through 6 of Division A
of Article III of the Articles, and the rates, dates, terms and other
conditions upon which distributions shall be payable thereon shall be as set
forth in Parts I and II of these Articles of Amendment.
4. The designation of the New Preferred, as herein provided, has been duly
approved, and these Articles of Amendment have been duly adopted, by an
Executive Committee of the Board of Directors of the Company, within limits
specifically prescribed by the Board of Directors of the Company. No
shareholder action was taken, or was required to be taken, in connection with
the adoption of these Articles of Amendment.
PART I
1. Definitions. As used in Parts I and II hereof, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
(a) "'AA' Composite Commercial Paper Rate," on any date, shall mean (i)
the interest equivalent of the 60-day rate on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by S&P or the
equivalent of such rating by S&P or another rating agency, as made available
on a discount basis or otherwise by the Federal Reserve Bank of New York for
the immediately preceding Business Day; or (ii) in the event that the Federal
Reserve Bank of New York does not make available such a rate, then the
arithmetic average of the interest equivalent of the 60- day rate on
commercial paper placed on behalf of such issuers, as quoted on a discount
basis or otherwise by the Commercial Paper Dealers to the Auction Agent for
the close of business on the immediately preceding Business Day. If any
Commercial Paper Dealer does not quote a rate required to determine the "AA"
Composite Commercial Paper Rate, the "AA" Composite Commercial Paper Rate
shall be determined on the basis of quotations furnished by the remaining
Commercial Paper Dealers and any Substitute Commercial Paper Dealer selected
by the Company to provide such rate not being supplied by any Commercial
Paper Dealer or, if the Company does not select any such Substitute
Commercial Paper Dealer, by the remaining Commercial Paper Dealers; provided,
however, that if the Board shall make the adjustment referred to in the
second sentence of paragraph (b)(i) of Section 2 of this Part I, then (i) if
the Dividend Period Days after such adjustment shall be 70 or more days but
fewer than 85 days, such rate shall be based on the arithmetic average of the
interest equivalent of the 60-day and 90-day rates on such commercial paper,
or (ii) if the number of Dividend Period Days after such adjustment shall be
85 or more days but 98 or fewer days, such rate shall be based on the
interest equivalent of the 90-day rate on such commercial paper. For purposes
of this definition, the "interest equivalent" of a rate stated on a discount
basis (a "discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next higher
one-thousandth (.001 of 1%) of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction, the numerator of which shall
be the product of the discount rate times the number of days in which such
commercial paper matures and the denominator of which shall be 360.
<PAGE>
(b) "Applicable Rate" shall have the meaning specified in subparagraph
(c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Agent" shall mean the bank or trust company or other entity
appointed as such by a resolution of the Board.
(e) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(f) "Board" shall mean the Board of Directors of the Company or any duly
authorized committee thereof.
(g) "Business Day" shall mean a day on which the New York Stock Exchange
is open for trading and banks or trust companies in The City of New York, New
York, are not authorized by law to close.
(h) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time to time.
(i) "Commercial Paper Dealers" shall mean Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Lehman Commercial Paper Incorporated and Smith Barney,
Harris Upham & Co. Incorporated or, in lieu of any thereof, their respective
affiliates or successors, if any such entity is a commercial paper dealer.
(j) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(k) "Default" shall mean the first failure by the Company (A) to declare
or to pay to the Auction Agent, not later than 12:00 Noon, New York City
time, on the Business Day next preceding any Dividend Payment Date, in funds
immediately available on such Dividend Payment Date in New York, New York,
the full amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to the Auction
Agent, no later than 12:00 Noon, New York City time on the Business Day next
preceding any redemption date, the redemption price in funds available in New
York, New York to be paid on such redemption date, plus an amount equal to
accrued and unpaid dividends at the Applicable Rate thereon to such
redemption date, of any share of the New Preferred after notice of a
redemption is given.
<PAGE>
(l) "Dividend Payment Date" shall mean a date of payment of Dividends on
the New Preferred.
(m) "Dividend Period" and "Dividend Periods" shall have the respective
meanings specified in subparagraph (c)(i) of Section 2 of this Part I.
(n) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(o) "Holder" shall mean the holder(s) of shares of the New Preferred as
the same appear(s) on the stock books of the Company.
(p) "Initial Dividend Payment Date" shall mean the first Dividend Payment
Date with respect to the New Preferred.
(q) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(r) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(s) "New Preferred" shall mean the series of the Preferred Stock, $100
liquidation preference, of the Company designated as its "September 1992A
Series Auction Market Preferred Stock."
(t) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(u) "Short-Term Money Market Instruments" shall mean the following types
of instruments if, on the date of determination, the remaining terms to
maturity thereof are not in excess of 90 days:
(i) GNMA, FNMA and FHLMC Certificates and U.S. Treasury
Securities;
(ii) demand or time deposits in, or bankers acceptances or
certificates of deposit issued by, (A) a depository institution or trust
company incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or (B) a United States branch
office or agency of a foreign depository institution (provided that such
branch office or agency is subject to banking regulation under the laws
of the United States, any state thereof or the District of Columbia), if,
in each case, the commercial paper, if any, and the long-term unsecured
debt obligations (other than such obligations whose rating is based on
the credit of a person or entity other than such institution or trust
company) of such depository institution or trust company, at the time of
the Company's investment therein or contractual commitment providing for
such investment, have credit ratings from Moody's and Standard & Poor's
of at least P-1 and A-1+, respectively, in the case of commercial paper,
and, if the long-term unsecured debt obligations of such institution are
rated by Moody's , a credit rating from Moody's of at least Aa3 in the
case of such long-term unsecured debt obligations; provided, however,
that in the case of any such investment that matures in no more than one
Business Day from the date of purchase or other acquisition by the
Company, all of the foregoing requirements shall be applicable except
that the required long-term unsecured debt credit rating of such
depository institution or trust company from Moody's shall be at least
A2; and provided further, however, that time deposits, bankers
acceptances and certificates of deposit shall be deemed to be Short-Term
Money Market Instruments only to the extent that they are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation;
<PAGE>
(iii) commercial paper that is exempted from the provisions of the
Securities Act of 1933, as amended, by Section 3(a)(3) thereof and that
is rated at the time of the Company's investment therein or contractual
commitment providing for such investment, at least P-1 and A-1+ by
Moody's and Standard & Poor's, respectively, and issued by an obligor
whose other long-term unsecured debt obligations, if rated by Moody's
(other than such obligations whose rating is based on the credit of a
person or entity other than such obligor), are rated at least Aa3 by
Moody's;
(iv) repurchase obligations with respect to any U.S. Treasury
Security or any GNMA, FNMA or FHLMC Certificate entered into with a
depository institution, trust company or securities dealer (acting as
principal) which meets the credit rating requirements for commercial
paper and long-term unsecured debt obligations specified in clause (ii)
above; and
(v) eurodollar demand deposits in the head office or a branch office
of a depository institution or trust company meeting the credit rating
requirements for commercial paper and long-term unsecured debt
obligations specified in clause (ii) above; provided, that the interest
receivable by the Company on such investment is not subject to
withholding or similar taxes imposed by the country of situs of such
investment.
(w) "Subsequent Dividend Period" and "Subsequent Dividend Periods" shall
have the respective meanings specified in subparagraph (c)(i) of Section 2 of
this Part I.
(x) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their respective
affiliates or successors, if such dealer or its affiliate or successor is a
commercial paper dealer; provided, that neither such dealer nor any of its
affiliates or successors shall be a Commercial Paper Dealer.
2. Dividend Methodology.
(a) The Holders shall be entitled to receive, when, as and if declared by
the Board and when not prohibited by law, cumulative cash dividends at the
Applicable Rate, in accordance with the method prescribed by the Board as set
forth in subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
(b) (i) Dividends on shares of the New Preferred, at the Applicable Rate,
shall accrue from the Date of Original Issue and shall be payable commencing
on such Dividend Payment Dates as shall be specified for the New Preferred by
resolutions duly adopted by the Board in accordance with the method
prescribed by the Board, which Dividend Payment Dates shall be every 49th day
after the Initial Dividend Payment Date, except that:
<PAGE>
(1) if the day that otherwise would be the Dividend Payment Date is
not a Business Day, or the day that otherwise would be the Dividend
Payment Date is immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next succeeding Business
Day that is immediately succeeded by a Business Day, provided that
(2) if the Securities Depository shall make available to its
participants and members, in funds immediately available in The City of
New York on a Dividend Payment Date, the amount due as dividends on such
Dividend Payment Date (and the Securities Depository shall have so
advised the Auction Agent), and if the day that otherwise would be such
Dividend Payment Date is not a Business Day, then the Dividend Payment
Date shall be the next succeeding Business Day, provided that
(3) if the determination of the otherwise applicable Dividend
Payment Date in the manner hereinabove provided would result in the
Dividend Period commencing on said otherwise applicable Dividend Payment
Date having less than the number of days constituting the minimum holding
period (currently found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends-received deduction on preferred
stock held by non-affiliated corporations (currently found in Section
243(a) of the Code), then the Board shall make such adjustment to the
next succeeding Dividend Payment Date as shall be necessary to cause such
Dividend Period to have the minimum number of days constituting the
minimum holding period.
It is provided further, however, that the Board, in the event of a change in law
lengthening the minimum holding period required for taxpayers to be entitled to
the dividends-received deduction on preferred stock held by non-affiliated
corporations, may adjust the period of the time between Dividend Payment Dates
so as, subject to clauses (A) and (B) below of this subparagraph (b)(i), to
adjust uniformly the number of days (such number of days without giving effect
to such clauses (A) and (B) being hereinafter referred to as "Dividend Period
Days") in Dividend Periods commencing after the date of such change in law to
equal or exceed the then-current minimum holding period, subject to the
limitations that (A) the number of Dividend Period Days shall not exceed by more
than nine days the length of such then-current minimum holding period and in no
event shall exceed 98 days and (B) dividends shall continue to be payable on the
same day of the week as the Initial Dividend Payment Date. Upon any such change
in the number of Dividend Period Days as a result of a change in law, the
Company shall mail notice of such change by first class mail, postage prepaid,
to each Holder at such Holder's address as the same appears on the stock books
of the Company.
(ii) So long as no uncured Default shall have occurred, the Company shall
pay to the Auction Agent no later than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment Date, an aggregate amount
of funds available on the next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such Dividend Payment Date. The
Company shall give the Auction Agent irrevocable instructions to apply such
funds and, if applicable, the income and proceeds therefrom, to the payment
of such dividends. The Company may direct the Auction Agent to invest any
such available funds in Short-Term Money Market Instruments, provided that
the proceeds of any such investment will be available in The City of New
York, New York at the opening of business on such Dividend Payment Date. All
such moneys shall be held in trust for the payment of such dividends by the
Auction Agent for the benefit of the Holders specified in subparagraph
(b)(iii) of this Section 2.
<PAGE>
(iii) Each dividend shall be paid to the Holders of the New Preferred as
they shall appear on the stock books of the Company on the Business Day next
preceding the Dividend Payment Date therefor; provided, however, that if such
dividend shall have been determined under the proviso in subparagraph (c)(i)
of this Section 2, such dividend shall be paid to the Holders of record of
the New Preferred on such date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board. Dividends in arrears for any past
Dividend Period may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to the Holders of record of the New
Preferred as they shall appear on the stock books of the Company on such
date, not exceeding 15 days preceding the payment date thereof, as may be
fixed by the Board.
(c) (i) The dividend rate on shares of the New Preferred during the
period from and after the Date of Original Issue to and including the day
preceding the Initial Dividend Payment Date (the "Initial Dividend Period")
shall be 2.80%. Commencing on the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each subsequent dividend period (each
such period being hereinafter referred to as a "Subsequent Dividend Period",
and such periods being hereinafter referred to collectively as "Subsequent
Dividend Periods") which Subsequent Dividend Periods each shall commence on a
Dividend Payment Date and shall end on and include the day preceding the next
Dividend Payment Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures; provided, however, that if a
Default shall have occurred prior to the first day of such Subsequent
Dividend Period and shall not be cured as provided in the next succeeding
paragraph, the dividend rate for all such Subsequent Dividend Periods shall
be a rate per annum equal to 250% of the 60-day "AA" Composite Commercial
Paper Rate (the rate per annum at which dividends are payable on shares of
the New Preferred for any Dividend Period being herein referred to as the
"Applicable Rate").
(ii) Any Default with respect to shares of the New Preferred shall be
deemed to be cured if as of 12:00 noon, New York City time, on the third
Business Day next succeeding such Default, the Company shall have paid to the
Auction Agent (i) in the case of a failure to pay dividends, the full amount
of the dividends to be paid for the Dividend Period with respect to which
such failure occurred, or (ii) in the case of a failure to pay the redemption
price, the full amount of the aggregate redemption price for the shares of
the New Preferred that have been called for redemption, plus accrued and
unpaid dividends from the date of redemption to the date of such cure.
<PAGE>
(iii) The dividends payable on shares of the New Preferred for any
Dividend Period shall be computed by multiplying the Applicable Rate for such
Dividend Period by a fraction, the numerator of which shall be the number of
days in such Dividend Period and the denominator of which shall be 360, and
applying the rate obtained against $100,000 per Unit ($100 per share) of the
New Preferred.
