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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 3, 1999
Virginia Electric and Power Company
(Exact name of registrant as specified in its charter)
Virginia 1-2255 54-0418825
(State or other juris- (Commission (IRS Employer
diction of Incorporation) File Number) Identification No.)
701 E. Cary Street, Richmond, Virginia 23219-3932
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 771-3000
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
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On June 3, 1999, Virginia Electric and Power Company (the Company) entered
into an underwriting agreement (the Underwriting Agreement) with Morgan Stanley
& Co. Incorporated, as representative of the Underwriters named in Schedule II
of the Underwriting Agreement, for the sale of $150 million aggregate principal
amount of the Company's Senior Notes. Such Senior Notes, which are designated
the 1999 Series A 6.70% Senior Notes, due June 30, 2009, are a portion of the
$375 million aggregate principal amount of Debt Securities that were registered
by the Company pursuant to a registration statement on Form S-3 under Rule 415
under the Securities Act of 1933, which registration statement was declared
effective on March 18, 1998 (File No. 333-47119). This Registration Statement
also constitutes Post-Effective Amendment No. 1 of Registration Statement No.
33-59581 regarding $375 million of the Company's First and Refunding Mortgage
Bonds registered for sale, pursuant to Rule 429 under the Securities Act of
1933, as amended. A copy of the Underwriting Agreement including exhibits
thereto, is filed as Exhibit 1 to this Form 8-K.
The designation of, and the terms and conditions applicable to, the 1999
Series A 6.70% Senior Notes, due June 30, 2009 were established as set forth in
the Second Supplemental Indenture to the Company's Senior Indenture dated as of
June 1, 1998, and have been approved by the Board of Directors of the Company.
A copy of the form of Second Supplemental Indenture is filed as Exhibit 4 to
this Form 8-K.
Incorporation of Certain Documents by Reference
The consolidated financial statements of Ambac Assurance Corporation and
its subsidiaries as of December 31, 1998 and December 31, 1997, and for each of
the years in the three-year period ended December 31, 1998, included in the
Annual Report on Form 10-K of Ambac Financial Group, Inc. (which was filed with
the Securities and Exchange Commission on March 30, 1999; Commission File Number
1-10777) and the unaudited consolidated financial statements of Ambac Assurance
Corporation and subsidiaries as of March 31, 1999, and for the periods ended
March 31, 1999 and March 31, 1998, included in the Quarterly Report on Form 10-Q
of Ambac Financial Group, Inc. for the period ended March 31, 1999 (which was
filed with the Securities and Exchange Commission on May 12, 1999) are hereby
incorporated by reference in (i) this Current Report on Form 8-K; (ii) the
prospectus; and (iii) the prospectus supplement for Virginia Electric and Power
Company's 1999 Series A 6.70% Senior Notes, and shall be deemed to be part
hereof and thereof.
In connection with the issuance of the Notes, the Company is filing
herewith the consent of KPMG LLP (KPMG) to the use of their name and the
incorporation by reference of their report in the prospectus supplement relating
to the issuance of the 1999 Series A
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6.70% Senior Notes. The consent of KPMG is attached hereto as Exhibit 23.
Exhibits:
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1 Underwriting Agreement, dated June 3, 1999, between the Company and
Morgan Stanley & Co. Incorporated, as representative of the
Underwriters named in Schedule II of the Underwriting Agreement (filed
herewith).
4.1 Form of Senior Indenture dated as of June 1, 1998 between the Company
and The Chase Manhattan Bank filed as Exhibit 4(ii) to the
Registration Statement described above, and Form of First Supplemental
Indenture dated as of June 1, 1998 filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K filed June 12, 1998, are hereby
incorporated by reference.
4.2 Form of Second Supplemental Indenture to the Senior Indenture,
dated as of June 1, 1999, pursuant to which the 1999 Series A 6.70%
Senior Notes, due June 30, 2009, will be issued. The Form of the 1999
Series A 6.70% Senior Notes is included as Exhibit A to the Second
Supplemental Indenture (filed herewith).
12 Computation of Ratios of Earnings to Fixed Charges (filed herewith).
23 Consent of KPMG LLP (filed herewith).
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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
/s/ John A. Shaw
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John A. Shaw
Senior Vice Presdient
Chief Financial Officer & Treasurer
Date: June 3, 1999
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EXHIBIT 1
VIRGINIA ELECTRIC AND POWER COMPANY
1999 Series A 6.70% Senior Notes, Due June 30, 2009
UNDERWRITING AGREEMENT
June 3, 1999
Morgan Stanley & Co. Incorporated
as Representative for
the Several Underwriters
named in Schedule II hereto
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
The undersigned, Virginia Electric and Power Company (the Company), hereby
confirms its agreement with the several Underwriters named in Schedule II hereto
(the Agreement) with respect to the sale to the several Underwriters of certain
of its Senior Notes (the Senior Notes) specified in Schedule I hereto, and the
public offering thereof by the several Underwriters, upon the terms specified in
Schedule I hereto.
1. Underwriters and Representative. The term "Underwriters" as used
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herein shall be deemed to mean the several persons, firms or corporations
(including the Representative hereinafter mentioned) named in Schedule II
hereto, and the term "Representative" as used herein shall be deemed to mean the
representative to whom this Agreement is addressed, who by signing this
Agreement represents that it has been authorized by the other Underwriters to
execute this Agreement on their behalf and to act for them in the manner herein
provided. If there shall be only one person, firm or corporation named in
Schedule II hereto, the term "Underwriters" and the term "Representative" as
used herein shall mean that person, firm or corporation. All obligations of the
Underwriters hereunder are several and not joint. Any action under or in
respect of this Agreement taken by the Representative will be binding upon all
the Underwriters.
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2. Description of the Senior Notes. Schedule I specifies the aggregate
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principal amount of the Senior Notes, the initial public offering price of the
Senior Notes, the purchase price to be paid by the Underwriters, and any
concession from the initial public offering price to be allowed to dealers or
brokers, and sets forth the date, time and manner of delivery of the Senior
Notes and payment thereof. Schedule I also specifies (to the extent not set
forth in the Registration Statement and Prospectus referred to below) the terms
and provisions for the purchase of such Senior Notes. The Senior Notes will be
issued under the Company's Senior Indenture dated as of June 1, 1998 between the
Company and The Chase Manhattan Bank, as Trustee (the Trustee), as supplemented
by the First Supplemental Indenture dated as of June 1, 1998, and to be further
supplemented by a Second Supplemental Indenture dated as of June 1, 1999
(collectively, the Senior Indenture).
3. Representations and Warranties of the Company. The Company represents
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and warrants to, and agrees with, the Underwriters that:
(a) A registration statement on Form S-3 (Reg. No. 333-47119) for the
registration of the Senior Notes under the Securities Act of 1933, as
amended (the Securities Act), heretofore filed with the Securities and
Exchange Commission (the Commission), a copy of which as so filed has been
delivered to you, has become effective. The registration statement,
including all exhibits thereto, as amended through the date hereof, is
hereinafter referred to as the "Registration Statement"; the prospectus
relating to the Senior Notes included in the Registration Statement, which
prospectus is now proposed to be supplemented by a supplement relating to
the Senior Notes to be filed with the Commission under the Securities Act,
as so supplemented, is hereinafter referred to as the "Prospectus." As used
herein, the terms "Registration Statement," "prospectus" and "Prospectus"
include all documents (including any Current Report on Form 8-K)
incorporated therein by reference, and shall include any documents
(including any Current Report on Form 8-K) filed after the date of such
Registration Statement, prospectus or Prospectus and incorporated therein
by reference from the date of filing of such incorporated documents
(collectively, the Incorporated Documents).
(b) No order suspending the effectiveness of the Registration
Statement or otherwise preventing or suspending the use of the Prospectus
has been issued by the Commission and is in effect and no proceedings for
that purpose are pending before or, to the knowledge of the Company,
threatened by the Commission. The Registration Statement and the
Prospectus comply in all material respects with the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the
Securities Exchange Act), and the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act), and the rules, regulations and releases of the
Commission thereunder (the Rules and Regulations), and, on the date hereof,
neither the Registration Statement nor the
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Prospectus contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and, on the Closing Date, the
Registration Statement and the Prospectus (including any amendments and
supplements thereto) will conform in all respects to the requirements of
the Securities Act, the Trust Indenture Act and the Rules and Regulations,
and neither of such documents will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, that the foregoing representations and warranties in this
paragraph (b) shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished in writing to the Company by the
Underwriters or on the Underwriters' behalf for use in the Registration
Statement or Prospectus; and provided, further, that the foregoing
representations and warranties are given on the basis that any statement
contained in an Incorporated Document shall be deemed not to be contained
in the Registration Statement or Prospectus if such statement has been
modified or superseded by any statement in a subsequently filed
Incorporated Document or in the Registration Statement or Prospectus or in
any amendment or supplement thereto.
(c) Deloitte & Touche LLP, who have examined certain of the Company's
financial statements filed with the Commission and incorporated by
reference in the Registration Statement, are independent public accountants
as required by the Securities Act and the rules and regulations of the
Commission thereunder.