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1 shall
have the respective meanings specified in Part I hereof. As used in this Part
II, the following terms shall have the following meanings, unless the context
otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the percentage
determined as set forth below based on the prevailing credit ratings of the
New Preferred in effect at the close of business on the Business Day
immediately preceding such Auction Date:
Prevailing Credit Rating Percentage
(S&P/Moody's)
AA/aa or Above ............ 120%
A/a ....................... 150%
BBB/baa ................... 200%
Below BBB/baa ............. 250%
For purposes of this definition, the "prevailing credit rating" of the New
Preferred shall be (i) AA/aa or Above, if the New Preferred has a rating of
AA- or better by S&P and aa3 or better by Moody's or the equivalent of either
or both or such ratings by such agencies or substitute rating agencies
selected as provided below, (ii) if not AA/aa or Above, then A/a if the New
Preferred has a rating of A- or better and lower than AA- by S&P and a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if not AA/aa or
Above or A/a, then BBB/baa if the New Preferred has a rating of BBB- or
better and lower than A- by S&P and baa3 or better and lower than a3 by
Moody's or the equivalent, and (iv) if not AA/aa or Above, A/a or BBB/baa,
then Below BBB/baa. The Company shall take all reasonable action necessary to
enable S&P and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Shearson Lehman Brothers Inc. and Smith Barney,
Harris Upham & Co. Incorporated or their respective successors shall select,
as necessary, one or two nationally recognized statistical rating
organizations (as that term is used in the rules and regulations of the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended) to act as substitute rating agencies and the Company shall take
all reasonable action to enable such rating agencies to provide ratings for
the New Preferred.
(b) "Affiliate" shall mean any Person known to the Auction Agent to be
controlled by, in control of or under common control with the Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is identified
as such in such Bidder's Master Purchaser's Letter.
<PAGE>
(d) "Auction Date" shall mean the Business Day next preceding the first
day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of Section 2
of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of Section
2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-Dealer in this
Part II, that is a member of, or a participant in, the Securities Depository,
has been selected by the Company and has entered into a Broker-Dealer
Agreement with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in this Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Master Purchaser's Letter and
is listed as the beneficial owner of such shares of the New Preferred in the
records of the Auction Agent.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Master Purchaser's Letter" shall mean a letter addressed to the
Company, the Auction Agent, a Broker-Dealer and an Agent Member in which a
Person agrees, among other things, to offer to purchase, to purchase, to
offer to sell and/or to sell shares of the New Preferred as set forth in this
Part II.
(m) "Maximum Rate," on any Auction Date, shall mean the product of the
"AA" Composite Commercial Paper Rate times the "AA" Rate Multiple.
(n) "Order" shall have the meaning specified in paragraph (a) of Section
2 of this Part II.
(o) "Outstanding" shall mean, as of any date, shares of the New Preferred
theretofore issued by the Company except, without duplication, (i) any shares
of the New Preferred theretofore cancelled or delivered to the Auction Agent
for cancellation or redeemed by the Company or as to which a notice of
redemption shall have been given by the Company, (ii) any shares of the New
Preferred as to which the Company or any Affiliate thereof (other than a
Broker-Dealer Affiliate) shall be an Existing Holder and (iii) any shares of
the New Preferred represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Company.
(p) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
<PAGE>
(q) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Master Purchaser's Letter and (ii) who
may be interested in acquiring shares of the New Preferred (or, in the case
of an Existing Holder, additional shares of the New Preferred).
(r) "Securities Depository" shall mean The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
securities depository in connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time, on
any Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as
specified by the Auction Agent from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.
(v) "Submitted Hold Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders.
(a) On or prior to the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer information
as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such Existing Holder
desires to continue to hold without regard to the Applicable Rate
for the next succeeding Dividend Period;
(B) the number of Outstanding shares, if any, of the New
Preferred that such Existing Holder desires to continue to hold if
the Applicable Rate for the next succeeding Dividend Period shall
not be less than the rate per annum specified by such Existing
Holder; and/or
<PAGE>
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such Existing Holder
offers to sell without regard to the Applicable Rate for the next
succeeding Dividend Period; and
(ii) one or more Broker-Dealers, using lists of Potential Holders,
shall, in good faith for the purpose of conducting a competitive Auction
in a commercially reasonable manner, contact Potential Holders, including
Persons that are not Existing Holders, on such lists to determine the
number of shares, if any, of the New Preferred that each such Potential
Holder offers to purchase if the Applicable Rate for the next succeeding
Dividend Period shall be not less than the rate per annum specified by
such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i)(A), (i)(B), (i)(C) or (ii) of this paragraph (a) is
hereinafter referred to as an "Order"; each Existing Holder and each Potential
Holder placing an Order is hereinafter referred to as a "Bidder"; an Order
containing the information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing the information
referred to in clause (i)(B) or (ii) of this paragraph (a) is hereinafter
referred to as a "Bid"; and an Order containing the information referred to in
clause (i)(C) of this paragraph (a) is hereinafter referred to as a "Sell
Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate determined on such
Auction Date shall be less than the rate specified therein;
(B) such number or a lesser number of Outstanding shares of the
New Preferred to be determined as set forth in clause (iv) of
paragraph (a) of Section 5 of this Part II if the Applicable Rate
determined on such Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New Preferred
to be determined as set forth in clause (iii) of paragraph (b) of
Section 5 of this Part II if the rate specified therein shall be
higher than the Maximum Rate and Sufficient Clearing Bids do not
exist.
(ii) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or lesser number of Outstanding shares of the
New Preferred as set forth in clause (iii) of paragraph (b) of
Section 5 of this Part II if Sufficient Clearing Bids do not exist.
<PAGE>
(iii) A Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate determined on such
Auction Date shall be higher than the rate specified therein; or
(B) such number or a lesser number of Outstanding shares of the
New Preferred as set forth in clause (v) of paragraph (a) of Section
5 of this Part II if the Applicable rate determined on such Auction
date shall be equal to the rate specified therein.
3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior
to the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred that are
the subject to such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of the New Preferred subject
to any Hold Order placed by such Existing Holder;
(B) the number of shares, if any, of the New Preferred subject
to any Bid placed by such Existing Holder and the rate specified in
such Bid; and
(C) the number of shares, if any, of the New Preferred subject
to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate and
number of shares specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of the
New Preferred held by any Existing Holder are not submitted to the Auction
Agent prior to the Submission deadline, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Holder covering the
number of Outstanding shares of the New Preferred held by such Existing
Holder not subject to an Order submitted to the Auction Agent.
(d) If one or more Orders covering, in the aggregate, more than the
number of Outstanding shares of the New Preferred held by any Existing Holder
are submitted to the Auction Agent by a Broker-Dealer, such Orders shall be
considered valid as follows and in the following order of priority:
(i) all Hold Orders shall be considered valid, but only up to and
including in the aggregate the number of Outstanding shares of the New
Preferred held by such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers submitting Hold Orders,
if the number of shares of the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New Preferred held by
such Existing Holder, the number of shares subject to each such Hold
Order shall be reduced pro rata to cover the number of Outstanding shares
of the New Preferred held by such Existing Holder;
<PAGE>
(ii) (A) any Bid shall be considered valid up to and including the
excess of the number of Outstanding shares of the New Preferred held by
such Existing Holder over the number of shares of the New Preferred
subject to any Hold Orders referred to in clause (i) above;
(B) subject to subclause (A), if more than one Bid with the same
rate is submitted on behalf of such Existing Holder and the number of
Outstanding shares of the New Preferred subject to such Bids is greater
than such excess, such Bids shall be considered valid up to and including
the amount of such excess, and, solely for purposes of allocating
compensation among the Broker-Dealers submitting Bids with the same rate,
the number of shares of the New Preferred subject to each Bid with the
same rate shall be reduced pro rata to cover the number of shares of the
New Preferred equal to such excess;
(C) subject to subclause (A), if more than one Bid with
different rates is submitted on behalf of such Existing Holder, such Bids
shall be considered valid in the ascending order of their respective
rates up to and including the amount of such excess; and
(D) in any such event, the number, if any, of such Outstanding
shares of the New Preferred subject to Bids not valid under this clause
(ii) shall be treated as the subject of a Bid by a Potential Holder at
the rate herein specified; and
(iii) all Sell Orders shall be considered valid up to and including
the excess of the number of Outstanding shares of the New Preferred held
by such Existing Holder over the sum of the shares of the New Preferred
subject to valid Hold Orders referred to in clause (i) above and valid
Bids by such Existing Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate Bid with the rate and number of shares
therein specified.
(f) Orders by Existing Holders and Potential Holders must specify numbers
of shares of the New Preferred in whole Units. Any Order that specifies a
number of shares of the New Preferred other than in whole Units will not be
accepted and will not be considered a Submitted Order for purposes of an
Auction.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
<PAGE>
(a) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (such Orders submitted or deemed submitted by
Broker-Dealers being hereinafter referred to as "Submitted Hold Orders,"
"Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall determine:
(i) the excess of the total number of Outstanding shares of the New
Preferred over the number of Outstanding shares of the New Preferred that
are the subject of Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred that
are the subject of Submitted Bids by Potential Holders specifying
one or more rates equal to or lower than the Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred that
are the subject of Submitted Bids by Existing Holders specifying one
or more rates higher than the Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred that
are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than because the
number of shares of the New Preferred in subclauses (B) and (C) above is
zero because all of the Outstanding shares of the New Preferred are the
subject of Submitted Hold Orders), such Submitted Bids in subclause (A)
above being hereinafter referred to collectively as "Sufficient Clearing
Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate specified
in the Submitted Bids (the "Winning Bid Rate") which if:
(A)(I) each Submitted Bid from Existing Holders specifying such
lowest rate and (II) all other Submitted Bids from Existing Holders
specifying lower rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New Preferred that are
the subject of such Submitted Bids; and
(B)(I) each Submitted Bid from Potential Holders specifying such
lowest rate and (II) all other Submitted Bids from Potential Holders
specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate number of Outstanding shares of the New
Preferred which, when added to the number of Outstanding shares of the
New Preferred to be purchased by such Potential Holders described in
subclause (B) above, would equal not less than the Available New
Preferred.
<PAGE>
(b) Promptly after the Auction Agent has made the determinations pursuant
to paragraph (a) of this Section 4, the Auction Agent shall advise the
Company of the "AA" Composite Commercial Paper Rate and the Maximum Rate on
the Auction Date and, based on such determinations, the Applicable Rate for
the next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid
Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding shares of the New Preferred are the subject of
Submitted Hold Orders), that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate; or
(iii) if all of the Outstanding shares of the New Preferred are the
subject of Submitted Hold Orders, that the Applicable Rate for the next
succeeding Dividend Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of Shares. Existing Holders shall continue to hold the shares of the
New Preferred that are the subject of Submitted Hold Orders, and based on the
determinations made pursuant to paragraph (a) of Section 4 of this Part II, the
Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the
Auction Agent shall take such other actions as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell Orders
shall be accepted and, subject to the provisions of paragraphs (d) and (e) of
this Section 5, Submitted Bids shall be accepted or rejected as follows in
the following order of priority and all other Submitted Bids shall be
rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted
and Existing Holders' Submitted Bids specifying any rate that is higher
than the Winning Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New Preferred that are the
subject of such Submitted Sell Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any rate that is
lower than the Winning Bid Rate shall be rejected, thus entitling each
such Existing Holder to continue to hold the shares of the New Preferred
that are the subject of such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any rate that is
lower than the Winning Bid Rate shall be accepted;
(iv) Each Existing Holder's Submitted Bid specifying a rate that is
equal to the Winning Bid Rate shall be rejected, thus entitling such
Existing Holder to continue to hold the shares of the New Preferred that
are the subject of such Submitted bid, unless the number of Outstanding
shares of the New Preferred subject to all such Submitted Bids shall be
greater than the number of shares of New Preferred ("remaining shares")
equal to the excess of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted Bids described in
clauses (ii) and (iii) of this paragraph (a), in which event such
Submitted Bid of such Existing Holder shall be accepted in part, and such
Existing Holder shall be required to sell shares of the New Preferred
subject to such Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding shares of the New
Preferred then held by such Existing Holder subject to such Submitted Bid
and (B) the number of shares of the New Preferred obtained by multiplying
the number of remaining shares by a fraction the numerator of which shall
be the number of Outstanding shares of the New Preferred held by such
Existing Holder subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of the New
Preferred subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate; and
<PAGE>
(v) each Potential Holder's Submitted Bid specifying a rate that is
equal to the Winning Bid Rate shall be accepted but only in an amount
equal to the number of shares of the New Preferred obtained by
multiplying the difference between the Available New Preferred and the
number of shares of the New Preferred subject to Submitted Bids described
in clauses (ii), (iii) and (iv) of this paragraph (a) by a fraction, the
numerator of which shall be the number of Outstanding shares of the New
Preferred subject to such Potential Holder's Submitted Bid and the
denominator of which shall be the aggregate number of Outstanding shares
of the New Preferred subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding shares of the New Preferred are the subject of
Submitted Hold Orders), subject to the provisions of paragraph (d) of this
Section 5, Submitted Orders shall be accepted or rejected as follows in the
following order of priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate that is
equal to or lower than the Maximum Rate shall be rejected, thus entitling
such Existing Holders to continue to hold the shares of the New Preferred
that are the subject of such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any rate that is
equal to or lower than the Maximum Rate shall be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any rate that
is higher than the Maximum Rate and the Submitted Sell Order of each
Existing Holder shall be accepted, but in both cases only in an amount
equal to the difference between (A) the number of Outstanding shares of
the New Preferred then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the number of shares of the
New Preferred obtained by multiplying the difference between the
Available New Preferred and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in clauses (i) and (ii) of
this paragraph (b) by a fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred held by such Existing
Holder subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate number of Outstanding shares
of the New Preferred subject to all such Submitted Bids and Submitted
Sell Orders.
<PAGE>
(c) If all of the Outstanding shares of the New Preferred are subject to
Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or (b)
of this Section 5, any Existing Holder would be entitled or required to sell,
or any Potential Holder would be entitled or required to purchase shares of
the New Preferred other than in whole Units on any Auction Date, the Auction
Agent shall, in such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be purchased or
sold by any Existing Holder or Potential Holder on such Auction Date so that
the number of Units purchased or sold by each Existing Holder or Potential
Holder on such Auction Date shall be whole Units of the New Preferred.
(e) If, as a result of the procedures described in paragraph (a) of this
Section 5, any Potential Holder would be entitled or required to purchase
less than a whole Unit on any Auction Date, the Auction Agent shall, in such
manner as, in its sole discretion, it shall determine, allocate Units for
purchase among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential Holder, even if
such allocation results in one or more of such Potential Holders not
purchasing Units of the New Preferred on such Auction Date.
(f) Based on the results of each Auction, the Auction Agent shall
determine the aggregate number of shares of the New Preferred to be purchased
and the aggregate number of shares of the New Preferred to be sold by
Potential Holders and Existing Holders on whose behalf each Broker-Dealer
submitted Bids or Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate number of shares of the purchased and such
aggregate number of shares to be sold differ, determine to which other
Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, shares of the New Preferred.
6. Miscellaneous.
(a) The Board may interpret the provisions of this Part II to resolve any
inconsistency or ambiguity that may arise or be revealed in connection with
the Auction Procedures provided for herein, and if such inconsistency or
ambiguity reflects an inaccurate provision hereof, the Board may, in
appropriate circumstances, authorize the filing of an instrument to correct
or resolve such inaccurate provision.
(b) An Existing Holder (i) may sell, transfer or otherwise dispose of
shares of the New Preferred only pursuant to a Bid or Sell Order in
accordance with the procedures described in this Part II or to or through a
Broker-Dealer or to a Person that has delivered a signed copy of a Master
Purchaser's Letter to the Auction Agent, provided that in the case of all
transfers other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Agent Member advises the Auction Agent of such transfer,
and (ii) shall have the ownership of the shares of the New Preferred held by
it maintained in book entry form by the Securities Depository for the account
of its Agent Member, which in turn will maintain records of such Existing
Holder's beneficial ownership. Shares of the New Preferred may be sold or
transferred only in whole Units.
<PAGE>
(c) Neither the Company nor any affiliate thereof may submit an Order in
any Auction except as set forth in the next sentence. Any Broker-Dealer that
is an affiliate of the Company may submit Orders in Auctions but only if such
Orders are not for its own account, except that if such affiliated
Broker-Dealer holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such shares.
(d) Commencing with the first day of the first Dividend Period for which
the Applicable Rate is determined by the formula of 250% of the 60- day 'AA'
Composite Commercial Paper Rate, as a result of an occurrence of a Default,
the Company or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Auction Agent set forth herein.
Dated: September 14, 1992 VIRGINIA ELECTRIC AND POWER COMPANY
Thomas N. Chewning
Vice President, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company
(hereinafter referred to as the Company).
2. The Restated Articles of Incorporation, as amended (the Articles) of
Virginia Electric and Power Company (the Company) hereby are amended to
create a series of the Company's Preferred Stock which shall be
designated the September 1992B Series Auction Market Preferred Stock
(hereinafter sometimes referred to as the New Preferred). In
accordance with the provisions of the Articles, the distinctive
designation, preferences, limitations and relative rights of the New
Preferred are determined and fixed as follows:
(a) The distinctive serial designation of the New Preferred shall be
"September 1992B Series Auction Market Preferred Stock." Shares of the New
Preferred may only be purchased or transferred in whole units of 1,000 shares
each (Units) or integral multiples thereof and the shares included in the
Units may not be separately purchased or transferred.
(b) The dividend rate on the shares of the New Preferred for the Initial
Dividend Period (such term and all other capitalized terms used herein being
used, unless otherwise expressly provided herein, as defined in Parts I and
II of these Articles of Amendment) shall be 2.85 % per annum. For each
Dividend Period thereafter, the dividend rate will be determined according to
the procedures set forth in Parts I and II.
<PAGE>
(c) The liquidation preference of the shares of the New Preferred shall
be $100 per share, payable in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Company.
(d) (i) The shares of the New Preferred shall be redeemable on the second
Business Day preceding any Dividend Payment Date at the option of the
Company, as a whole or in part, in whole Units only at a redemption price of
$100,000 per Unit ($100 per share) (without premium), plus an amount equal to
"dividends accrued or in arrears" (such phrase being used in these Articles
of Amendment as defined in Section 3 of the Division A of the Articles).
If fewer than all of the outstanding shares of the New Preferred are to
be redeemed pursuant to this subparagraph (d)(i), the number of shares to be
redeemed shall be determined by the Board of Directors of the Company and
such shares shall be redeemed in whole Units pro rata from the Holders in
proportion to the number of such shares held by such Holders. If such pro
rata redemption would result in the redemption of fractional Units, the Units
to be redeemed shall be selected from among the outstanding Units of the New
Preferred in any manner determined by the Auction Agent to be equitable, such
that the redemption is in whole Units only.
(ii) So long as no Default shall have occurred, the Company shall pay to
the Auction Agent, no later than 12:00 Noon, New York City time, on the
Business Day next preceding any redemption date, the redemption price in
funds available in The City of New York, New York, to be paid on such
redemption date, plus an amount equal to dividends accrued or in arrears to
the date fixed for redemption of any share of the New Preferred after notice
of a redemption is given and shall give the Auction Agent irrevocable
instructions to apply such funds and, if applicable, the income and proceeds
therefrom, to the payment of the redemption price for such shares upon
surrender of the certificate or certificates therefor. The Company may direct
the Auction Agent to invest any such available funds in Short-Term Money
Market Instruments provided that the proceeds of any such investment will be
available in The City of New York, New York at the opening of business on
such redemption date. All funds held by the Auction Agent pursuant to this
clause (ii) (to the extent necessary to pay the full amount of the redemption
price for such shares) shall be held in trust for the Holders of such shares.
(e) The shares of the New Preferred shall not be entitled to any right of
conversion or any preemptive right to acquire any other security.
(f) The shares of the New Preferred shall not be entitled to a sinking
fund.
(g) Except as otherwise provided in these Articles of Amendment, the
shares of the New Preferred shall have all the designations, preferences,
limitations and relative rights and voting power, and restrictions or
qualifications thereof, expressed in the Articles as presently in effect. The
shares of the New Preferred shall not have any special rights other than
those specified herein and in the Articles as presently in effect.
<PAGE>
(h) There are hereby classified as the September 1992B Series Auction
Market Preferred Stock, 500,000 shares of the Preferred Stock,in 1,000 Units,
with each Unit consisting of 1,000 shares of the New Preferred; not more than
500,000 shares of the New Preferred may be issued. Upon retirement of the
shares of the New Preferred, such number of shares may be, but shall not be
required to be, decreased (in whole Units) by filing articles of amendment to
that effect. In the absence of such filing, retired shares of the New
Preferred shall become authorized but unissued shares of the Company's class
of Preferred Stock, undesignated as to series.
(i) No shares of the New Preferred redeemed, purchased or otherwise
acquired by the Company shall be reissued, resold or otherwise transferred by
the Company as shares of the New Preferred.
3. The shares of the New Preferred shall have the further relative rights,
preferences and limitations set forth in Sections 1 through 6 of Division A
of Article III of the Articles, and the rates, dates, terms and other
conditions upon which distributions shall be payable thereon shall be as set
forth in Parts I and II of these Articles of Amendment.
4. The designation of the New Preferred, as herein provided, has been duly
approved, and these Articles of Amendment have been duly adopted, by an
Executive Committee of the Board of Directors of the Company, within limits
specifically prescribed by the Board of Directors of the Company. No
shareholder action was taken, or was required to be taken, in connection with
the adoption of these Articles of Amendment.
PART I
1. Definitions. As used in Parts I and II hereof, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
(a) "'AA' Composite Commercial Paper Rate," on any date, shall mean (i)
the interest equivalent of the 60-day rate on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by S&P or the
equivalent of such rating by S&P or another rating agency, as made available
on a discount basis or otherwise by the Federal Reserve Bank of New York for
the immediately preceding Business Day; or (ii) in the event that the Federal
Reserve Bank of New York does not make available such a rate, then the
arithmetic average of the interest equivalent of the 60- day rate on
commercial paper placed on behalf of such issuers, as quoted on a discount
basis or otherwise by the Commercial Paper Dealers to the Auction Agent for
the close of business on the immediately preceding Business Day. If any
Commercial Paper Dealer does not quote a rate required to determine the "AA"
Composite Commercial Paper Rate, the "AA" Composite Commercial Paper Rate
shall be determined on the basis of quotations furnished by the remaining
Commercial Paper Dealers and any Substitute Commercial Paper Dealer selected
by the Company to provide such rate not being supplied by any Commercial
Paper Dealer or, if the Company does not select any such Substitute
Commercial Paper Dealer, by the remaining Commercial Paper Dealers; provided,
however, that if the Board shall make the adjustment referred to in the
second sentence of paragraph (b)(i) of Section 2 of this Part I, then (i) if
the Dividend Period Days after such adjustment shall be 70 or more days but
fewer than 85 days, such rate shall be based on the arithmetic average of the
interest equivalent of the 60-day and 90-day rates on such commercial paper,
or (ii) if the number of Dividend Period Days after such adjustment shall be
85 or more days but 98 or fewer days, such rate shall be based on the
interest equivalent of the 90-day rate on such commercial paper. For purposes
of this definition, the "interest equivalent" of a rate stated on a discount
basis (a "discount rate") for commercial paper of a given days' maturity
shall be equal to the quotient (rounded upwards to the next higher
one-thousandth (.001 of 1%) of (A) the discount rate divided by (B) the
difference between (x) 1.00 and (y) a fraction, the numerator of which shall
be the product of the discount rate times the number of days in which such
commercial paper matures and the denominator of which shall be 360.
<PAGE>
(b) "Applicable Rate" shall have the meaning specified in subparagraph
(c)(i) of Section 2 of this Part I.
(c) "Auction" shall mean each periodic implementation of the Auction
Procedures.
(d) "Auction Agent" shall mean the bank or trust company or other entity
appointed as such by a resolution of the Board.
(e) "Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Part II hereof.
(f) "Board" shall mean the Board of Directors of the Company or any duly
authorized committee thereof.
(g) "Business Day" shall mean a day on which the New York Stock Exchange
is open for trading and banks or trust companies in The City of New York, New
York, are not authorized by law to close.
(h) "Code" shall mean the Internal Revenue Code of 1986, or successor
provisions of federal tax law, as amended and in effect from time to time.
(i) "Commercial Paper Dealers" shall mean Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Lehman Commercial Paper Incorporated and Smith Barney,
Harris Upham & Co. Incorporated or, in lieu of any thereof, their respective
affiliates or successors, if any such entity is a commercial paper dealer.
(j) "Date of Original Issue" shall mean the date on which the Company
initially issues shares of the New Preferred.
(k) "Default" shall mean the first failure by the Company (A) to declare
or to pay to the Auction Agent, not later than 12:00 Noon, New York City
time, on the Business Day next preceding any Dividend Payment Date, in funds
immediately available on such Dividend Payment Date in New York, New York,
the full amount of any dividend at the Applicable Rate on such Dividend
Payment Date on any share of the New Preferred or (B) to pay to the Auction
Agent, no later than 12:00 Noon, New York City time on the Business Day next
preceding any redemption date, the redemption price in funds available in New
York, New York to be paid on such redemption date, plus an amount equal to
accrued and unpaid dividends at the Applicable Rate thereon to such
redemption date, of any share of the New Preferred after notice of a
redemption is given.
<PAGE>
(l) "Dividend Payment Date" shall mean a date of payment of Dividends on
the New Preferred.
(m) "Dividend Period" and "Dividend Periods" shall have the respective
meanings specified in subparagraph (c)(i) of Section 2 of this Part I.
(n) "Dividend Period Days" shall have the meaning specified in
subparagraph (b)(i) of Section 2 of this Part I.
(o) "Holder" shall mean the holder(s) of shares of the New Preferred as
the same appear(s) on the stock books of the Company.
(p) "Initial Dividend Payment Date" shall mean the first Dividend Payment
Date with respect to the New Preferred.
(q) "Initial Dividend Period" shall have the meaning specified in
subparagraph (c)(i) of Section 2 of this Part I.
(r) "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
corporation, and its successors.
(s) "New Preferred" shall mean the series of the Preferred Stock, $100
liquidation preference, of the Company designated as its "September 1992B
Series Auction Market Preferred Stock."
(t) "S&P" shall mean Standard & Poor's Corporation, a New York
corporation, and its successors.