(d) Except as reflected in, or contemplated by, the Registration
Statement and Prospectus, since the respective most recent dates as of
which information is given in the Registration Statement and Prospectus,
there has not been any material adverse change in the condition of the
Company, financial or otherwise. The Company has no material contingent
financial obligation that is not disclosed in each of the Registration
Statement and Prospectus.
(e) The Company has taken all corporate action necessary to be taken
by it to authorize the execution by it of this Agreement and the
performance by it of all obligations on its part to be performed hereunder;
and the consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, or other agreement or instrument to which the
Company is now a party, or the charter of the Company, as amended, or any
order, rule or regulation applicable to the Company of any federal or state
regulatory board or body or administrative agency having jurisdiction over
the Company or over its property.
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(f) The Senior Notes, upon issuance thereof, will conform in all
respects to the terms of the relevant order or orders of the State
Corporation Commission of Virginia (the Virginia Commission) now or
hereafter in effect with respect to the Senior Notes.
(g) The Company has duly authorized all necessary action to be taken
by it for the procurement of an irrevocable financial guaranty insurance
policy (the Insurance Policy) issued by Ambac Assurance Corporation (the
Insurer), insuring the payment of principal and interest on the Senior
Notes, when due.
4. Public Offering. On the basis of the representations and warranties
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herein contained, but subject to the terms and conditions in this Agreement set
forth, the Company agrees to sell to each of the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company, at
the price, place and time hereinafter specified, the principal amount of the
Senior Notes set forth opposite the name of such Underwriter in Schedule II
hereto. The several Underwriters agree to make a public offering of their
respective Senior Notes specified in Schedule II hereto at the initial public
offering price specified in Schedule I hereto. It is understood that after such
initial offering the several Underwriters reserve the right to vary the offering
price and further reserve the right to withdraw, cancel or modify such offering
without notice.
5. Time and Place of Closing. Delivery of the Senior Notes to, and
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payment therefor by, the Representative for the accounts of the several
Underwriters shall be made at the time, place and date specified in Schedule I
or such other time, place and date as the Representative and the Company may
agree upon in writing, and subject to the provisions of Section 10 hereof. The
hour and date of such delivery and payment are herein called the "Closing Date."
Unless otherwise specified in Schedule I hereto, payment for the Senior Notes
shall be made to the Company by wire transfer in federal funds at the Closing
Date against delivery of the Senior Notes, in fully registered form, registered
in the name of Cede & Co., as nominee for the Depositary Trust Company. The
certificate(s) for the Senior Notes will be made available at the location
specified on Schedule I for examination by the Representative not later than
12:00 Noon, New York time, on the last business day prior to the Closing Date.
6. Covenants of the Company. The Company agrees that:
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(a) The Company, at or prior to the Closing Date, will deliver to the
Representative conformed copies of the Registration Statement as originally
filed, including all exhibits filed therewith, any related preliminary
prospectus supplement, the Prospectus and all amendments and supplements to
each such document, in each case as soon as available and in such
quantities as are reasonably requested from time to time by the
Representative.
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(b) The Company will pay all expenses in connection with (i) the
preparation and filing by it of the Registration Statement and Prospectus,
(ii) the preparation, issuance and delivery of certificates for the Senior
Notes, (iii) any fees and expenses of the Trustee, (iv) the printing and
delivery to the Underwriters in reasonable quantities of copies of the
Registration Statement and the Prospectus (each as originally filed and as
subsequently amended or supplemented) and (v) the premium payable to the
Insurer in connection with the issuance of the Insurance Policy. The
Company also will pay all taxes, if any, on the issuance of the Senior
Notes. In addition, the Company will pay the reasonable fees and
disbursements of Underwriters' counsel, Mays & Valentine, L.L.P., in
connection with the qualification of the Senior Notes under state
securities or blue sky laws or investment laws (if and to the extent such
qualification is required by the Underwriters or the Company).
(c) If, at any time when a prospectus relating to the Senior Notes is
required to be delivered under the Securities Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Securities
Act, the Company promptly will (i) notify the Representative to suspend
solicitation of purchases of the Senior Notes, (ii) at its expense, prepare
and file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance, and (iii) at its expense, furnish to the Representative a
reasonable quantity of the prospectus as so supplemented or amended. In
case any Underwriter is required to deliver a prospectus in connection with
the sale of any Senior Notes after the expiration of the period specified
in the preceding sentence, the Company, upon the request of the
Representative, will furnish to the Representative, at the expense of such
Underwriter, a reasonable quantity of the prospectus as supplemented or
amended, complying with Section 10(a) of the Securities Act. During the
period specified in the second sentence of this paragraph, the Company will
continue to prepare and file with the Commission on a timely basis all
documents or amendments required to be filed by the Company under the
Securities Exchange Act and the applicable rules and regulations of the
Commission thereunder; provided, that the Company shall not file such
documents or amendments without also furnishing copies thereof to the
Representative and Mays & Valentine, L.L.P.
(d) The Company will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Representative a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Representative promptly of the filing of
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any such amendment or supplement. As soon as the Company is advised
thereof, it will advise the Representative of the issuance of any stop
order under the Securities Act with respect to the Registration Statement
or any part thereof, or the institution by the Commission of any stop order
proceedings with respect to the Registration Statement or of any part
thereof and will use its best efforts to prevent the issuance of any such
stop order and to obtain as soon as possible its lifting, if issued.
(e) The Company will make generally available to its security
holders, as soon as it is practicable to do so, an earnings statement of
the Company (which need not be audited) in reasonable detail, covering a
period of at least 12 months beginning within three months after the
effective date of the Registration Statement, which earnings statement
shall satisfy the requirements of Section 11(a) of the Securities Act.
(f) For a period of five years following the Closing Date, the
Company will deliver to the Representative, as soon as practicable after
the end of each fiscal year, a balance sheet of the Company as of the end
of such year and statements of income and earnings reinvested in business
for such year, all as certified by independent public or certified public
accountants, and will deliver to the Representative upon request, as soon
as practicable after the end of each quarterly period, statements of income
and earnings reinvested in business for the 12-month period ending with the
end of such quarterly period.
(g) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing
Date and to satisfy all conditions precedent required of it to the delivery
by it of the Senior Notes.
(h) The Company will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the Senior Notes
for offer and sale under the securities or blue sky laws of such states as
the Representative may designate; provided, however, that the Company shall
not be required in any state to qualify as a foreign corporation, or to
file a general consent to service of process, or to submit to any
requirements which it deems unduly burdensome.
(i) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, the Company will not, without
the prior written consent of the Representative, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise dispose
of, any Senior Notes or any security convertible into or exchangeable for
the Senior Notes or any debt securities substantially similar to the Senior
Notes through retail channels (except for the Senior Notes issued pursuant
to this Agreement).
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(j) Fees and disbursements of Mays & Valentine, L.L.P., who are
acting as counsel for the Underwriters (exclusive of fees and disbursements
of such counsel which are to be paid as set forth in paragraph 6(b)), shall
be paid by the Underwriters; provided, however, that if this Agreement is
terminated in accordance with the provisions of Sections 7 or 8 hereof, the
Company shall reimburse the Representative for the account of the
Underwriters for the amount of such fees and disbursements.
7. Conditions of Underwriters' Obligations; Termination by the
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Underwriters.
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(a) The obligations of the Underwriters to purchase and pay for the
Senior Notes shall be subject to the following conditions:
(i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect on the Closing Date and no
proceedings for that purpose shall be pending before, or to the
knowledge of the Company threatened by, the Commission on such date.
The Representative shall have received, prior to payment for the
Senior Notes, a certificate dated the Closing Date and signed by the
President or any Vice President of the Company to the effect that no
such stop order is in effect and that no proceedings for such purpose
are pending before or, to the knowledge of the Company, threatened by
the Commission.
(ii) At the Closing Date an order or orders of the Virginia
Commission permitting the issuance and sale of the Senior Notes
substantially in accordance with the terms and conditions hereof shall
be in full force and effect and shall contain no provision
unacceptable to the Representative or the Company (but all provisions
of such order or orders heretofore entered are deemed acceptable to
the Representative and the Company, and all provisions of such order
or orders hereafter entered shall be deemed acceptable to the
Representative and the Company unless within 24 hours after receiving
a copy of any such order either shall give notice to the other to the
effect that such order contains an unacceptable provision).
(iii) On the Closing Date, the Representative shall receive, on
behalf of the several Underwriters, the opinions of Mays & Valentine,
L.L.P., and McGuire, Woods, Battle & Boothe LLP, substantially in the
forms attached hereto as Schedules III and IV.
(iv) On the Closing Date, the Representative shall receive, on
behalf of the several Underwriters, the opinion of counsel for the
Insurer, substantially in the form attached hereto as Schedule V.
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(v) On the Closing Date, the Representative shall receive, on
behalf of the several Underwriters, from Deloitte & Touche LLP a
letter addressed to the Representative, dated the Closing Date, (A)
confirming that they are independent public accountants as required by
the Securities Act; (B) stating in effect that, in their opinion, the
audited financial statements included in or incorporated by reference
in the Registration Statement and the Prospectus and audited by them
as stated in their report incorporated by reference in the
Registration Statement (the Audited Financial Statements), comply as
to form in all material respects with the applicable accounting
requirements adopted pursuant to the Securities Exchange Act; (C)
stating, in effect, that on the basis of a reading of the minutes of
the meetings of the Board of Directors of the Company and of
committees of the Board since the end of the period covered by the
Audited Financial Statements, a reading of the unaudited financial
statements incorporated by reference in the Prospectus (if any), of
the unaudited statement of income for any interim period for which
information is included in the Prospectus under the caption "Selected
Financial Information" or any section updating such information, and
of the latest available unaudited financial statements of the Company
covering a period of twelve months ending after the end of the period
covered by the Audited Financial Statements (if any), and inquiries of
officials of the Company responsible for financial and accounting
matters (which procedures did not constitute an audit made in
accordance with generally accepted auditing standards), nothing came
to their attention that caused them to believe that such unaudited
financial statements incorporated by reference in the Prospectus are
not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the Audited
Financial Statements; and (D) stating, in effect, that on the basis of
more limited procedures than those set forth in the foregoing clause
(C), consisting merely of the reading of the minutes referred to in
such clause and inquiries of officials of the Company responsible for
financial and accounting matters, nothing came to their attention at a
date not more than five business days prior to the date of such letter
that caused them to believe that (1) at such date there was any
decrease in common stockholder's equity or any increase in funded debt
of the Company or any decrease in net assets as compared with the
amounts shown in the balance sheet included in the most recent
financial statements incorporated by reference in the Registration
Statement and the Prospectus, or (2) for the period from the date of
the most recent unaudited financial statements included in or
incorporated by reference in the Registration Statement and the
Prospectus to a date not more than five business days prior to the
date of such letter there were any decreases, as compared with the
corresponding period in the preceding year, in the operating revenues,
operating income or net income, except (with respect to (1) or (2)) in
all
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instances for changes or decreases that the Registration Statement
discloses have occurred or may occur; provided, however, that such
letter may vary from the requirements specified in clause (D) hereof
in such manner as the Representative in its sole discretion may deem
to be acceptable. Such letter shall also state that the dollar
amounts, percentages and other financial information (in each case to
the extent that such dollar amounts, percentages and other financial
information, either directly or by analysis or computation, are
derived from the general accounting records of the Company) that
appear (1) in the Prospectus under the captions "Selected Financial
Information" and "Other Selected Data" and under any caption contained
in a supplement to the Prospectus updating such dollar amounts,
percentages and other financial information (limited to total assets
and utility plant expenditures), (2) in the Company's most recent
Annual Report on Form 10-K under the caption "Selected Financial Data"
or (3) in the Registration Statement under the caption "Ratio of
Earnings to Fixed Charges" have been compared with the general
accounting records of the Company and such dollar amounts, percentages
and financial information have been found to be in agreement with the
accounting records of the Company and the computations have been found
to be arithmetically correct. Such letter shall relate to the
Registration Statement and Prospectus as amended or supplemented to
the date of the letter.
(vi) Subsequent to the execution of this Agreement and prior to
the Closing Date, (A) except as reflected in, or contemplated by, the
Registration Statement and the Prospectus, there shall not have
occurred (1) any change in the Senior Notes of the Company (other than
a decrease in the aggregate principal amount thereof outstanding), (2)
any material adverse change in the general affairs, financial
condition or earnings of the Company (whether or not arising in the
ordinary course of business) or (3) any material transaction entered
into by the Company other than a transaction in the ordinary course of
business, the effect of which in each such case in the judgment of the
Representative is so material and so adverse that it makes it
inadvisable to proceed with the public offering or delivery of the
Senior Notes on the terms and in the manner contemplated in the
Prospectus and this Agreement, or (B) there shall not have occurred
(1) a downgrading in the rating accorded the Company's senior
unsecured notes by any "nationally recognized statistical rating
organization" (as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Securities Act), (2) any general
suspension of trading in securities on the New York Stock Exchange or
any limitation on prices for such trading or any restrictions on the
distribution of securities established by the New York Stock Exchange
or by the Commission or by any federal or state agency or by the
decision of any court, (3) a banking moratorium declared either by
federal or New York State authorities or (4)
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any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by the United States
Congress or any other substantial national or international calamity
or crisis resulting in the declaration of a national emergency, the
effect of which outbreak, escalation, declaration, calamity or crisis,
in the reasonable judgment of the Representative, makes it
impracticable or inadvisable to proceed with the public offering or
delivery of the Senior Notes on the terms and in the manner
contemplated in the Prospectus and in this Agreement.
(vii) On the Closing Date, the representations and warranties
of the Company in this Agreement shall be true and correct as if made
on and as of such date, and the Company shall have performed all
obligations and satisfied all conditions required of it under this
Agreement; and, at the Closing Date, the Representative shall have
received a certificate to such effect signed by the President or any
Vice President of the Company.
(viii) All legal proceedings to be taken in connection with the
issuance and sale of the Senior Notes shall have been satisfactory in
form and substance to Mays & Valentine, L.L.P.
(ix) On or before the Closing Date, counsel for the
underwriters shall have received evidence that the Insurance Policy
has been issued by the Insurer and confirmation that the Senior Notes
have been rated at least Aaa by Moody's Investors Service and at least
AAA by Standard & Poor's Ratings Services.
(x) At the Closing Date, there shall not have been, since the
date of this Agreement, a downgrading in the rating accorded the
Insurer by any "nationally recognized statistical rating organization"
(as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act), and the Representative shall
receive on the Closing Date, on behalf of the several Underwriters, a
certificate, dated the Closing Date and signed by the President or any
Vice President or Secretary or Assistant Secretary of the Insurer,
substantially in the form attached hereto as Schedule VI.
(b) In case any of the conditions specified above in paragraph 7(a)
shall not have been fulfilled, this Agreement may be terminated by the
Representative upon mailing or delivering written notice thereof to the
Company; provided, however, that in case the conditions specified in
subparagraphs 7(a)(vi) and (vii) shall not have been fulfilled, this
Agreement may not be so terminated by the Representative unless
Underwriters who have agreed to purchase in the aggregate 50% or more of
the aggregate principal amount of the
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Senior Notes shall have consented to such termination and the aforesaid
notice shall so state. Any such termination shall be without liability of
any party to any other party except as otherwise provided in Section 9 and
in paragraphs 6(b), 6(j) and 7(c) hereof.
(c) If this Agreement shall be terminated by the Representative
pursuant to paragraph (b) above or because of any failure or refusal on the
part of the Company to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement, then in any such
case, the Company will reimburse the Underwriters, severally, for all out-
of-pocket expenses (in addition to the fees and disbursements of their
counsel as provided in paragraph 6(j)) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder and, upon such reimbursement, the Company shall be absolved from
any further liability hereunder, except as provided in paragraph 6(b) and
Section 9.
8. Conditions of the Obligation of the Company. The obligation of the
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Company to deliver the Senior Notes shall be subject to the conditions set forth
in the first sentence of subparagraph 7(a)(i) and the sole sentence of
subparagraph 7(a)(ii). In case those conditions shall not have been fulfilled,
this Agreement may be terminated by the Company by mailing or delivering written
notice thereof to the Representative. Any such termination shall be without
liability of any party to any other party except as otherwise provided in
paragraphs 6(b) and 6(j) and in Sections 9 and 10 hereof.
9. Indemnification. (a) The Company agrees to indemnify and hold
---------------
harmless each Underwriter and each person who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Securities Exchange Act, or any other statute or
common law and to reimburse each such Underwriter and controlling person for any
legal or other expenses (including, to the extent hereinafter provided,
reasonable counsel fees) incurred by them in connection with investigating any
such losses, claims, damages, or liabilities, or in connection with defending
any actions, insofar as such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus as originally filed, or in either such document as amended or
supplemented (if any amendments or supplements thereto shall have been
furnished), or any Preliminary Prospectus (if and when used prior to the
effective date of the Registration Statement), or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that the
foregoing indemnity agreement, insofar as it relates to any Preliminary
Prospectus, shall not inure to the benefit of any
-11-
<PAGE>
Underwriter (or to the benefit of any person who controls such Underwriter) on
account of any losses, claims, damages or liabilities arising out of the sale of
any of the Senior Notes by such Underwriter to any person if it shall be
established that a copy of the Prospectus (as supplemented or amended, if the
Company shall have made any supplements or amendments which have been furnished
to the Representative), excluding any documents incorporated by reference, shall
not have been sent or given by or on behalf of such Underwriter to such person
at or prior to the written confirmation of the sale to such person in any case
where such delivery is required by the Securities Act, if the misstatement or
omission leading to such loss, claim, damage or liability was corrected in the
Prospectus (excluding any documents incorporated by reference) as amended or
supplemented, and such correction would have cured the defect giving rise to
such loss, claim, damage, or liability; and provided further, however, that the
indemnity agreement contained in this paragraph 9(a) shall not apply to any such
losses, claims, damages, liabilities, expenses or actions arising out of or
based upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter for use in the Registration Statement or any
amendment thereto, in the Prospectus or any supplement thereto, or in any
Preliminary Prospectus. The indemnity agreement of the Company contained in this
paragraph 9(a) and the representations and warranties of the Company contained
in Section 3 hereof shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or any
such controlling person, and shall survive the delivery of the Senior Notes.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its officers and directors, each other Underwriter,
and each person who controls any of the foregoing within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act,
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Securities Exchange Act, or any other statute or common law and to reimburse
each of them for any legal or other expenses (including, to the extent
hereinafter provided, reasonable counsel fees) incurred by them in connection
with investigating any such losses, claims, damages or liabilities or in
connection with defending any actions, insofar as such losses, claims, damages,
liabilities, expenses or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus as originally filed, or in either such
document as amended or supplemented (if any amendments or supplements thereto
shall have been furnished), or any Preliminary Prospectus (if and when used
prior to the effective date of the Registration Statement), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such Underwriter for use in the
Registration Statement or the Prospectus or any
-12-
<PAGE>
amendment or supplement to either thereof, or any Preliminary Prospectus. The
indemnity agreement of the respective Underwriters contained in this paragraph
9(b) shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Company, or any such other Underwriter
or any such controlling person, and shall survive the delivery of the Senior
Notes.