(u) "Short-Term Money Market Instruments" shall mean the following types
of instruments if, on the date of determination, the remaining terms to
maturity thereof are not in excess of 90 days:
(i) GNMA, FNMA and FHLMC Certificates and U.S. Treasury
Securities;
(ii) demand or time deposits in, or bankers acceptances or
certificates of deposit issued by, (A) a depository institution or trust
company incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or (B) a United States branch
office or agency of a foreign depository institution (provided that such
branch office or agency is subject to banking regulation under the laws
of the United States, any state thereof or the District of Columbia), if,
in each case, the commercial paper, if any, and the long-term unsecured
debt obligations (other than such obligations whose rating is based on
the credit of a person or entity other than such institution or trust
company) of such depository institution or trust company, at the time of
the Company's investment therein or contractual commitment providing for
such investment, have credit ratings from Moody's and Standard & Poor's
of at least P-1 and A-1+, respectively, in the case of commercial paper,
and, if the long-term unsecured debt obligations of such institution are
rated by Moody's , a credit rating from Moody's of at least Aa3 in the
case of such long-term unsecured debt obligations; provided, however,
that in the case of any such investment that matures in no more than one
Business Day from the date of purchase or other acquisition by the
Company, all of the foregoing requirements shall be applicable except
that the required long-term unsecured debt credit rating of such
depository institution or trust company from Moody's shall be at least
A2; and provided further, however, that time deposits, bankers
acceptances and certificates of deposit shall be deemed to be Short-Term
Money Market Instruments only to the extent that they are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation;
<PAGE>
(iii) commercial paper that is exempted from the provisions of the
Securities Act of 1933, as amended, by Section 3(a)(3) thereof and that
is rated at the time of the Company's investment therein or contractual
commitment providing for such investment, at least P-1 and A-1+ by
Moody's and Standard & Poor's, respectively, and issued by an obligor
whose other long-term unsecured debt obligations, if rated by Moody's
(other than such obligations whose rating is based on the credit of a
person or entity other than such obligor), are rated at least Aa3 by
Moody's;
(iv) repurchase obligations with respect to any U.S. Treasury
Security or any GNMA, FNMA or FHLMC Certificate entered into with a
depository institution, trust company or securities dealer (acting as
principal) which meets the credit rating requirements for commercial
paper and long-term unsecured debt obligations specified in clause (ii)
above; and
(v) eurodollar demand deposits in the head office or a branch office
of a depository institution or trust company meeting the credit rating
requirements for commercial paper and long-term unsecured debt
obligations specified in clause (ii) above; provided, that the interest
receivable by the Company on such investment is not subject to
withholding or similar taxes imposed by the country of situs of such
investment.
(w) "Subsequent Dividend Period" and "Subsequent Dividend Periods" shall
have the respective meanings specified in subparagraph (c)(i) of Section 2 of
this Part I.
(x) "Substitute Commercial Paper Dealer" shall mean The First Boston
Corporation or Morgan Stanley & Co. Incorporated, or their respective
affiliates or successors, if such dealer or its affiliate or successor is a
commercial paper dealer; provided, that neither such dealer nor any of its
affiliates or successors shall be a Commercial Paper Dealer.
2. Dividend Methodology.
(a) The Holders shall be entitled to receive, when, as and if declared by
the Board and when not prohibited by law, cumulative cash dividends at the
Applicable Rate, in accordance with the method prescribed by the Board as set
forth in subparagraph (c)(i) of this Section 2, payable on the respective
Dividend Payment Dates as provided in this Section 2.
<PAGE>
(b) (i) Dividends on shares of the New Preferred, at the Applicable Rate,
shall accrue from the Date of Original Issue and shall be payable commencing
on such Dividend Payment Dates as shall be specified for the New Preferred by
resolutions duly adopted by the Board in accordance with the method
prescribed by the Board, which Dividend Payment Dates shall be every 49th day
after the Initial Dividend Payment Date, except that:
(1) if the day that otherwise would be the Dividend Payment Date is
not a Business Day, or the day that otherwise would be the Dividend
Payment Date is immediately succeeded by a day that is not a Business
Day, then the Dividend Payment Date shall be the next succeeding Business
Day that is immediately succeeded by a Business Day, provided that
(2) if the Securities Depository shall make available to its
participants and members, in funds immediately available in The City of
New York on a Dividend Payment Date, the amount due as dividends on such
Dividend Payment Date (and the Securities Depository shall have so
advised the Auction Agent), and if the day that otherwise would be such
Dividend Payment Date is not a Business Day, then the Dividend Payment
Date shall be the next succeeding Business Day, provided that
(3) if the determination of the otherwise applicable Dividend
Payment Date in the manner hereinabove provided would result in the
Dividend Period commencing on said otherwise applicable Dividend Payment
Date having less than the number of days constituting the minimum holding
period (currently found in Section 246(c) of the Code) required for
taxpayers to be entitled to the dividends-received deduction on preferred
stock held by non-affiliated corporations (currently found in Section
243(a) of the Code), then the Board shall make such adjustment to the
next succeeding Dividend Payment Date as shall be necessary to cause such
Dividend Period to have the minimum number of days constituting the
minimum holding period.
It is provided further, however, that the Board, in the event of a change in law
lengthening the minimum holding period required for taxpayers to be entitled to
the dividends-received deduction on preferred stock held by non-affiliated
corporations, may adjust the period of the time between Dividend Payment Dates
so as, subject to clauses (A) and (B) below of this subparagraph (b)(i), to
adjust uniformly the number of days (such number of days without giving effect
to such clauses (A) and (B) being hereinafter referred to as "Dividend Period
Days") in Dividend Periods commencing after the date of such change in law to
equal or exceed the then-current minimum holding period, subject to the
limitations that (A) the number of Dividend Period Days shall not exceed by more
than nine days the length of such then-current minimum holding period and in no
event shall exceed 98 days and (B) dividends shall continue to be payable on the
same day of the week as the Initial Dividend Payment Date. Upon any such change
in the number of Dividend Period Days as a result of a change in law, the
Company shall mail notice of such change by first class mail, postage prepaid,
to each Holder at such Holder's address as the same appears on the stock books
of the Company.
<PAGE>
(ii) So long as no uncured Default shall have occurred, the Company shall
pay to the Auction Agent no later than 12:00 Noon, New York City time, on the
Business Day next preceding each Dividend Payment Date, an aggregate amount
of funds available on the next Business Day in New York, New York, equal to
the dividends to be paid to all Holders on such Dividend Payment Date. The
Company shall give the Auction Agent irrevocable instructions to apply such
funds and, if applicable, the income and proceeds therefrom, to the payment
of such dividends. The Company may direct the Auction Agent to invest any
such available funds in Short-Term Money Market Instruments, provided that
the proceeds of any such investment will be available in The City of New
York, New York at the opening of business on such Dividend Payment Date. All
such moneys shall be held in trust for the payment of such dividends by the
Auction Agent for the benefit of the Holders specified in subparagraph
(b)(iii) of this Section 2.
(iii) Each dividend shall be paid to the Holders of the New Preferred as
they shall appear on the stock books of the Company on the Business Day next
preceding the Dividend Payment Date therefor; provided, however, that if such
dividend shall have been determined under the proviso in subparagraph (c)(i)
of this Section 2, such dividend shall be paid to the Holders of record of
the New Preferred on such date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board. Dividends in arrears for any past
Dividend Period may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to the Holders of record of the New
Preferred as they shall appear on the stock books of the Company on such
date, not exceeding 15 days preceding the payment date thereof, as may be
fixed by the Board.
(c) (i) The dividend rate on shares of the New Preferred during the
period from and after the Date of Original Issue to and including the day
preceding the Initial Dividend Payment Date (the "Initial Dividend Period")
shall be 2.85%. Commencing on the Initial Dividend Payment Date, the dividend
rate on shares of the New Preferred for each subsequent dividend period (each
such period being hereinafter referred to as a "Subsequent Dividend Period",
and such periods being hereinafter referred to collectively as "Subsequent
Dividend Periods") which Subsequent Dividend Periods each shall commence on a
Dividend Payment Date and shall end on and include the day preceding the next
Dividend Payment Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures; provided, however, that if a
Default shall have occurred prior to the first day of such Subsequent
Dividend Period and shall not be cured as provided in the next succeeding
paragraph, the dividend rate for all such Subsequent Dividend Periods shall
be a rate per annum equal to 250% of the 60-day "AA" Composite Commercial
Paper Rate (the rate per annum at which dividends are payable on shares of
the New Preferred for any Dividend Period being herein referred to as the
"Applicable Rate").
(ii) Any Default with respect to shares of the New Preferred shall be
deemed to be cured if as of 12:00 noon, New York City time, on the third
Business Day next succeeding such Default, the Company shall have paid to the
Auction Agent (i) in the case of a failure to pay dividends, the full amount
of the dividends to be paid for the Dividend Period with respect to which
such failure occurred, or (ii) in the case of a failure to pay the redemption
price, the full amount of the aggregate redemption price for the shares of
the New Preferred that have been called for redemption, plus accrued and
unpaid dividends from the date of redemption to the date of such cure.
<PAGE>
(iii) The dividends payable on shares of the New Preferred for any
Dividend Period shall be computed by multiplying the Applicable Rate for such
Dividend Period by a fraction, the numerator of which shall be the number of
days in such Dividend Period and the denominator of which shall be 360, and
applying the rate obtained against $100,000 per Unit ($100 per share) of the
New Preferred.
PART II
1. Certain Definitions. Capitalized terms not defined in this Section 1 shall
have the respective meanings specified in Part I hereof. As used in this Part
II, the following terms shall have the following meanings, unless the context
otherwise requires.
(a) "'AA' Rate Multiple," on any Auction Date, shall mean the percentage
determined as set forth below based on the prevailing credit ratings of the
New Preferred in effect at the close of business on the Business Day
immediately preceding such Auction Date:
Prevailing Credit Rating Percentage
(S&P/Moody's)
AA/aa or Above ............ 120%
A/a ....................... 150%
BBB/baa ................... 200%
Below BBB/baa ............. 250%
For purposes of this definition, the "prevailing credit rating" of the New
Preferred shall be (i) AA/aa or Above, if the New Preferred has a rating of
AA- or better by S&P and aa3 or better by Moody's or the equivalent of either
or both or such ratings by such agencies or substitute rating agencies
selected as provided below, (ii) if not AA/aa or Above, then A/a if the New
Preferred has a rating of A- or better and lower than AA- by S&P and a3 or
better and lower than aa3 by Moody's or the equivalent, (iii) if not AA/aa or
Above or A/a, then BBB/baa if the New Preferred has a rating of BBB- or
better and lower than A- by S&P and baa3 or better and lower than a3 by
Moody's or the equivalent, and (iv) if not AA/aa or Above, A/a or BBB/baa,
then Below BBB/baa. The Company shall take all reasonable action necessary to
enable S&P and Moody's to provide a rating for the New Preferred. If either
S&P or Moody's shall not make such a rating available, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Shearson Lehman Brothers Inc. and Smith Barney,
Harris Upham & Co. Incorporated or their respective successors shall select,
as necessary, one or two nationally recognized statistical rating
organizations (as that term is used in the rules and regulations of the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended) to act as substitute rating agencies and the Company shall take
all reasonable action to enable such rating agencies to provide ratings for
the New Preferred.
(b) "Affiliate" shall mean any Person known to the Auction Agent to be
controlled by, in control of or under common control with the Company.
(c) "Agent Member" shall mean the member of, or participant in, the
Securities Depository that will act on behalf of a Bidder and is identified
as such in such Bidder's Master Purchaser's Letter.
<PAGE>
(d) "Auction Date" shall mean the Business Day next preceding the first
day of a Dividend Period.
(e) "Available New Preferred" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(f) "Bid" shall have the meaning specified in paragraph (a) of Section 2
of this Part II.
(g) "Bidder" shall have the meaning specified in paragraph (a) of Section
2 of this Part II.
(h) "Broker-Dealer" shall mean any broker-dealer, or other entity
permitted by law to perform the functions required of a Broker-Dealer in this
Part II, that is a member of, or a participant in, the Securities Depository,
has been selected by the Company and has entered into a Broker-Dealer
Agreement with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" shall mean an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in this Part II.
(j) "Existing Holder," when used with respect to shares of the New
Preferred, shall mean a Person who has signed a Master Purchaser's Letter and
is listed as the beneficial owner of such shares of the New Preferred in the
records of the Auction Agent.
(k) "Hold Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(l) "Master Purchaser's Letter" shall mean a letter addressed to the
Company, the Auction Agent, a Broker-Dealer and an Agent Member in which a
Person agrees, among other things, to offer to purchase, to purchase, to
offer to sell and/or to sell shares of the New Preferred as set forth in this
Part II.
(m) "Maximum Rate," on any Auction Date, shall mean the product of the
"AA" Composite Commercial Paper Rate times the "AA" Rate Multiple.
(n) "Order" shall have the meaning specified in paragraph (a) of Section
2 of this Part II.
(o) "Outstanding" shall mean, as of any date, shares of the New Preferred
theretofore issued by the Company except, without duplication, (i) any shares
of the New Preferred theretofore cancelled or delivered to the Auction Agent
for cancellation or redeemed by the Company or as to which a notice of
redemption shall have been given by the Company, (ii) any shares of the New
Preferred as to which the Company or any Affiliate thereof (other than a
Broker-Dealer Affiliate) shall be an Existing Holder and (iii) any shares of
the New Preferred represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Company.
(p) "Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
<PAGE>
(q) "Potential Holder" shall mean any Person, including any Existing
Holder, (i) who shall have executed a Master Purchaser's Letter and (ii) who
may be interested in acquiring shares of the New Preferred (or, in the case
of an Existing Holder, additional shares of the New Preferred).
(r) "Securities Depository" shall mean The Depository Trust Company and
its successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
securities depository in connection with shares of the New Preferred.
(s) "Sell Order" shall have the meaning specified in paragraph (a) of
Section 2 of this Part II.
(t) "Submission Deadline" shall mean 1:00 P.M., New York City time, on
any Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as
specified by the Auction Agent from time to time.
(u) "Submitted Bid" shall have the meaning specified in paragraph (a) of
Section 4 of this Part II.
(v) "Submitted Hold Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(w) "Submitted Order" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
(x) "Submitted Sell Order" shall have the meaning specified in paragraph
(a) of Section 4 of this Part II.
(y) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph (a) of Section 4 of this Part II.
(z) "Winning Bid Rate" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.
2. Orders by Existing Holders and Potential Holders.
(a) On or prior to the Submission Deadline on each Auction Date:
(i) each Existing Holder may submit to a Broker-Dealer information
as to:
(A) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such Existing Holder
desires to continue to hold without regard to the Applicable Rate
for the next succeeding Dividend Period;
(B) the number of Outstanding shares, if any, of the New
Preferred that such Existing Holder desires to continue to hold if
the Applicable Rate for the next succeeding Dividend Period shall
not be less than the rate per annum specified by such Existing
Holder; and/or
<PAGE>
(C) the number of Outstanding shares, if any, of the New
Preferred held by such Existing Holder that such Existing Holder
offers to sell without regard to the Applicable Rate for the next
succeeding Dividend Period; and
(ii) one or more Broker-Dealers, using lists of Potential Holders,
shall, in good faith for the purpose of conducting a competitive Auction
in a commercially reasonable manner, contact Potential Holders, including
Persons that are not Existing Holders, on such lists to determine the
number of shares, if any, of the New Preferred that each such Potential
Holder offers to purchase if the Applicable Rate for the next succeeding
Dividend Period shall be not less than the rate per annum specified by
such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i)(A), (i)(B), (i)(C) or (ii) of this paragraph (a) is
hereinafter referred to as an "Order"; each Existing Holder and each Potential
Holder placing an Order is hereinafter referred to as a "Bidder"; an Order
containing the information referred to in clause (i)(A) of this paragraph (a) is
hereinafter referred to as a "Hold Order"; an Order containing the information
referred to in clause (i)(B) or (ii) of this paragraph (a) is hereinafter
referred to as a "Bid"; and an Order containing the information referred to in
clause (i)(C) of this paragraph (a) is hereinafter referred to as a "Sell
Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate determined on such
Auction Date shall be less than the rate specified therein;
(B) such number or a lesser number of Outstanding shares of the
New Preferred to be determined as set forth in clause (iv) of
paragraph (a) of Section 5 of this Part II if the Applicable Rate
determined on such Auction Date shall be equal to the rate specified
therein; or
(C) a lesser number of Outstanding shares of the New Preferred
to be determined as set forth in clause (iii) of paragraph (b) of
Section 5 of this Part II if the rate specified therein shall be
higher than the Maximum Rate and Sufficient Clearing Bids do not
exist.
(ii) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of the New Preferred
specified in such Sell Order; or
(B) such number or lesser number of Outstanding shares of the
New Preferred as set forth in clause (iii) of paragraph (b) of
Section 5 of this Part II if Sufficient Clearing Bids do not exist.
<PAGE>
(iii) A Bid by a Potential Holder shall constitute an irrevocable
offer to purchase:
(A) the number of Outstanding shares of the New Preferred
specified in such Bid if the Applicable Rate determined on such
Auction Date shall be higher than the rate specified therein; or
(B) such number or a lesser number of Outstanding shares of the
New Preferred as set forth in clause (v) of paragraph (a) of Section
5 of this Part II if the Applicable rate determined on such Auction
date shall be equal to the rate specified therein.
3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior
to the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of shares of the New Preferred that are
the subject to such Order;
(iii) to the extent that such Bidder is an Existing Holder:
(A) the number of shares, if any, of the New Preferred subject
to any Hold Order placed by such Existing Holder;
(B) the number of shares, if any, of the New Preferred subject
to any Bid placed by such Existing Holder and the rate specified in
such Bid; and
(C) the number of shares, if any, of the New Preferred subject
to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate and
number of shares specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.
(c) If one or more Orders covering all of the Outstanding shares of the
New Preferred held by any Existing Holder are not submitted to the Auction
Agent prior to the Submission deadline, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Holder covering the
number of Outstanding shares of the New Preferred held by such Existing
Holder not subject to an Order submitted to the Auction Agent.
(d) If one or more Orders covering, in the aggregate, more than the
number of Outstanding shares of the New Preferred held by any Existing Holder
are submitted to the Auction Agent by a Broker-Dealer, such Orders shall be
considered valid as follows and in the following order of priority:
<PAGE>
(i) all Hold Orders shall be considered valid, but only up to and
including in the aggregate the number of Outstanding shares of the New
Preferred held by such Existing Holder, and, solely for purposes of
allocating compensation among the Broker-Dealers submitting Hold Orders,
if the number of shares of the New Preferred subject to such Hold Orders
exceeds the number of Outstanding shares of the New Preferred held by
such Existing Holder, the number of shares subject to each such Hold
Order shall be reduced pro rata to cover the number of Outstanding shares
of the New Preferred held by such Existing Holder;
(ii) (A) any Bid shall be considered valid up to and including the
excess of the number of Outstanding shares of the New Preferred held by
such Existing Holder over the number of shares of the New Preferred
subject to any Hold Orders referred to in clause (i) above;
(B) subject to subclause (A), if more than one Bid with the same
rate is submitted on behalf of such Existing Holder and the number of
Outstanding shares of the New Preferred subject to such Bids is greater
than such excess, such Bids shall be considered valid up to and including
the amount of such excess, and, solely for purposes of allocating
compensation among the Broker-Dealers submitting Bids with the same rate,
the number of shares of the New Preferred subject to each Bid with the
same rate shall be reduced pro rata to cover the number of shares of the
New Preferred equal to such excess;
(C) subject to subclause (A), if more than one Bid with
different rates is submitted on behalf of such Existing Holder, such Bids
shall be considered valid in the ascending order of their respective
rates up to and including the amount of such excess; and
(D) in any such event, the number, if any, of such Outstanding
shares of the New Preferred subject to Bids not valid under this clause
(ii) shall be treated as the subject of a Bid by a Potential Holder at
the rate herein specified; and
(iii) all Sell Orders shall be considered valid up to and including
the excess of the number of Outstanding shares of the New Preferred held
by such Existing Holder over the sum of the shares of the New Preferred
subject to valid Hold Orders referred to in clause (i) above and valid
Bids by such Existing Holder referred to in clause (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate Bid with the rate and number of shares
therein specified.
(f) Orders by Existing Holders and Potential Holders must specify numbers
of shares of the New Preferred in whole Units. Any Order that specifies a
number of shares of the New Preferred other than in whole Units will not be
accepted and will not be considered a Submitted Order for purposes of an
Auction.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
<PAGE>
(a) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (such Orders submitted or deemed submitted by
Broker-Dealers being hereinafter referred to as "Submitted Hold Orders,"
"Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall determine:
(i) the excess of the total number of Outstanding shares of the New
Preferred over the number of Outstanding shares of the New Preferred that
are the subject of Submitted Hold Orders (such excess being hereinafter
referred to as the "Available New Preferred");
(ii) from the Submitted Orders whether:
(A) the number of Outstanding shares of the New Preferred that
are the subject of Submitted Bids by Potential Holders specifying
one or more rates equal to or lower than the Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding shares of the New Preferred that
are the subject of Submitted Bids by Existing Holders specifying one
or more rates higher than the Maximum Rate; and
(C) the number of Outstanding shares of the New Preferred that
are subject to Submitted Sell Orders
(in the event of such excess or such equality (other than because the
number of shares of the New Preferred in subclauses (B) and (C) above is
zero because all of the Outstanding shares of the New Preferred are the
subject of Submitted Hold Orders), such Submitted Bids in subclause (A)
above being hereinafter referred to collectively as "Sufficient Clearing
Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate specified
in the Submitted Bids (the "Winning Bid Rate") which if:
(A)(I) each Submitted Bid from Existing Holders specifying such
lowest rate and (II) all other Submitted Bids from Existing Holders
specifying lower rates were rejected, thus entitling such Existing
Holders to continue to hold the shares of the New Preferred that are
the subject of such Submitted Bids; and
(B)(I) each Submitted Bid from Potential Holders specifying such
lowest rate and (II) all other Submitted Bids from Potential Holders
specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate number of Outstanding shares of the New
Preferred which, when added to the number of Outstanding shares of the
New Preferred to be purchased by such Potential Holders described in
subclause (B) above, would equal not less than the Available New
Preferred.
<PAGE>
(b) Promptly after the Auction Agent has made the determinations pursuant
to paragraph (a) of this Section 4, the Auction Agent shall advise the
Company of the "AA" Composite Commercial Paper Rate and the Maximum Rate on
the Auction Date and, based on such determinations, the Applicable Rate for
the next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid
Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding shares of the New Preferred are the subject of
Submitted Hold Orders), that the Applicable Rate for the next succeeding
Dividend Period shall be equal to the Maximum Rate; or
(iii) if all of the Outstanding shares of the New Preferred are the
subject of Submitted Hold Orders, that the Applicable Rate for the next
succeeding Dividend Period shall be equal to 59% of the "AA" Composite
Commercial Paper Rate.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and
Allocation of Shares. Existing Holders shall continue to hold the shares of the
New Preferred that are the subject of Submitted Hold Orders, and based on the
determinations made pursuant to paragraph (a) of Section 4 of this Part II, the
Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the
Auction Agent shall take such other actions as set forth below:
(a) If Sufficient Clearing Bids have been made, all Submitted Sell Orders
shall be accepted and, subject to the provisions of paragraphs (d) and (e) of
this Section 5, Submitted Bids shall be accepted or rejected as follows in
the following order of priority and all other Submitted Bids shall be
rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted
and Existing Holders' Submitted Bids specifying any rate that is higher
than the Winning Bid Rate shall be accepted, thus requiring each such
Existing Holder to sell the shares of the New Preferred that are the
subject of such Submitted Sell Orders or Submitted Bids;
(ii) Existing Holders' Submitted Bids specifying any rate that is
lower than the Winning Bid Rate shall be rejected, thus entitling each
such Existing Holder to continue to hold the shares of the New Preferred
that are the subject of such Submitted Bids;
(iii) Potential Holders' Submitted Bids specifying any rate that is
lower than the Winning Bid Rate shall be accepted;
(iv) Each Existing Holder's Submitted Bid specifying a rate that is
equal to the Winning Bid Rate shall be rejected, thus entitling such
Existing Holder to continue to hold the shares of the New Preferred that
are the subject of such Submitted bid, unless the number of Outstanding
shares of the New Preferred subject to all such Submitted Bids shall be
greater than the number of shares of New Preferred ("remaining shares")
equal to the excess of the Available New Preferred over the number of
shares of the New Preferred subject to Submitted Bids described in
clauses (ii) and (iii) of this paragraph (a), in which event such
Submitted Bid of such Existing Holder shall be accepted in part, and such
Existing Holder shall be required to sell shares of the New Preferred
subject to such Submitted Bid, but only in an amount equal to the
difference between (A) the number of Outstanding shares of the New
Preferred then held by such Existing Holder subject to such Submitted Bid
and (B) the number of shares of the New Preferred obtained by multiplying
the number of remaining shares by a fraction the numerator of which shall
be the number of Outstanding shares of the New Preferred held by such
Existing Holder subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of the New
Preferred subject to such Submitted Bids made by all such Existing
Holders that specified a rate equal to the Winning Bid Rate; and
<PAGE>
(v) each Potential Holder's Submitted Bid specifying a rate that is
equal to the Winning Bid Rate shall be accepted but only in an amount
equal to the number of shares of the New Preferred obtained by
multiplying the difference between the Available New Preferred and the
number of shares of the New Preferred subject to Submitted Bids described
in clauses (ii), (iii) and (iv) of this paragraph (a) by a fraction, the
numerator of which shall be the number of Outstanding shares of the New
Preferred subject to such Potential Holder's Submitted Bid and the
denominator of which shall be the aggregate number of Outstanding shares
of the New Preferred subject to such Submitted Bids made by all such
Potential Holders that specified a rate equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding shares of the New Preferred are the subject of
Submitted Hold Orders), subject to the provisions of paragraph (d) of this
Section 5, Submitted Orders shall be accepted or rejected as follows in the
following order of priority, and all other Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids specifying any rate that is
equal to or lower than the Maximum Rate shall be rejected, thus entitling
such Existing Holders to continue to hold the shares of the New Preferred
that are the subject of such Submitted Bids;
(ii) Potential Holders' Submitted Bids specifying any rate that is
equal to or lower than the Maximum Rate shall be accepted; and
(iii) each Existing Holder's Submitted Bid specifying any rate that
is higher than the Maximum Rate and the Submitted Sell Order of each
Existing Holder shall be accepted, but in both cases only in an amount
equal to the difference between (A) the number of Outstanding shares of
the New Preferred then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the number of shares of the
New Preferred obtained by multiplying the difference between the
Available New Preferred and the aggregate number of shares of the New
Preferred subject to Submitted Bids described in clauses (i) and (ii) of
this paragraph (b) by a fraction, the numerator of which shall be the
number of Outstanding shares of the New Preferred held by such Existing
Holder subject to such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate number of Outstanding shares
of the New Preferred subject to all such Submitted Bids and Submitted
Sell Orders.
<PAGE>
(c) If all of the Outstanding shares of the New Preferred are subject to
Submitted Hold Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in paragraph (a) or (b)
of this Section 5, any Existing Holder would be entitled or required to sell,
or any Potential Holder would be entitled or required to purchase shares of
the New Preferred other than in whole Units on any Auction Date, the Auction
Agent shall, in such manner as, in its sole discretion, it shall determine,
round up or down the number of Units of the New Preferred to be purchased or
sold by any Existing Holder or Potential Holder on such Auction Date so that
the number of Units purchased or sold by each Existing Holder or Potential
Holder on such Auction Date shall be whole Units of the New Preferred.
(e) If, as a result of the procedures described in paragraph (a) of this
Section 5, any Potential Holder would be entitled or required to purchase
less than a whole Unit on any Auction Date, the Auction Agent shall, in such
manner as, in its sole discretion, it shall determine, allocate Units for
purchase among Potential Holders so that only whole Units of the New
Preferred are purchased on such Auction Date by any Potential Holder, even if
such allocation results in one or more of such Potential Holders not
purchasing Units of the New Preferred on such Auction Date.