(c) The Company and each of the Underwriters agrees that, upon the receipt
of notice of the commencement of any action against the Company or any of its
officers or directors, or any person controlling the Company, or against such
Underwriter or controlling person as aforesaid, in respect of which indemnity
may be sought on account of any indemnity agreement contained herein, it will
promptly give written notice of the commencement thereof to the party or parties
against whom indemnity shall be sought hereunder, but the omission so to notify
such indemnifying party or parties of any such action shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party otherwise than on account of such indemnity agreement. In
case such notice of any such action shall be so given, such indemnifying party
shall be entitled to participate at its own expense in the defense or, if it so
elects, to assume (in conjunction with any other indemnifying parties) the
defense of such action, in which event such defense shall be conducted by
counsel chosen by such indemnifying party (or parties) and reasonably
satisfactory to the indemnified party or parties who shall be defendant or
defendants in such action, and such defendant or defendants shall bear the fees
and expenses of any additional counsel retained by them; provided that, if the
defendants in any such action include both the indemnified party and the
indemnifying party (or parties) and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party (or parties), the indemnified party shall have the right
to select separate counsel to assert such legal defenses and to participate
otherwise in the defense of such action on behalf of such indemnified party.
The indemnifying party shall bear the reasonable fees and expenses of counsel
retained by the indemnified party if (i) the indemnified party shall have
retained such counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, representing the indemnified parties under
paragraphs 9(a) or 9(b), as the case may be, who are parties to such action),
(ii) the indemnifying party shall have elected not to assume the defense of such
action, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the commencement of the action, or (iv) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
indemnification may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such a proceeding), unless such settlement
includes an unconditional
-13-
<PAGE>
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under paragraphs (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and of the Underwriters, on the other, in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations, including relative benefit. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this paragraph (d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this paragraph (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this paragraph (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Senior Notes underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations
under this paragraph (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
10. Termination by the Company. If any one or more of the Underwriters
--------------------------
shall fail or refuse to purchase the Senior Notes which it or they have agreed
to purchase hereunder, and the aggregate principal amount of the Senior Notes
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of the
Senior Notes, the other Underwriters shall be obligated severally in the
proportions which the principal amount of the Senior Notes set forth opposite
their respective names in Schedule II bears to the aggregate underwriting
obligations of all non-defaulting Underwriters, or in such other
-14-
<PAGE>
proportions as the Underwriters may specify, to purchase the Senior Notes which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase. If any Underwriter or Underwriters shall so fail or refuse to purchase
Senior Notes and the aggregate principal amount of the Senior Notes with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of the Senior Notes and arrangements satisfactory to the Underwriters and
the Company for the purchase of such Senior Notes are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter (except as provided in paragraph 6(j) and
Section 9) or of the Company (except as provided in paragraph 6(b) and Section
9). In any such case not involving a termination, either the Representative or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven calendar days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this Section 10 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. Representations, Warranties and Agreements to Survive Delivery. All
--------------------------------------------------------------
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
of any Underwriter, or by or on behalf of the Company, and shall survive
delivery of the Senior Notes.
12. Miscellaneous. The validity and interpretation of this Agreement
-------------
shall be governed by the laws of the State of New York. This Agreement shall
inure to the benefit of the Company, the Underwriters and, with respect to the
provisions of Section 9 hereof, each controlling person and each officer and
director of the Company referred to in said Section 9, and their respective
successors, assigns, executors and administrators. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. The term "successors" as used in
this Agreement shall not include any purchaser, as such, of any of the Senior
Notes from any of the several Underwriters.
13. Notices. All communications hereunder shall be in writing and if to
-------
the Underwriters shall be mailed, telexed, telecopied or delivered to the
Representative at the address set forth on Schedule I hereto, or if to the
Company shall be mailed, telexed, telecopied or delivered to it, attention of
Treasurer, Virginia Electric and Power Company, 701 E. Cary Street, Richmond,
Virginia 23219-3932.
-15-
<PAGE>
Please sign and return to us a counterpart of this letter, whereupon this
letter will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
VIRGINIA ELECTRIC AND POWER COMPANY
By:_________________________________
Title:
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above
written.
MORGAN STANLEY & CO. INCORPORATED
By:________________________________
Title:
Acting individually and on
behalf of the other several
Underwriters named in
Schedule II hereto.
<PAGE>
SCHEDULE I
Title of Senior Notes: 1999 Series A 6.70% Senior Notes, due June 30, 2009
Aggregate Principal Amount: $150,000,000
Denominations: $25 and any integral multiple thereof
Initial Price to Public:
100% of the principal amount of the Senior Notes plus accrued
interest, if any, from the date of issuance
Initial Purchase Price to be paid by Underwriters:
97.50% of the principal amount of the Senior Notes except that such
price will be increased to 98.50% of the principal amount of the
Senior Notes sold to certain institutions
Concessions and reallowances to dealers and brokers:
Concession: Up to $.40 per Senior Note
Reallowance: Up to $.35 per Senior Note
Redemption terms:
Redeemable (in whole or in part) on or after June 30, 2002, at 100%
of the principal amount to be redeemed plus accrued and unpaid
interest to the date of redemption.
Insurance: Payment of principal and interest on the Senior Notes will be
insured by a financial
guaranty insurance policy issued by Ambac Assurance Corporation.
Specified funds for payment of purchase price: Federal funds (by wire transfer).
Time of Delivery: June 10, 1999, 10:00 a.m.
Closing Location: One James Center
901 East Cary Street
Richmond, VA 23219
<PAGE>
The Senior Notes will be available for inspection by the
Representative at:
One James Center
901 East Cary Street
Richmond, VA 23219
Address for Notices to the Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
<PAGE>
SCHEDULE II
Principal
Amount of
1999 Series A
Underwriter Senior Notes
- ----------- ------------
Morgan Stanley & Co. Incorporated $ 21,300,000
First Union Capital Markets Corp. 21,300,000
Lehman Brothers Inc. 21,300,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 21,300,000
PaineWebber Incorporated 21,300,000
Banc of America Securities LLC 3,000,000
Banc One Capital Markets, Inc. 3,000,000
BT Alex. Brown Incorporated 3,000,000
Chase Securities Inc. 3,000,000
Credit Suisse First Boston Corporation 3,000,000
Wachovia Securities, Inc. 3,000,000
BB&T Capital Markets 1,500,000
A Division of Scott & Stringfellow
Davenport & Company LLC 1,500,000
A.G. Edwards & Sons, Inc. 1,500,000
Goldman, Sachs & Co. 1,500,000
Prudential Securities Incorporated 1,500,000
Roney Capital Markets 1,500,000
A Division of Banc One Capital Markets, Inc.
Schroder & Co. Inc. 1,500,000
SG Cowen Securities Corporation 1,500,000
Advest, Inc. 500,000
Robert W. Baird & Co. Incorporated 500,000
J.C. Bradford & Co. 500,000
Branch, Cabell and Company 500,000
Dain Rauscher Incorporated 500,000
Edward D. Jones & Co., L.P. 500,000
Fahnestock & Co. Inc. 500,000
Ferris, Baker Watts, Incorporated 500,000
Fidelity Capital Markets 500,000
A division of National Financial Services Corporation
Fifth Third Securities, Inc. 500,000
First Albany Corporation 500,000
Fleet Securities, Inc. 500,000
J.J.B. Hilliard, W.L. Lyons, Inc. 500,000
Janney Montgomery Scott Inc. 500,000
Legg Mason Wood Walker, Incorporated 500,000
McDonald Investments Inc., 500,000
A Keycorp Company
Mesirow Financial, Inc. 500,000
Morgan Keegan & Company, Inc. 500,000
Olde Discount Corporation 500,000
Raymond James & Associates, Inc. 500,000
The Robinson-Humphrey Company, LLC 500,000
Charles Schwab & Co., Inc. 500,000
Sterne, Agree & Leach, Inc. 500,000
Stifel, Nicolaus & Company, Incorporated 500,000
Tucker Anthony Incorporated 500,000
U.S. Bancorp Piper Jaffray Inc. 500,000
Wedbush Morgan Securities 500,000
Total: $150,000,000
============
<PAGE>
SCHEDULE III
PROPOSED FORM OF OPINION
OF
MAYS & VALENTINE, L.L.P.