(f) Based on the results of each Auction, the Auction Agent shall
determine the aggregate number of shares of the New Preferred to be purchased
and the aggregate number of shares of the New Preferred to be sold by
Potential Holders and Existing Holders on whose behalf each Broker-Dealer
submitted Bids or Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate number of shares of the purchased and such
aggregate number of shares to be sold differ, determine to which other
Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, shares of the New Preferred.
6. Miscellaneous.
(a) The Board may interpret the provisions of this Part II to resolve any
inconsistency or ambiguity that may arise or be revealed in connection with
the Auction Procedures provided for herein, and if such inconsistency or
ambiguity reflects an inaccurate provision hereof, the Board may, in
appropriate circumstances, authorize the filing of an instrument to correct
or resolve such inaccurate provision.
(b) An Existing Holder (i) may sell, transfer or otherwise dispose of
shares of the New Preferred only pursuant to a Bid or Sell Order in
accordance with the procedures described in this Part II or to or through a
Broker-Dealer or to a Person that has delivered a signed copy of a Master
Purchaser's Letter to the Auction Agent, provided that in the case of all
transfers other than pursuant to Auctions, such Existing Holder, its
Broker-Dealer or its Agent Member advises the Auction Agent of such transfer,
and (ii) shall have the ownership of the shares of the New Preferred held by
it maintained in book entry form by the Securities Depository for the account
of its Agent Member, which in turn will maintain records of such Existing
Holder's beneficial ownership. Shares of the New Preferred may be sold or
transferred only in whole Units.
<PAGE>
(c) Neither the Company nor any affiliate thereof may submit an Order in
any Auction except as set forth in the next sentence. Any Broker-Dealer that
is an affiliate of the Company may submit Orders in Auctions but only if such
Orders are not for its own account, except that if such affiliated
Broker-Dealer holds shares of the New Preferred for its own account, it must
submit a Sell Order in the next Auction with respect to such shares.
(d) Commencing with the first day of the first Dividend Period for which
the Applicable Rate is determined by the formula of 250% of the 60- day 'AA'
Composite Commercial Paper Rate, as a result of an occurrence of a Default,
the Company or a designee thereof, at the option of the Company, may perform
any of the functions to be performed by the Auction Agent set forth herein.
Dated: September 14, 1992 VIRGINIA ELECTRIC AND POWER COMPANY
Thomas N. Chewning
Vice President, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company.
2. The Restated Articles of Incorporation, as amended, of Virginia Electric
and Power Company (the Company) hereby are amended to create a series of
the Company's Preferred Stock. In accordance with the provisions of the
Restated Articles of Incorporation, as amended, of the Company, the
distinctive designation, preferences, limitations and relative rights of
said series of Preferred Stock are determined and fixed as follows:
(a) The distinctive serial designation of the New Series shall be
"$5.58 Dividend Preferred Stock" (hereinafter sometimes referred to as the
$5.58 Series).
(b) The dividend rate of the shares of the $5.58 Series shall be fixed
at $5.58 per share per annum. Dividends shall be cumulative from the date
of initial issuance of the shares of the $5.58 Series. The payment dates
for the dividends on the shares of the $5.58 Series shall be March 20, June
20, September 20 and December 20 of each year, beginning March 20, 1993.
(c) The fixed liquidation preference of the shares of the $5.58 Series
shall be $100 per share.
(d) The $5.58 Series shall not be redeemable by the Company (except to
the extent otherwise provided for redemption in liquidation) prior to March
1, 2000. The entire $5.58 Series is subject to mandatory redemption on
March 1, 2000 at $100 per share, plus accrued and unpaid dividends to the
redemption date.
<PAGE>
(e) The shares of the $5.58 Series shall not be entitled to any
sinking fund or right of conversion or any preemptive right to acquire any
other security.
(f) Except as above provided, the shares of the $5.58 Series shall
have all the designations, preferences, limitations and relative rights and
voting powers, and restrictions or qualifications thereof, expressed in the
Restated Articles of Incorporation, as amended, of the Company. The shares
of the $5.58 Series shall not have any special rights other than those
specified herein and in the Restated Articles of Incorporation, as amended,
of the Company.
(g) There are hereby classified as the series of $5.58 Dividend
Preferred Stock 400,000 shares of the Preferred Stock. No more than 400,000
shares of the $5.58 Series may be issued. Upon retirement of the shares of
the $5.58 Series, this number may be decreased by filing articles of
amendment to that effect.
(h) No shares of the $5.58 Series purchased or otherwise acquired by
the Company shall be reissued, resold or otherwise transferred by the
Company as shares of the $5.58 Series.
3. The designation of the $5.58 Series, as herein provided, has been duly
approved by the Executive Committee on behalf of the Board of Directors of
the Company within and in accordance with limits specifically prescribed by
the Board of Directors.
4. These Articles of Amendment were duly adopted on February 10, 1993 by said
Executive Committee on behalf of the Board of Directors of Virginia
Electric and Power Company and shareholder action was not required in
connection with such adoption.
Dated: February 10, 1993
VIRGINIA ELECTRIC AND POWER COMPANY
By B. D. Johnson
Senior Vice President - Finance,
Controller, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company.
<PAGE>
2. The Restated Articles of Incorporation, as amended, of Virginia Electric
and Power Company (the Company) hereby are amended to create a new series
(the New Series) of the Company's Preferred Stock. In accordance with the
provisions of the Restated Articles of Incorporation, as amended, of the
Company, the distinctive designation, preferences, limitations and
relative rights of said series of Preferred Stock are determined and fixed
as follows:
(a) The distinctive serial designation of the New Series shall be "7.05
Dividend Preferred Stock" (hereinafter sometimes referred to as the $7.05
Series).
(b) The dividend rate on the shares of the $7.05 Series shall be $7.05
per share per annum. Dividends shall be cumulative from the date of
initial issue of the shares of the $7.05 Series. The payment dates for the
dividends on the shares of the $7.05 Series shall be March 20, June 20,
September 20 and December 20 of each year, beginning September 20, 1993.
(c) The stated value and fixed liquidation preference of the shares of
the $7.05 Series shall be $100 per share. In the event of a voluntary
liquidation, dissolution or winding up of the Company, the fixed
liquidation premium on the shares of the $7.05 Series, payable in addition
to the liquidation preference, will be an amount per share equal to $5.00
prior to August 1, 2003 and, thereafter, to the applicable per share
premium, if any, payable in optional redemption.
(d) The $7.05 Series shall not be to redeemable by the Company (except
to the extent otherwise provided for redemption in liquidation) prior to
August 1, 2003. The fixed redemption price of the shares of the $7.05
Series for redemption on and after August 1, 2003 shall be $100 per share
plus a premium, in the case of redemption prior to August 1, 2013, from
time to time applicable to such redemption as follows:
Optional Redemption
Time Period Premium Per Share
August 1, 2003 through July 31, 2004 $3.53
August 1, 2004 through July 31, 2005 $3.18
August 1, 2005 through July 31, 2006 $2.82
August 1, 2006 through July 31, 2007 $2.47
August 1, 2007 through July 31, 2008 $2.12
August 1, 2008 through July 31, 2009 $1.77
August 1, 2009 through July 31, 2010 $1.41
August 1, 2010 through July 31, 2011 $1.06
August 1, 2011 through July 31, 2012 $0.71
August 1, 2012 through July 31, 2013 $0.36
and thereafter without any premium.
(e) The shares of the $7.05 Series shall not be entitled to any sinking
fund or right of conversion or any preemptive right to acquire any other
security.
(f) Except as above provided, the shares of the $7.05 Series shall have
all the designations, preferences, limitations and relative rights and
voting powers, and restrictions or qualifications thereof, expressed in
the Restated Articles of Incorporation, as amended, of the Company. The
shares of the $7.05 Series shall not have any special rights other than
those specified herein and in the Restated Articles of Incorporation, as
amended.
<PAGE>
(g) There are hereby classified as the series of $7.05 Dividend
Preferred Stock 500,000 shares of the Preferred Stock. No more than
500,000 shares of the $7.05 Series may be issued. Upon retirement of the
shares of the $7.05 Series, this number may be decreased by filing
articles of amendment to that effect.
(h) No shares of the $7.05 Series purchased or otherwise acquired by the
Company shall be reissued, resold or otherwise transferred by the Company
as shares of the $7.05 Series.
3. The designation of the $7.05 Series, as herein provided, has been duly
approved by the Executive Committee on behalf of the Board of Directors of
the Company within and in accordance with limits specifically prescribed
by the Board of Directors.
4. These Articles of Amendment were duly adopted on June 30, 1993 by said
Executive Committee on behalf of the Board of Directors of Virginia
Electric and Power Company and shareholder action was not required in
connection with such adoption.
Dated: June 30, 1993
VIRGINIA ELECTRIC AND POWER COMPANY
By: B. D. Johnson
Senior Vice President - Finance,
Controller, Treasurer and
Corporate Secretary
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLES OF AMENDMENT
1. The name of the corporation is Virginia Electric and Power Company.
2. The Restated Articles of Incorporation, as amended, of Virginia Electric
and Power Company (the Company) hereby are amended to create a new series
(the New Series) of the Company's Preferred Stock. In accordance with the
provisions of the Restated Articles of Incorporation, as amended, of the
Company, the distinctive designation, preferences, limitations and
relative rights of said series of Preferred Stock are determined and fixed
as follows:
(a) The distinctive serial designation of the New Series shall be "$6.98
Dividend Preferred Stock" (hereinafter sometimes referred to as the $6.98
Series).
(b) The dividend rate on the shares of the $6.98 Series shall be $6.98
per share per annum. Dividends shall be cumulative from the date of
initial issue of the shares of the $6.98 Series. The payment dates for the
dividends on the shares of the $6.98 Series shall be March 20, June 20,
September 20 and December 20 of each year, beginning September 20, 1993.
<PAGE>
(c) The stated value and fixed liquidation preference of the shares of
the $6.98 Series shall be $100 per share. In the event of a voluntary
liquidation, dissolution or winding up of the Company, the fixed
liquidation premium on the shares of the $6.98 Series, payable in addition
to the liquidation preference, will be an amount per share equal to $5.00
prior to September 1, 2003 and, thereafter, to the applicable per share
premium, if any, payable in optional redemption.
(d) The $6.98 Series shall not be to redeemable by the Company (except
to the extent otherwise provided for redemption in liquidation) prior to
September 1, 2003. The fixed redemption price of the shares of the $6.98
Series for redemption on and after September 1, 2003 shall be $100 per
share plus a premium, in the case of redemption prior to September 1,
2013, from time to time applicable to such redemption as follows:
Optional Redemption
Time Period Premium Per Share
September 1, 2003 through August 31, 2004 $3.49
September 1, 2004 through August 31, 2005 $3.15
September 1, 2005 through August 31, 2006 $2.80
September 1, 2006 through August 31, 2007 $2.45
September 1, 2007 through August 31, 2008 $2.10
September 1, 2008 through August 31, 2009 $1.75
September 1, 2009 through August 31, 2010 $1.40
September 1, 2010 through August 31, 2011 $1.05
September 1, 2011 through August 31, 2012 $0.70
September 1, 2012 through August 31, 2013 $0.35
and thereafter without any premium.
(e) The shares of the $6.98 Series shall not be entitled to any sinking
fund or right of conversion or any preemptive right to acquire any other
security.
(f) Except as above provided, the shares of the $6.98 Series shall have
all the designations, preferences, limitations and relative rights and
voting powers, and restrictions or qualifications thereof, expressed in
the Restated Articles of Incorporation, as amended, of the Company. The
shares of the $6.98 Series shall not have any special rights other than
those specified herein and in the Restated Articles of Incorporation, as
amended.
(g) There are hereby classified as the series of $6.98 Dividend
Preferred Stock 600,000 shares of the Preferred Stock. No more than
600,000 shares of the $6.98 Series may be issued. Upon retirement of the
shares of the $6.98 Series, this number may be decreased by filing
articles of amendment to that effect.
(h) No shares of the $6.98 Series purchased or otherwise acquired by the
Company shall be reissued, resold or otherwise transferred by the Company
as shares of the $6.98 Series.
3. The designation of the $6.98 Series, as herein provided, has been duly
approved by the Executive Committee on behalf of the Board of Directors of
the Company within and in accordance with limits specifically prescribed
by the Board of Directors.
<PAGE>
4. These Articles of Amendment were duly adopted on August, 1993 by said
Executive Committee on behalf of the Board of Directors of Virginia
Electric and Power Company and shareholder action was not required in
connection with such adoption.
Dated: August 10, 1993
VIRGINIA ELECTRIC AND POWER COMPANY
By: B. D. Johnson
Senior Vice President - Finance,
Controller, Treasurer and
Corporate Secretary
Exhibit 3.2
BYLAWS
OF
VIRGINIA ELECTRIC AND POWER COMPANY
As amended and in effect on May 1, 1999 (and April 16, 1999 in
the case of Article XI)
<PAGE>
TABLE OF CONTENTS
Article Page
I Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
II Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . .1
III Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . .1
IV Special Meetings . . . . . . . . . . . . . . . . . . . . . . . .1
V Notice of Shareholders' Meetings and Voting
Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
VI Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . .3
VII Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
VIII Proxy and Voting . . . . . . . . . . . . . . . . . . . . . . . .4
IX Board of Directors . . . . . . . . . . . . . . . . . . . . . . .4
X Powers of Directors. . . . . . . . . . . . . . . . . . . . . . .4
XI Executive and Other Committees . . . . . . . . . . . . . . . . .5
XII Meetings of Directors and Quorum . . . . . . . . . . . . . . . .5
XIII Action Without a Meeting . . . . . . . . . . . . . . . . . . . .7
XIV Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
XV Eligibility of Officers. . . . . . . . . . . . . . . . . . . . .7
XVI Chairman of the Board of Directors and
President. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
XVII Vice Presidents. . . . . . . . . . . . . . . . . . . . . . . . .8
XVIII Corporate Secretary. . . . . . . . . . . . . . . . . . . . . . .9
XIX Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
XX Controller . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXI Resignations and Removals. . . . . . . . . . . . . . . . . . . 10
XXII Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXIII Certificates for Shares. . . . . . . . . . . . . . . . . . . . 11
XXIV Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 11
XXV Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 12
XXVI Voting of Shares Held. . . . . . . . . . . . . . . . . . . . . 12
XXVII Bonds, Debentures and Notes Issued Under an
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XXVIII Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XXIX Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
BYLAWS
OF
VIRGINIA ELECTRIC AND POWER COMPANY
ARTICLE I.
Name.
The name of the Corporation is Virginia Electric and Power Company.
ARTICLE II.
Shareholders' Meetings.
All meetings of the Shareholders shall be held at such place, within or
without of the Commonwealth, as provided in the notice of the meeting given
pursuant to Article V. If the Chairman of the Board of Directors determines that
the holding of any meeting at the place named in the notice might be hazardous,
he may cause it to be held at some other place deemed by him suitable and
convenient, upon arranging notice to Shareholders who attend at the first place
and reasonable opportunity for them to proceed to the new place.
ARTICLE III.
Annual Meeting.
The Annual Meeting of the Shareholders shall be held on the third Friday in
April in each year if not a legal holiday, and if a legal holiday then on the
next succeeding Friday not a legal holiday. In the event that such Annual
Meeting is omitted by oversight or otherwise on the date herein provided for,
the Board of Directors shall cause a meeting in lieu thereof to be held as soon
thereafter as conveniently may be, and any business transacted or elections held
at such meeting shall be as valid as if transacted or held at the Annual
Meeting. Such subsequent meeting shall be called in the same manner as provided
for Special Shareholders' Meetings.
ARTICLE IV.
Special Meetings.
Special Meetings of the Shareholders shall be held whenever called by
the Chairman of the Board of Directors, any Chief Executive Officer, or a
majority of the Directors or in accordance with the provisions of Article III of
the Articles of Incorporation. Special Meetings of the Shareholders shall also
be held following the accrual or termination of voting rights of the Preferred
Stock, whenever requested to be called in the manner provided in Article III of
the Articles of Incorporation.
ARTICLE V.
Notice of Shareholders' Meetings and Voting Lists.
Written notice stating the place, day and hour of each Shareholders'
Meeting and the purpose or purposes for which the meeting is called shall be
given not less than 10 nor more than 60 days before the date of the meeting, or
such longer period as is specified below, by, or at the direction of, the Board
of Directors or its Chairman, any Chief Executive Officer, any President, or any
Vice President or the Corporate Secretary or any Assistant Corporate Secretary,
by hand or by mail, to each Shareholder of record entitled to vote at the
meeting, at his or her registered address and the person giving such notice
shall make affidavit in relation thereto. Such notice shall be deemed to be
given when deposited in the United States mails addressed to the Shareholder at
his address as it appears on the stock transfer books, with postage thereon
prepaid or when hand delivered at said address.
Notice of a Shareholders' Meeting to act on an amendment of the Articles of
Incorporation, on a plan of merger or share exchange, on a proposed dissolution
of the Corporation or on a proposed sale, lease or exchange, or other
disposition, of all, or substantially all, of the property of the Corporation
otherwise than in the usual and regular course of business, shall be given in
the manner provided above, not less than 25 nor more than 60 days before the
date of the meeting. Any notice of a Shareholders' Meeting to act on an
amendment of the Articles of Incorporation, a plan of merger or share exchange
or a proposed sale, lease or exchange, or other disposition of all, or
substantially all, of the property of the Corporation otherwise than in the
usual and regular course of business shall be accompanied by a copy of the
proposed amendment, plan of merger or exchange or agreement effecting the
disposition of assets.
<PAGE>
Any meeting at which all Shareholders having voting power in respect of the
business to be transacted thereat are present, either in person or by proxy, or
of which those not present waive notice in writing, whether before or after the
meeting, shall be a legal meeting for the transaction of business
notwithstanding that notice has not been given as hereinbefore provided.
The officer or agent having charge of the share transfer books of the
Corporation shall make, at least 10 days before each meeting of Shareholders, a
complete list of the Shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of and number of shares held by each. The
list shall be arranged by voting group and within each voting group by class or
series of shares. Such list, for a period of 10 days prior to such meeting,
shall be kept on file at the principal office of the Corporation. Any person who
shall have been a Shareholder of record for at least 6 months immediately
preceding his demand or who shall be the holder of record of at least 5% of all
the outstanding shares of the Corporation, upon demand stating with reasonable
particularity the purpose thereof, shall have the right to inspect such list, in
person, for any proper purpose if such list is directly connected with such
purpose, during usual business hours within the period of 10 days prior to the
meeting. Such list shall also be produced at the time and place of the meeting
and shall be subject to the inspection of any Shareholder during the whole time
of the meeting for the purposes thereof.
ARTICLE VI.
Waiver of Notice.
Notice of any Shareholders' Meeting may be waived by any Shareholder,
whether before or after the date of the meeting. Such waiver of notice shall be
in writing, signed by the Shareholder and delivered to the Corporate Secretary.
Any Shareholder who attends a meeting shall be deemed to have waived objection
to lack of notice or defective notice of the meeting, unless the Shareholder at
the beginning of the meeting objects to holding the meeting or transacting
business at the meeting and shall be deemed to have waived objection to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the Shareholder
objects to considering the matter when it is presented.
ARTICLE VII.
Quorum.
At any meeting of the Shareholders, a majority in number of votes of all
the shares issued and outstanding having voting power in respect of the business
to be transacted thereat, represented by such Shareholders of record in person
or by proxy, shall constitute a quorum, but a lesser interest may adjourn any
meeting from time to time and the meeting may be held as adjourned without
further notice. When a quorum is present at any meeting, a majority vote
represented thereat shall decide any question brought before such meeting,
unless the question is one upon which by express provision of law or of the
Articles of Incorporation or of these Bylaws a larger or different vote is
required, in which case such express provision shall govern and control the
decision of such question. The provisions of this Article are, however, subject
to the provisions of Article III of the Articles of Incorporation.
ARTICLE VIII.
Proxy and Voting.
Shareholders of record entitled to vote may vote at any meeting held, in
person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney-in-fact, which shall be filed with the Corporate Secretary
or the secretary of the meeting before being voted. A proxy shall designate only
one person as proxy, except that proxies executed pursuant to a general
solicitation of proxies may designate one or more persons as proxies. Proxies
shall entitle the holders thereof to vote at any adjournment of the meeting, but
shall not be valid after the final adjournment thereof. No proxy shall be valid
after 11 months from its date unless the appointment form expressly provides for
a longer period of validity. Shareholders entitled to vote may also be
represented by an agent personally present, duly designated by power of
attorney, with or without power of substitution, and such power of attorney
shall be produced at the meeting on request. Each holder of record of stock of
any class shall, as to all matters in respect of which stock of any class has
voting power, be entitled to one vote for each share of stock of such class
standing in his name on the books.
<PAGE>
ARTICLE IX.
Board of Directors.
A Board of Directors shall be chosen by ballot at the Annual Meeting of the
Shareholders or at any meeting held in lieu thereof as herein before provided in
Article III. The number of Directors may be fixed from time to time by
resolution of the Board of Directors but shall not be less than six nor more
than thirteen. Except as otherwise provided in Article XXI hereof, each Director
shall serve until the next Annual Meeting of Shareholders and until his
successor is duly elected and qualified or until the number of Directors is
decreased. The foregoing provisions are, however, subject to Article III of the
Articles of Incorporation, if and whenever the same may become applicable by the
accrual of voting rights to the Preferred Stock.
ARTICLE X.
Powers of Directors.
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the direction
of, the Board of Directors, subject to any limitation set forth in the Articles
of Incorporation and so far as this delegation of authority is not inconsistent
with the laws of the Commonwealth of Virginia, with the Articles of
Incorporation or with these Bylaws.
ARTICLE XI.
Executive and Other Committees.
The Board of Directors, by resolution passed by a majority of the whole
Board, may designate two or more of its number to constitute an Executive
Committee. If a quorum is present, the Committee may act upon the affirmative
vote of a majority of the Committee members present. When the Board of Directors
is not in session, the Executive Committee shall have and may exercise all of
the authority of the Board of Directors except that the Executive Committee
shall not (i) approve or recommend to Shareholders action that Virginia law
requires to be approved by Shareholders; (ii) fill vacancies on the Board of
Directors or any of its Committees or elect officers; (iii) Amend Articles of
Incorporation other than as permitted by statute; (iv) adopt, amend or repeal
these Bylaws; (v) approve a plan of merger not requiring Shareholder approval;
(vi) authorize or approve a distribution, except according to a general formula
or method prescribed by the Board of Directors; or (vii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, except that the Board of Directors may authorize the Executive
Committee to do so within limits specifically prescribed by the Board of
Directors. If the Executive Committee is created for any designated purpose, its
authority shall be limited to such purpose. The Executive Committee shall report
its action to the Board of Directors. Regular and special meetings of the
Executive Committee may be called and held subject to the same requirements with
respect to time, place and notice as are specified in these Bylaws for regular
and special meetings of the Board of Directors. Members of the Executive
Committee shall receive such compensation for attendance at meetings as may be
fixed by the Board of Directors.
The Board of Directors likewise may appoint from their number other
Committees from time to time, the number composing such Committees and the power
conferred upon the same to be subject to the foregoing exceptions for an
Executive Committee but otherwise as determined by vote of the Board of
Directors.
<PAGE>
ARTICLE XII.
Meetings of Directors and Quorum.
Regular Meetings of the Board of Directors may be held at such places
within or without the Commonwealth of Virginia and at such times as the Board by
vote may determine from time to time, and if so determined no notice thereof
need be given. Special Meetings of the Board of Directors may be held at any
time or place either within or without the Commonwealth of Virginia, whenever
called by the Chairman of the Board of Directors, the President, any Vice
President, the Corporate Secretary, or three or more Directors, notice thereof
being given to each Director by the Corporate Secretary or an Assistant
Corporate Secretary, the Directors or the officer calling the meeting, or at any
time without formal notice provided all the Directors are present or those not
present waive notice thereof. Notice of Special Meetings, stating the time and
place thereof, shall be given by mailing the same to each Director at his
residence or business address at least two days before the meeting, or by
delivering the same to him personally or telephoning the same to him at his
residence or business address at least one day before the meeting, unless, in
case of exigency, the Chairman of the Board of Directors or any Chief Executive
Officer shall prescribe a shorter notice to be given personally or by
telephoning each Director at his residence or business address.
A written waiver of notice signed by the Director entitled to such notice,
whether before or after the date of the meeting, shall be equivalent to the
giving of such notice. A Director who attends or participates in a meeting shall
be deemed to have waived timely and proper notice of the meeting unless the
Director, at the beginning of the meeting or promptly upon his arrival, objects
to holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
A majority of the number of Directors fixed at the time in accordance with
the Bylaws shall constitute a quorum for the transaction of business, but a
lesser number may adjourn any meeting from time to time, and the meeting may be
held without further notice. The foregoing provision is, however, subject to
Article III of the Articles of Incorporation. When a quorum is present at any
meeting, a majority of the members present thereat shall decide any question
brought before such meeting, except as otherwise provided by law, by the
Articles of Incorporation or by these Bylaws.
ARTICLE XIII.
Action Without a Meeting.
Any action required to be taken at a meeting of the Directors, or any
action which may be taken at a meeting of the Directors or of a Committee, may
be taken without a meeting if a consent in writing (which may be in any number
of counterparts), setting forth the action so to be taken, shall be signed by
all of the Directors, or all of the members of the Committee, as the case may
be, either before or after such action is taken. Such consent shall have the
same force and effect as a unanimous vote.
ARTICLE XIV.
Officers.
The Board of Directors shall appoint such officers of the Corporation with
such titles and duties as the Board in its discretion may determine. The
Chairman of the Board of Directors and the Vice Chairman, if one is elected,
shall be officers unless they are not full-time employees of the Corporation.
The officers and the Chairman of the Board shall be elected or appointed by the
Board of Directors after each election of Directors by the Shareholders, and a
meeting of the Board of Directors may be held without notice for the purpose of
electing officers following the Annual Meeting of the Shareholders. The
foregoing shall not preclude the Board from electing individual officers at any
regular or special meeting of the Board of Directors.
<PAGE>
The Board of Directors may appoint one or more Chief Executive Officers,
Presidents, Chief Operating Officers, Chief Financial Officers, Treasurers and
Controllers and other officers with such titles, powers and duties with respect
to the Corporation and its operating divisions as the Board of Directors may
prescribe. Except as otherwise prescribed by the Board of Directors, such
officers shall have the powers and duties commonly incident to their offices.
Where more than one such Chief Executive Officer or Chief Financial Officer has
been so appointed, each shall be authorized to execute documents on behalf of
the Corporation as its chief executive officer or chief financial officer, as
the case may be, for purposes of filing the same with governmental or regulatory
authorities including, without limitation, the State Corporation Commission of
the Commonwealth of Virginia and the Securities and Exchange Commission.
The officers appointed by the Board of Directors shall include a Corporate
Secretary who shall perform the duties set forth in Article XVIII and such other
duties as are commonly incident to such office.
The Board of Directors, in its discretion, may appoint one or more Vice
Presidents and one or more assistant officers to any of the officers it appoints
with the exception of any Chief Executive Officers, Presidents, Chief Operating
Officers or Chief Financial Officers, and may appoint such other officers or
agents as it may deem advisable and prescribe their powers and duties. Unless
otherwise provided by the Board, any such officer or agent shall have the powers
and duties commonly incident to his office.