NationsBank Center
1111 East Main Street
Richmond, Virginia 23219
Re: VIRGINIA ELECTRIC AND POWER COMPANY
1999 Series A 6.70% Senior Notes,
due June 30, 2009
June ___, 1999
Morgan Stanley & Co. Incorporated, as Representative
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as counsel for you in connection with arrangements for
the issuance by Virginia Electric and Power Company (the Company) of up to U.S.
$150,000,000 aggregate principal amount of its 1999 Series A 6.70% Senior Notes,
due June 30, 2009 (the Senior Notes) under and pursuant to a Senior Indenture,
dated as of June 1, 1998 between the Company and The Chase Manhattan Bank, as
trustee (the Trustee), as supplemented by the First Supplemental Indenture dated
as of June 1, 1998 and to be further supplemented by a Second Supplemental
Indenture dated as of June 1, 1999 (collectively, the Senior Indenture), and the
offering of the Senior Notes by you pursuant to an Underwriting Agreement dated
June 3, 1999 by and between you and the Company (the Underwriting Agreement).
All terms not otherwise defined herein shall have the meanings set forth in the
Underwriting Agreement.
We have examined originals, or copies certified to our satisfaction of
such corporate records of the Company, indentures, agreements and other
instruments, certificates of
<PAGE>
public officials, certificates of officers and representatives of the Company
and of the Trustee, and other documents, as we have deemed necessary as a basis
for the opinions hereinafter expressed. As to various questions of fact material
to such opinions, we have, when relevant facts were not independently
established, relied upon certifications by officers of the Company, the Trustee
and other appropriate persons and statements contained in the Registration
Statement hereinafter mentioned. All legal proceedings taken as of the date
hereof in connection with the transactions contemplated by the Underwriting
Agreement have been satisfactory to us.
In addition, we attended the closing held today at the offices of
McGuire, Woods, Battle & Boothe LLP, One James Center, Richmond, Virginia, at
which the Company satisfied the conditions contained in Section 7 of the
Underwriting Agreement that are required to be satisfied as of the Closing Date.
Based upon the foregoing, and having regard to legal considerations
that we deem relevant, we are of the opinion that:
A. The Company is a corporation duly incorporated and existing under
the laws of Virginia and is duly qualified as a foreign corporation in West
Virginia and North Carolina, and has corporate power to transact its business as
described in the Prospectus.
B. The Underwriting Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by the
Company.
C. The Senior Indenture has been duly authorized, executed and
delivered by, and constitutes a valid and binding obligation of, the Company and
has been duly qualified under the Trust Indenture Act, except that we express no
opinion as to the validity or enforceability of any covenant to pay interest on
defaulted interest, and except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law).
D. The Senior Notes have been duly authorized by the Company and,
when executed by the Company and completed and authenticated by the Trustee in
accordance with the Senior Indenture and delivered and paid for as provided in
the Underwriting Agreement, will have been duly issued under the Senior
Indenture and will constitute valid and binding obligations of the Company
entitled to the benefits provided by the Senior Indenture, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally or
by general equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law).
E. The Registration Statement (Reg. No. 333-47119) with respect to
the Senior Notes filed pursuant to the Securities Act, has become effective and
remains in effect at this date, and the Prospectus in the form filed as part of
the Registration Statement, including all
III - 2
<PAGE>
Incorporated Documents constituting a part thereof, may lawfully be used for the
purposes specified in the Securities Act in connection with the offer for sale
and the sale of Senior Notes in the manner therein specified.
The Registration Statement and the Prospectus (except the financial
statements incorporated by reference therein, as to which we express no opinion)
appear on their face to be appropriately responsive in all material respects to
the requirements of the Securities Act, and to the applicable rules and
regulations of the Commission thereunder.
As to the statements relating to the Senior Notes under DESCRIPTION OF
THE SENIOR NOTES AND SENIOR SUBORDINATED NOTES in the prospectus initially filed
as part of the Registration Statement, as supplemented by the statements under
the DESCRIPTION OF THE 1999 SERIES A SENIOR NOTES in the Prospectus Supplement
dated June 3, 1999 (the Prospectus Supplement), we are of the opinion that the
statements are accurate and do not omit any material fact required to be stated
therein or necessary to make such statements not misleading. As to the
statistical statements in the Registration Statement (which includes the
Incorporated Documents), we have relied solely on the officers of the Company.
As to the other matters, we have not undertaken to determine independently the
accuracy or completeness of the statements contained or incorporated by
reference in the Registration Statement or in the Prospectus. We accordingly
assume no responsibility for the accuracy or completeness of the statements made
in the Registration Statement except as stated above in regard to the above
captions. We note that we were not involved in the preparation of the
Registration Statement or the prospectus initially filed as part thereof, and
that the Incorporated Documents were prepared and filed by the Company without
our participation. We have, however, participated in conferences with counsel
for and representatives of the Company in connection with the preparation of the
Prospectus Supplement, and we have reviewed the Incorporated Documents and such
of the corporate records of the Company as we deemed advisable. None of the
foregoing disclosed to us any information that gives us reason to believe that
the Registration Statement or the Prospectus (except the financial statements
incorporated by reference therein, as to which we express no opinion) contained
on the date the Registration Statement became effective or now contains any
untrue statement of a material fact or omitted on said date or now omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The foregoing opinion is given on the basis
that any statement contained in an Incorporated Document shall be deemed not to
be contained in the Registration Statement or Prospectus if the statement has
been modified or superseded by any statement in a subsequently filed
Incorporated Document or in the Registration Statement or Prospectus.
F. An appropriate order of the Virginia Commission with respect to
the sale of the Senior Notes on the terms and conditions set forth in the
Underwriting Agreement has been issued, and such order remains in effect at this
date and constitutes valid and sufficient authorization for the sale of the
Senior Notes as contemplated by the Underwriting Agreement. We understand such
order does not contain any provision unacceptable to you under the Underwriting
Agreement. No approval or consent by any public regulatory body, other than
III - 3
<PAGE>
such order and notification of effectiveness by the Commission, is legally
required in connection with the sale of the Senior Notes as contemplated by the
Underwriting Agreement (except to the extent that compliance with the provisions
of securities or blue sky laws of certain states may be required in connection
with the sale of the Senior Notes in such states) and the carrying out of the
provisions of the Underwriting Agreement.
G. The Senior Notes conform to their description in the Underwriting
Agreement and to the statements with respect thereto contained in the
Registration Statement and the Prospectus.
To the extent that the opinion expressed in paragraph A involves
matters governed by the laws of North Carolina and West Virginia, we have relied
upon certificates of public officials in those states as to the Company's good
standing and due authorization to transact business in those states.
Very truly yours,
MAYS & VALENTINE, L.L.P.
III - 4
<PAGE>
SCHEDULE IV
PROPOSED FORM OF OPINION
OF
MCGUIRE, WOODS, BATTLE & BOOTHE LLP
One James Center
901 East Cary Street
Richmond, Virginia 23219
Re: VIRGINIA ELECTRIC AND POWER COMPANY
1999 Series A 6.70% Senior Notes
due June 30, 2009
June ___, 1999
Morgan Stanley & Co. Incorporated, as Representative
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
The arrangements for issuance of up to U.S. $150,000,000 aggregate
principal amount of 1999 Series A 6.70% Senior Notes, due June 30, 2009 (the
Senior Notes), of Virginia Electric and Power Company (the Company) under a
Senior Indenture dated as of June 1, 1998 between the Company and The Chase
Manhattan Bank, as trustee (the Trustee), as supplemented by the First
Supplemental Indenture dated as of June 1, 1998 and to be further supplemented
by a Second Supplemental Indenture dated as of June 1, 1999 (collectively, the
Senior Indenture), and pursuant to an Underwriting Agreement dated June 3,
1999 by and between the Company and the Underwriters listed on Schedule II as
attached thereto (the Underwriting Agreement), have been taken under our
supervision as counsel for the Company. Terms not otherwise defined herein have
the meanings set forth in the Underwriting Agreement.
We have examined originals, or copies certified to our satisfaction, of
such corporate records of the Company, indentures, agreements, and other
instruments, certificates of public officials, certificates of officers and
representatives of the Company and of the Trustee, and other documents, as we
have deemed it necessary to require as a basis for the opinions hereinafter
<PAGE>
expressed. As to various questions of fact material to such opinions, we have,
when relevant facts were not independently established, relied upon
certifications by officers of the Company, the Trustee and other appropriate
persons and statements contained in the Registration Statement hereinafter
mentioned. All legal proceedings taken as of the date hereof in connection with
the transactions contemplated by the Underwriting Agreement have been
satisfactory to us.
In regard to the title of the Company to its properties, we have made no
independent investigation of original records but our opinion is based (a) with
respect to land and rights of way for electric lines of 69,000 volts or more,
solely on reports and opinions by counsel in whom we have confidence and (b)
with respect to rights of way for electric lines of less than 69,000 volts and
various matters of fact in regard to all other properties, solely on information
from officers of the Company.
On this basis we are of the opinion that:
1. The Company is a corporation duly organized and existing under the laws
of Virginia and is duly qualified as a foreign corporation in West Virginia and
North Carolina. Neither the nature of the Company's business nor the properties
it owns or holds under lease makes necessary qualification as a foreign
corporation in any state where it is not now so qualified or where the failure
to be so qualified would have a material adverse effect on the Company and its
subsidiaries taken as a whole, and the Company has corporate power to conduct
its business as described in the Prospectus and to issue the Senior Notes.
2. All requisite corporate and governmental authorizations have been given
for the issuance of the Senior Notes under the Senior Indenture.
3. The Underwriting Agreement has been duly authorized by all necessary
corporate action and has been duly executed and delivered by the Company.
4. The Senior Indenture has been duly authorized, executed, and delivered
by, and constitutes a valid and binding obligation of, the Company and has been
duly qualified under the Trust Indenture Act, except that we express no opinion
as to the validity or enforceability of any covenant to pay interest on
defaulted interest, and except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law).
5. The Senior Notes have been duly authorized by the Company and, when
duly executed by the Company and completed and authenticated by the Trustee in
accordance with the Senior Indenture and issued, delivered and paid for in
accordance with the Underwriting Agreement, will have been duly issued under the
Senior Indenture and will constitute valid and binding obligations of the
Company entitled to the benefits provided by the Senior Indenture, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally or by
IV - 2
<PAGE>
general equitable principles (regardless of whether enforcement is considered in
a proceeding in equity or at law).
6. The Registration Statement (Reg. No. 333-47119) with respect to the
Senior Notes filed pursuant to the Securities Act, has become effective and
remains in effect at this date, and the Prospectus may lawfully be used for the
purposes specified in the Securities Act in connection with the offer for sale
and the sale of the Senior Notes in the manner therein specified.
The statements in regard to our firm under the caption EXPERTS in the
Prospectus relating to the Senior Notes are correct, and we are of the opinion
that, so far as governed by the laws of the United States, North Carolina or
Virginia, the legal conclusions relating to franchises, title to its properties,
rates, environmental and other regulatory matters and litigation in the
Company's Annual Report on Form 10-K incorporated in the Prospectus by reference
and the description of the provisions of the Senior Indenture and the terms of
the Senior Notes contained in the prospectus initially filed as part of the
Registration Statement under DESCRIPTION OF THE SENIOR NOTES AND SENIOR
SUBORDINATED NOTES, as supplemented by the statements under DESCRIPTION OF THE
1999 SERIES A SENIOR NOTES in the Prospectus Supplement dated June 3, 1999, are
substantially accurate and fair. As to the statistical statements in the
Registration Statement (which includes the Incorporated Documents), we have
relied solely on the officers of the Company. As to other matters of fact, we
have consulted with officers and other employees of the Company to inform them
of the disclosure requirements of the Securities Act. We have examined various
reports, records, contracts and other documents of the Company and orders and
instruments of public officials, which our investigation led us to deem
pertinent. In addition, we attended the due diligence meetings with
representatives of the Company and the closing at which the Company satisfied
the conditions contained in Section 7 of the Underwriting Agreement. We have
not, however, undertaken to make any independent review of the other records of
the Company. We accordingly assume no responsibility for the accuracy or
completeness of the statements made in the Registration Statement except as
stated above in regard to the aforesaid captions. But such consultation,
examination and attendance disclosed to us no information with respect to such
other matters that gives us reason to believe that the Registration Statement or
the Prospectus contained on the date the Registration Statement became effective
or contains now any untrue statement of a material fact or omitted on said date
or omits now to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. We are of the opinion that the
Registration Statement (excepting the financial statements incorporated therein
by reference, as to which we express no opinion) complies as to form in all
material respects with all legal requirements and is now effective.
The Registration Statement and the Prospectus (except the financial
statements incorporated by reference therein, as to which we express no opinion)
appear on their face to be appropriately responsive in all material respects to
the requirements of the Securities Act, and to the applicable rules and
regulations of the Commission thereunder.
IV - 3
<PAGE>
7. The titles and interests of the Company in and to its properties are
reasonably adequate to enable the Company to carry on its business and the
Company holds such franchises, permits and licenses as are reasonably adequate
to enable the Company to carry on its business, and, as to any franchises,
permits and licenses that the Company does not hold, the absence thereof will
not materially adversely affect the operation, business and properties of the
Company as a whole.
8. Except as set forth in the Registration Statement, there are no pending
legal, administrative or judicial proceedings with respect to the Company that
are required to be described in Form S-3.
The opinions in paragraphs 6 and 8 hereof are given on the basis that any
statement contained in an Incorporated Document shall be deemed not to be
contained in the Registration Statement or Prospectus if the statement has been
modified or superseded by any statement in a subsequently filed Incorporated
Document or in the Registration Statement or Prospectus.
Yours very truly,
MCGUIRE, WOODS, BATTLE
& BOOTHE LLP
IV - 4
<PAGE>
SCHEDULE V
PROPOSED FORM OF OPINION
OF
COUNSEL FOR AMBAC
[Letterhead of Insurer's Counsel]
June ___, 1999
Morgan Stanley & Co. Incorporated, as Representative
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
This opinion has been requested of the undersigned, a Vice President and an
Assistant General Counsel of Ambac Assurance Corporation, a Wisconsin stock
insurance company (Ambac Assurance) in connection with the issuance by Ambac
Assurance of a certain Financial Guaranty Insurance Policy and endorsement
thereto, effective as of the date hereof (the Policy), insuring $150,000,000 in
aggregate principal amount of 1999 Series A 6.70% Senior Notes, due June 30,
2009, and dated June 10, 1999, (the Obligations), of Virginia Electric and Power
Company (the Issuer).
In connection with my opinion herein, I have examined the Policy, such
statutes, documents and proceedings as I have considered necessary or
appropriate under the circumstances to render the following opinion, including,
without limiting the generality of the foregoing, certain statements contained
in the Prospectus Supplement of the Issuer dated June 3, 1999, to the Prospectus
of the Issuer dated March 18, 1998 relating to the Obligations (the Prospectus
Supplement) under the headings "THE POLICY" and "THE INSURER" and in "Appendix
AForm of Policy."
Based upon the foregoing and having regard to legal considerations I deem
relevant, I am of the opinion that:
1. Ambac Assurance is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of Wisconsin,
and duly qualified to conduct an insurance business in the Commonwealth of
Virginia.
2. Ambac Assurance has full corporate power and authority to execute
and deliver the Policy and the Policy has been duly authorized, executed
and delivered by Ambac Assurance and constitutes a legal, valid and binding
obligation of Ambac
<PAGE>
Assurance enforceable in accordance with its terms except to the extent
that the enforceability (but not the validity) of such obligation may be
limited by any applicable bankruptcy, insolvency, liquidation,
rehabilitation or other similar law or enactment now or hereafter enacted
affecting the enforcement of creditors' rights.
3. The execution and delivery by Ambac Assurance of the Policy will
not, and the consummation of the transactions contemplated thereby and the
satisfaction of the terms thereof will not, conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Authority, Articles of Incorporation or By-Laws of Ambac Assurance, or any
restriction contained in any contract, agreement or instrument to which
Ambac Assurance is a party or by which it is bound or constitute a default
under any of the foregoing.
4. Proceedings legally required for the issuance of the Policy have
been taken by Ambac Assurance and licenses, orders, consents or other
authorizations or approvals of any governmental boards or bodies legally
required for the enforceability of the Policy have been obtained; any
proceedings not taken and any licenses, authorizations or approvals not
obtained are not material to the enforceability of the Policy.
5. The statements contained in the Prospectus Supplement under the
headings "THE POLICY" and "THE INSURER," insofar as such statements
constitute summaries of the matters referred to therein, accurately reflect
and fairly present the information purported to be shown and insofar as
such statements describe Ambac Assurance, fairly and accurately describe
Ambac Assurance.
6. The form of Policy contained in the Prospectus Supplement under
the heading "Appendix AForm of Policy" is a true and complete copy of the
form of the Policy.