Except as otherwise provided by the Board of Directors, each Chief
Executive Officer, President and Vice President shall have authority to sign
certificates of stock, bonds, deeds and contracts and to delegate such authority
in such manner as may be approved by a Chief Executive Officer or President.
ARTICLE XV.
Eligibility of Officers.
The Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, any Chief Executive Officer and any President of the Corporation
shall be Directors. The office of Chief Executive Officer may be held by a
person who does not also hold the office of President. In the case where a Chief
Executive Officer who is not a President has been appointed by the Board of
Directors, any President also appointed shall not be chief executive officer,
but shall have such other powers and responsibilities as are prescribed by the
Board of Directors and these Bylaws. Any person may hold more than one office
provided, however, that none of the Corporate Secretary, any Treasurer, any
Chief Financial Officer or any Controller shall at the same time hold the office
of Chairman of the Board of Directors or any office as Chief Executive Officer
or President.
ARTICLE XVI.
Chairman of the Board of Directors and Vice Chairman.
The Chairman of the Board of Directors shall preside at the meetings of the
Board of Directors. He may call meetings of the Board of Directors and of any
Committee thereof whenever he deems it necessary. He shall call to order, and
act as chairman of, all meetings of the Shareholders and prescribe rules of
procedure therefor. He shall perform the duties commonly incident to his office
and such other duties as the Board of Directors shall designate from time to
time.
In the absence of the Chairman of the Board of Directors, the Vice Chairman
of the Board of Directors, if one has been elected, shall perform his duties.
The Vice Chairman, if any, shall also perform the duties commonly incident to
his office and such other duties as the Board of Directors shall designate from
time to time. In the absence of the Vice Chairman of the Board of Directors, or
if no Vice Chairman has been elected, his duties shall be performed by a Chief
Executive Officer of the Corporation. If more than one Chief Executive Officer
has been appointed, the Chairman shall from time to time designate the order in
which such chief executive officers shall serve in the event of such absences.
<PAGE>
ARTICLE XVII.
Presidents; Vice Presidents
In the event of the absence or disability of a Chief Executive Officer, the
duties and powers of the Chief Executive Officer shall be performed and
exercised by the President; and in the event of the absence or disability of a
President, the duties and powers of the President shall be performed and
exercised by the Vice President designated to so act by the line of succession
provided by the Board of Directors, or if not so provided by the Board of
Directors, in accordance with the order of priority set forth below. Where the
absent or disabled Chief Executive Officer or President has been appointed for a
division, the officers in the line of succession referred to in this Article
shall, unless otherwise provided by the Board of Directors, be officers in the
corresponding division. The order of priority among Vice Presidents for
succession referred to above is: (a) The Executive Vice Presidents in order of
their seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in order of their seniority
in age; (b) The Senior Vice Presidents in order of their seniority of first
election to such office, or if two or more shall have been first elected to such
office on the same day, in order of their seniority in age; (c) All other Vice
Presidents at the principal office of the Corporation in the order of their
seniority of first election to such office or if two or more shall have been
first elected to such office on the same day, the order of their seniority in
age; and (d) Any other persons that are designated on a list that shall have
been approved by the Board of Directors, such persons to be taken in such order
of priority and subject to such conditions as may be provided in the resolution
approving the list.
ARTICLE XVIII.
Corporate Secretary.
The Corporate Secretary shall keep accurate minutes of all meetings of the
Shareholders, the Board of Directors and the Executive Committee, shall perform
the duties commonly incident to his office, and shall perform such other duties
and have such other powers as the Board of Directors shall designate from time
to time. The Corporate Secretary shall have power, together with a Chief
Executive Officer, a President or a Vice President, to sign certificates for
shares of stock. In his absence an Assistant Corporate Secretary shall perform
his duties.
ARTICLE XIX.
Treasurer.
The Treasurer, subject to the order of the Board of Directors, shall have
the care and custody of the money, funds and securities of the Corporation and
shall have and exercise under the supervision of the Board of Directors, all the
powers and duties commonly incident to his office. He shall deposit all funds of
the Corporation in such bank or banks, trust company or trust companies or with
such firm or firms doing a banking business, as the Directors shall designate.
He may endorse for deposit or collection all checks, notes, et cetera, payable
to the Corporation or to its order, may accept drafts on behalf of the
Corporation, and, together with the President or a Vice President, may sign
certificates for shares of stock.
All checks, drafts, notes and other obligations for the payment of money
except bonds, debentures and notes issued under an Indenture shall be signed
either manually or, if and to the extent authorized by the Board of Directors,
through facsimile, by the Treasurer or an Assistant Treasurer or such other
officer or agent as the Board of Directors shall authorize. Checks for the total
amount of any payroll may be drawn in accordance with the foregoing provisions
and deposited in a special fund. Checks upon this fund may be drawn by such
person as the Treasurer shall designate.
Where a Treasurer has been appointed to serve for a division of the
Corporation, he shall exercise the foregoing power and duties with respect to
such division.
ARTICLE XX.
Controller.
The Controller shall keep accurate books of account of the Corporation's
transactions and shall perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
ARTICLE XXI.
Resignation and Removals.
Any Director may resign at any time by giving written notice to the Board
of Directors, to the Chairman of the Board of Directors, to a Chief Executive
Officer or to the Corporate Secretary, and any member of any Committee may
resign by giving written notice either as aforesaid or to the Committee of which
he is a member or the chairman thereof. Any officer may resign at any time by
delivering notice to the Corporation. Any such resignation shall take effect at
the time specified therein or, if the time be not specified, upon receipt
thereof; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
The Shareholders, at any meeting called for the purpose, by vote of a
majority of the stock having voting power issued and outstanding, may remove any
Director from office with or without cause and elect his successor; but this
provision is subject to Article III of the Articles of Incorporation, if and
whenever the same may become applicable by the accrual of voting rights to the
Preferred Stock. The Board of Directors, by vote of a majority of the entire
Board, may remove any officer, agent or member of any Committees elected or
appointed by them, with or without cause, from office.
ARTICLE XXII.
Vacancies.
If the office of any officer or agent, one or more, becomes vacant by
reason of death, disability, resignation, removal, disqualification or
otherwise, the Directors at the time in office, may, by a majority vote at a
meeting at which a quorum is present, choose a successor or successors who shall
hold office for the unexpired term or until his successor is duly elected and
qualified or his position is eliminated.
ARTICLE XXIII.
Certificates for Shares.
Every Shareholder shall be entitled to a certificate or certificates for
shares of record owned by him in such form as may be prescribed by the Board of
Directors, duly numbered and setting forth the number and kind of shares to
which such Shareholder is entitled. Such certificates shall be signed by a Chief
Executive Officer, a President or a Vice President and by a Treasurer or an
Assistant Treasurer or the Corporate Secretary or an Assistant Corporate
Secretary. The Board of Directors may also appoint one or more Transfer Agents
and/or Registrars for its stock of any class or classes and may require stock
certificates to be countersigned and/or registered by one or more of such
Transfer Agents and/or Registrars. If certificates for shares are signed by a
Transfer Agent or by a Registrar, the signatures thereon of the President or a
Vice President and the Treasurer or an Assistant Treasurer or the Corporate
Secretary or an Assistant Corporate Secretary may be facsimiles, engraved or
printed. Any provisions of these Bylaws with reference to the signing of stock
certificates shall include, in cases above permitted, such facsimiles. In case
any officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates shall
cease to be such officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures
shall have been used thereon had not ceased to be such officer or officers of
the Corporation.
Notwithstanding the foregoing, the Board of Directors may authorize the issue of
some or all of the shares of any or all of its classes or series without
certificates. Within a reasonable time after the issue or transfer of shares
without certificates, the Corporation shall send the Shareholder a written
statement of the information required on certificates by the Virginia Stock
Corporation Act or other applicable law.
ARTICLE XXIV.
Transfer of Shares.
Shares may be transferred by delivery of the certificate accompanied either
by an assignment in writing on the back of the certificate or by a written power
of attorney to sell, assign and transfer the same on the books of the
Corporation, signed by the person appearing by the certificate to be the owner
of the shares represented thereby, and shall be transferable on the books of the
Corporation upon surrender thereof so assigned or endorsed. The person
registered on the books of the Corporation as the owner of any shares shall be
entitled exclusively as the owner of such shares to receive dividends and to
vote in respect thereof. It shall be the duty of every Shareholder to notify the
Corporation of his address.
<PAGE>
ARTICLE XXV.
Record Date.
For the purpose of determining the Shareholders entitled to notice of or to
vote at any meeting of Shareholders, or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors may fix in
advance a date as the record date for any such determination of Shareholders,
provided that such date shall not in any case be more than 70 days prior to the
date on which the particular action, requiring such determination of
Shareholders, is to be taken. If no record date shall be fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, or for the determination of the Shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of Shareholders in such cases. A determination of Shareholders entitled to
notice of or to vote at a Shareholders' meeting is effective for any adjournment
of the meeting unless the Board of Directors fixes a new record date, which it
shall do if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting.
ARTICLE XXVI.
Voting of Shares Held.
Unless the Board of Directors shall otherwise provide, the Chairman of the
Board of Directors, any Chief Executive Officer, President or Vice President, or
the Corporate Secretary may from time to time appoint one or more
attorneys-in-fact or agents of the Corporation, in the name and on behalf of the
Corporation, to cast the votes that the Corporation may be entitled to cast as a
shareholder or otherwise in any other corporation, any of whose stock or
securities of which may be held by the Corporation, at meetings of the holders
of any such other corporations, or to consent in writing to any action by any
such other corporation, and may instruct the person or persons so appointed as
to the manner of casting such votes or giving such consent, and may execute or
cause to be executed on behalf of the Corporation such written proxies,
consents, waivers or other instruments as he may deem necessary or proper in the
premises; or either the Chairman of the Board of Directors, a Chief Executive
officer, a President or the Corporate Secretary may himself attend any meeting
of the shareholders of any such other corporation and there at vote or exercise
any or all other powers of the Corporation as the shareholder of such other
corporation.
ARTICLE XXVII.
Bonds, Debentures and Notes Issued Under an Indenture.
All bonds, debentures and notes issued under an Indenture shall be signed A
Chief Executive Officer, President or any Vice President or such other officer
or agent as the Board of Directors shall authorize and by the Corporate
Secretary or any Assistant Corporate Secretary or by a Treasurer or any
Assistant Treasurer or such other officer or agent as the Board of Directors
shall authorize.
The signature of any authorized officer of the Corporation on bonds and
debentures authenticated by a corporate trustee may be made manually or by
facsimile.
<PAGE>
ARTICLE XXVIII.
Amendments.
All Bylaws shall be subject to alteration or repeal, and new Bylaws may be
made by the affirmative vote of a majority of the Directors. The Shareholders
entitled to vote, however, shall have the power to rescind, amend, alter or
repeal the Bylaws and to enact Bylaws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
ARTICLE XXIX.
Emergency Bylaws.
The Emergency Bylaws provided in this Article XXIX shall be operative
during any emergency notwithstanding any different provision in the preceding
Articles of the Bylaws or in the Articles of Incorporation of the Corporation or
in the Virginia Stock Corporation Act. An emergency exists if a quorum of the
Corporation's Board of Directors cannot readily be assembled because of some
catastrophic event. To the extent not inconsistent with these Emergency Bylaws,
the Bylaws provided in the preceding Articles shall remain in effect during such
emergency and upon the termination of such emergency the Emergency Bylaws shall
cease to be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer of
the Corporation or by any Director. Notice shall be given by the person calling
the meeting. The notice shall specify the place of the meeting, which shall be
the principal office of the Corporation at the time if feasible, but otherwise
shall be any other place specified in the notice. The notice shall also specify
the time of the meeting. Notice may be given only to such of the Directors as it
may be feasible to reach at the time and by such means as may be feasible at the
time, including publication or radio. If given by mail, messenger or telephone,
the notice shall be addressed to the Director's address or such other place as
the person giving the notice shall deem most suitable. Notice shall be similarly
given, to the extent feasible, to the other persons referred to in (b) below.
Notice shall be given at least two days before the meeting if feasible in the
judgment of the person giving the notice, but otherwise shall be given any time
before the meeting as the person giving the notice shall deem necessary.
(b) At any meeting of the Board of Directors, a quorum shall consist of a
majority of the number of Directors fixed at the time by Article IX of the
Bylaws. If the Directors present at any particular meeting shall be fewer than
the number required for such quorum, other persons present, as determined by the
following provisions and in the following order of priority, up to the number
necessary to make up such quorum, shall be deemed Directors for such particular
meeting:
(i) The Executive Vice Presidents;
(ii) The Senior Vice Presidents in the order of their seniority of
first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their
seniority in age;
(iii) All other Vice Presidents at the principal office of the
Corporation in the order of their seniority of first election to such
office, or if two or more shall have been first elected to such office
on the same day, in the order of their seniority in age; and
(iv) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such
persons to be taken in such order of priority and subject to such
conditions as may be provided in the resolution approving the list.
(c) The Board of Directors, during as well as before any such emergency,
may provide, and from time to time modify, lines of succession in the event that
during such an emergency any or all officers or agents of the Corporation for
any reason shall be rendered incapable of discharging their duties.
<PAGE>
(d) The Board of Directors, before and during any such emergency, may,
effective in the emergency, change the principal office or designate several
alternative principal offices or regional offices, or authorize the officers so
to do.
No officer, Director or employee shall be liable for any action taken in
good faith in accordance with these Emergency Bylaws.
These Emergency Bylaws shall be subject to repeal or change by further
action of the Board of Directors or by action of the Shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency Bylaws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
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