Very truly yours,
Vice President and
Assistant General Counsel
V-2
<PAGE>
SCHEDULE VI
PROPOSED FORM OF CERTIFICATE
OF
AMBAC ASSURANCE CORPORATION
June ___, 1999
Morgan Stanley & Co. Incorporated, as Representative
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Reference is made to the Prospectus Supplement dated June 3, 1999 with
respect to the 1999 Series A 6.70% Senior Notes, due June 30, 2009 (the Senior
Notes), of Virginia Electric and Power Company (the Issuer). Capitalized terms
used herein and not otherwise defined shall have the meaning assigned to them in
the Prospectus Supplement. With respect to the Senior Notes, the undersigned
does hereby certify the following:
(a) The undersigned is a duly authorized representative of Ambac
Assurance Corporation (Ambac Assurance) and is authorized to execute and
deliver this certificate.
(b) The financial data presented in the table set forth under the
heading "THE INSURERInsurer Financial Information" in the Prospectus
Supplement presents fairly the financial position of Ambac Assurance as of
December 31, 1996, 1997 and 1998 and March 31, 1999, and to the best of my
knowledge since March 31, 1999, no material and adverse change has occurred
in the financial position of Ambac Assurance other than as set forth in the
Prospectus Supplement.
(c) There are no actions, suits, proceedings or investigations pending
or, to the best of Ambac Assurance's knowledge, threatened against it at
law or in equity or before or by any court, governmental agency, board or
commission or any arbitrator which, if decided adversely, would materially
and adversely affect its condition (financial or otherwise) or operations
or which would materially and adversely affect its ability to perform its
obligations under the Policy.
Dated this _______ day of June, 1999
<PAGE>
AMBAC ASSURANCE CORPORATION
___________________________________
By:
<PAGE>
EXHIBIT 4.2
VIRGINIA ELECTRIC AND POWER COMPANY
TO
THE CHASE MANHATTAN BANK
Trustee
-------------------------
Second Supplemental Indenture
Dated as of June 1, 1999
-------------------------
$150,000,000
1999 Series A 6.70% Senior Notes
due June 30, 2009
<PAGE>
TABLE OF CONTENTS/1/
ARTICLE 1
1999 SERIES A 6.70% SENIOR NOTES
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 101. Establishment.......................................... 1
SECTION 102. Definitions ...................... 2
SECTION 103. Payment of Principal and Interest...................... 3
SECTION 104. Denominations.......................................... 4
SECTION 105. Global Securities...................................... 4
SECTION 106. Redemption............................................. 5
SECTION 107. Additional Interest.................................... 5
SECTION 108. Listing of Series A Notes.............................. 6
SECTION 109. Paying Agent........................................... 6
ARTICLE 2
SPECIAL INSURANCE PROVISIONS
SECTION 201. Insurer as Third Party Beneficiary..................... 6
SECTION 202. Notices and Information................................ 6
SECTION 203. Concerning the Special Insurance Provisions............ 7
SECTION 204. Amendments............................................. 7
SECTION 205. Defeasance............................................. 7
SECTION 206. Insurer's Rights to Notice; Subrogation................ 7
SECTION 207. Insurer's Rights Concerning the Trustee................ 9
SECTION 208. Insurer's Right to Accelerate, etc..................... 9
ARTICLE 3
MISCELLANEOUS PROVISIONS
SECTION 301. Recitals by Corporation................................ 9
SECTION 302. Ratification and Incorporation of Original Indenture... 9
SECTION 303. Executed in Counterparts............................... 10
SECTION 304. Assignment............................................. 10
</TABLE>
- ----------------------------
/1/This Table of Contents does not constitute part of the Indenture or have
any bearing upon the interpretation of any of its terms and provisions.
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE is made as of the first day of June,
1999, by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia
corporation, having its principal office at 701 East Cary Street, Richmond,
Virginia 23219-3932 (the "Company"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as Trustee (herein called the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company has heretofore entered into a Senior Indenture, dated
as of June 1, 1998, (the "Original Indenture") with The Chase Manhattan Bank;
WHEREAS, the Original Indenture is incorporated herein by this reference
and the Original Indenture, as supplemented by a First Supplemental Indenture
dated as of June 1, 1998 and this Second Supplemental Indenture, is herein
called the "Indenture";
WHEREAS, under the Original Indenture, a new series of Securities may at
any time be established in accordance with the provisions of the Original
Indenture and the terms of such series may be described by a supplemental
indenture executed by the Company and the Trustee;
WHEREAS, the Company proposes to create under the Indenture a series of
Securities;
WHEREAS, additional Securities of other series hereafter established,
except as may be limited in the Original Indenture as at the time supplemented
and modified, may be issued from time to time pursuant to the Indenture as at
the time supplemented and modified; and
WHEREAS, all conditions necessary to authorize the execution and delivery
of this Second Supplemental Indenture and to make it a valid and binding
obligation of the Company have been done or performed.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
1999 SERIES A 6.70% SENIOR NOTES
SECTION 101. Establishment. There is hereby established a new series of
-------------
Securities to be issued under the Indenture, to be designated as the Company's
1999 Series A 6.70% Senior Notes, due June 30, 2009 (the "Series A Notes").
There are to be authenticated and delivered $150,000,000 principal amount
of Series A Notes, and no further Series A Notes shall be authenticated and
delivered except as provided by
1
<PAGE>
Sections 304, 305, 306, 906 or 1106 of the Original Indenture. The Series A
Notes shall be issued in definitive fully registered form without coupons.
The Series A Notes shall be in substantially the form set out in Exhibit A
---------
hereto. The entire principal amount of the Series A Notes shall initially be
evidenced by one certificate issued to Cede & Co.
The form of the Trustee's Certificate of Authentication for the Series A
Notes shall be in substantially the form set forth in Exhibit B hereto.
---------
Each Series A Note shall be dated the date of authentication thereof and
shall bear interest from the date of original issuance thereof or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for.
SECTION 102. Definitions. The following defined terms used herein shall,
-----------
unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.
"Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a
day on which banks in New York, New York are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office is closed for business.
"Insurance Trustee" means United States Trust Company of New York, or any
successor thereto, as the Insurance Trustee under the Policy.
"Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation.
"Interest Payment Dates" means March 31, June 30, September 30 and December
31 of each year.
"Original Issue Date" means June 10, 1999.
"Outstanding", when used with respect to the Series A Notes, means, as of
the date of determination, all Series A Notes, theretofore authenticated and
delivered under the Indenture, except:
(i) Series A Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Series A Notes for whose payment or redemption the necessary
amount of money or money's worth has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the
2
<PAGE>
Company shall act as its own Paying Agent) for the Holders of such Series A
Notes; provided that if such Series A Notes are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Series A Notes as to which Defeasance has been effected
pursuant to Section 1302 of the Original Indenture; and
(iv) Series A Notes that have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Series A Notes have been authenticated
and delivered pursuant to the Indenture, other than any such Series A Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Series A Notes are held by a bona fide purchaser in
whose hands such Series A Notes are valid obligations of the Company; provided,
however, that in determining, during any period in which any Series A Notes are
owned by any Person other than the Company or any Affiliate thereof, whether the
Holders of the requisite principal amount of Outstanding Series A Notes have
given, made or taken any request, demand, authorization, direction, notice,
consent, waiver or other action hereunder as of any date, Series A Notes owned,
whether of record or beneficially, by the Company or any Affiliate thereof shall
be disregarded and deemed not to be Outstanding. In determining whether the
Trustee shall be protected in relying upon such request, demand, authorization,
direction, notice, consent, waiver or other action, only Series A Notes that the
Trustee knows to be so owned by the Company or an Affiliate of the Company in
the above circumstances shall be so disregarded. Series A Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Series A Notes and that the pledgee is not the Company or
any Affiliate of the Company.
"Policy" means the financial guaranty insurance policy issued by the
Insurer with respect to regularly scheduled payments due for principal of and
interest on the Series A Notes as provided in such policy.
"Regular Record Date" means, with respect to each Interest Payment Date,
the close of business on the 15th calendar day preceding such Interest Payment
Date.
"Stated Maturity" means June 30, 2009.
SECTION 103. Payment of Principal and Interest. The principal of the
---------------------------------
Series A Notes shall be due at the Stated Maturity (subject to earlier
redemption). The unpaid principal amount of the Series A Notes shall bear
interest at the rate of 6.70% per annum until paid or duly provided for, such
interest to accrue from the Original Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for. Interest
shall be paid quarterly in arrears on each Interest Payment Date to the Person
in whose name the Series A Notes are registered on the Regular Record Date for
such Interest Payment Date; provided that interest payable at the Stated
Maturity of principal or on a Redemption Date as provided herein will be paid to
the Person to whom principal is payable. Any such interest that is not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holders on such
3
<PAGE>
Regular Record Date and may either be paid to the Person or Persons in whose
name the Series A Notes are registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee (Special Record Date), notice whereof shall be given to Holders of the
Series A Notes not less than ten (10) days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange, if any, on which the Series A Notes may
be listed, and upon such notice as may be required by any such exchange, all as
more fully provided in the Original Indenture.
Payments of interest on the Series A Notes will include interest accrued to
but excluding the respective Interest Payment Dates. Interest payments for the
Series A Notes shall be computed and paid on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which interest is payable on
the Series A Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date the payment was originally payable.
Payment of the principal and interest on the Series A Notes shall be made
at the office of the Paying Agent in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts, with any such payment that is due at the Stated Maturity or at
earlier redemption of any Series A Notes being made upon surrender of such
Series A Notes to the Paying Agent. Payments of interest (including interest on
any Interest Payment Date) will be made, subject to such surrender where
applicable, at the option of the Company, (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Trustee
at least sixteen (16) days prior to the date for payment by the Person entitled
thereto. In the event that any date on which principal and interest is payable
on the Series A Notes is not a Business Day, then payment of the principal and
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was originally
payable.
SECTION 104. Denominations. The Series A Notes may be issued in
-------------
denominations of $25, or any integral multiple thereof.
SECTION 105. Global Securities. The Series A Notes will be issued
-----------------
initially in the form of one or more Global Securities registered in the name of
the Depositary (which shall be The Depository Trust Company) or its nominee.
Except under the limited circumstances described below, Series A Notes
represented by such Global Security or Global Securities will not be
exchangeable for, and will not otherwise be issuable as, Series A Notes in
definitive form. The Global Securities described above may not be transferred
except by the Depositary to a
4
<PAGE>
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or to a successor Depositary or its nominee.
Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Series A Note shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of the Depositary or its nominee or to a successor Depositary or its
nominee or except as described below. The rights of Holders of such Global
Security shall be exercised only through the Depositary.
A Global Security shall be exchangeable for Series A Notes registered in
the names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as a
Depositary for such Global Security and no successor Depositary shall have been
appointed by the Company within 90 days of receipt by the Company of such
notification, or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act at a time when the Depositary is required to
be so registered to act as such Depositary and no successor Depositary shall
have been appointed by the Company within 90 days after it becomes aware of such
cessation, or (ii) the Company in its sole discretion determines that such
Global Security shall be so exchangeable. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Series
A Notes registered in such names as the Depositary shall direct.
SECTION 106. Redemption. The Series A Notes shall be subject to
----------
redemption at the option of the Company, in whole or in part, without premium or
penalty, at any time or from time to time on or after June 30, 2002, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus
accrued but unpaid interest to the Redemption Date. The election of the Company
to redeem, in whole or in part, the Series A Notes shall be evidenced by an
Officers' Certificate.
In the event of redemption of the Series A Notes in part only, a new Series
A Note or Notes for the unredeemed portion shall be issued in the name or names
of the Holders thereof upon the surrender thereof.
The Series A Notes shall not have a sinking fund.
Notice of redemption shall be given as provided in Section 1104 of the
Original Indenture.
Any redemption of less than all of the Series A Notes shall, with respect
to the principal thereof, be divisible by $25.
SECTION 107. Additional Interest. Any principal of and installment of
-------------------
interest on the Series A Notes that is overdue shall bear interest at the rate
of 6.70% (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand.
5
<PAGE>
SECTION 108. Listing of Series A Notes. The Company shall use its best
-------------------------
efforts to list the Series A Notes on the New York Stock Exchange or any other
exchange on which the Company's securities are listed. The Company shall notify
the Trustee if and when the Series A Notes become admitted to trading on the New
York Stock Exchange or any other national securities exchange.
SECTION 109. Paying Agent. The Trustee shall initially serve as Paying
------------
Agent with respect to the Series A Notes, with the Place of Payment initially
being the Corporate Trust Office of the Trustee.
ARTICLE 2
SPECIAL INSURANCE PROVISIONS
SECTION 201. Insurer as Third Party Beneficiary. To the extent that the
----------------------------------
Indenture confers upon or gives or grants to the Insurer any right, remedy or
claim, the Insurer is hereby explicitly recognized as being a third-party
beneficiary hereunder and may enforce any such right, remedy or claim conferred,
given or granted hereunder.
SECTION 202. Notices and Information.
-----------------------
(a) The Company shall furnish to the Insurer:
(i) any notice that is required to be given to a Holder of the
Series A Notes or to the Trustee pursuant to the Indenture; and
(ii) as soon as practicable after the filing thereof, a copy of any
financial statement of the Company and a copy of any audit and annual
report of the Company; a copy of any notice to be given to the registered
owners of the Series A Notes including, without limitation, notice of any
redemption of or defeasance of the Series A Notes; and such additional
information it may reasonably request.
(b) The Company will permit the Insurer to have access to and make copies
of all books and records relating to the Series A Notes at any reasonable time.
(c) Notwithstanding any other provision of the Indenture, the Company
shall immediately notify the Insurer if at any time after such amounts are due
to be paid to the Trustee or Paying Agent there are insufficient moneys to make
any payments of principal and/or interest as required and the Trustee and the
Company shall notify the Insurer promptly upon the occurrence of any Event of
Default hereunder.
6
<PAGE>
All notices and information required to be given to the Insurer shall be in
writing and shall be sent by overnight delivery to Ambac Assurance Corporation,
One State Street Plaza, New York, NY 10004, Attention: Utilities Department.
SECTION 203 Concerning the Special Insurance Provisions. The provisions
-------------------------------------------
of this Article 2 shall apply notwithstanding anything in the Indenture to the
contrary (except as provided in Section 208), but only so long as the Policy
shall be in full force and effect and the Insurer is not in default thereunder.
SECTION 204. Amendments. Any provision of the Indenture expressly
----------
recognizing or granting rights in or to the Insurer may not be amended in any
manner which affects the rights of the Insurer hereunder without the prior
written consent of the Insurer.
SECTION 205. Defeasance. Notwithstanding anything herein to the
----------
contrary, in the event that the principal and/or interest due on the Series A
Notes shall be paid by the Insurer pursuant to the Policy, the Series A Notes
shall remain Outstanding for all purposes, not be defeased or otherwise
satisfied and not be considered paid by the Company, and the assignment and
pledge of moneys held in trust by the Trustee (other than moneys subject to the
Trustee's lien provided by Section 607 of the Original Indenture) and all
covenants, agreements and other obligations of the Company to the registered
owners shall continue to exist and shall run to the benefit of the Insurer, and
the Insurer shall be subrogated to the rights of such registered owners.
SECTION 206. Insurer's Rights to Notice; Subrogation. As long as the
---------------------------------------
Policy shall be in full force and effect, the Company, the Trustee and any
Paying Agent agree to comply with the following provisions:
(a) (i) If the Trustee or Paying Agent determines that there will be
insufficient funds to pay the principal of or interest on the Series A Notes on
an Interest Payment Date, the Trustee or Paying Agent shall so notify the
Insurer within one Business Day after such determination. Such notice shall
specify the amount of the anticipated deficiency, the Series A Notes to which
such deficiency is applicable and whether such Series A Notes will be deficient
as to principal or interest, or both. The Insurer will make payments of
principal or interest due on the Series A Notes on or before the first Business
Day next following the date on which the Insurer shall have received notice of
non-payment from the Trustee or Paying Agent.
(ii) If the Trustee or Paying Agent receives notice that any payment
of principal of or interest on Series A Notes which has become Due for Payment
(as defined in the Policy) and which is made to a Holder of Series A Notes by or
on behalf of the Company has been deemed a preferential transfer and theretofore
recovered from its registered owner pursuant to the United States Bankruptcy
Code by a trustee in bankruptcy in accordance with the final, nonappealable
order of a court having competent jurisdiction, the Trustee or Paying Agent, as
the case may be, shall notify the Insurer of such event within one Business Day
after receiving notice thereof.
7
<PAGE>
(b) The Trustee or Paying Agent shall, after giving notice to the Insurer
as provided in (a) above, make available to the Insurer and, at the Insurer's
direction, to the Insurance Trustee, the registration books of the Company
maintained by the Trustee or Paying Agent and all records relating to the Series
A Notes maintained under the Indenture.
(c) After giving the foregoing notice, the Trustee or Paying Agent shall
provide the Insurer and the Insurance Trustee with a list of registered owners
of Series A Notes entitled to receive principal or interest payments from the
Insurer under the terms of the Policy, and shall make arrangements with the
Insurance Trustee (i) to mail checks or pay by wire transfer to the registered
owners of Series A Notes entitled to receive full or partial interest payments
from the Insurer and (ii) to pay principal upon Series A Notes surrendered to
the Insurance Trustee by the registered owners of Series A Notes entitled to
receive full or partial principal payments from the Insurer.
(d) The Trustee or Paying Agent shall, at the time it provides notice to
the Insurer pursuant to (a)(i) above, notify registered owners of Series A Notes
entitled to receive the payment of principal or interest thereon from the
Insurer (i) as to the fact of such entitlement, (ii) that the Insurer will remit
to them all or a part of the interest payments next coming due upon proof of any
Holder's entitlement to interest payments and delivery to the Insurance Trustee,
in form satisfactory to the Insurance Trustee, of an appropriate assignment of
the registered owner's right to payment, (iii) that should they be entitled to
receive full payment of principal from the Insurer, they must surrender their
Series A Notes (along with an appropriate instrument of assignment in form
satisfactory to the Insurance Trustee to permit ownership of Series A Notes to
be registered in the name of the Insurer) for payment to the Insurance Trustee,
and not the Trustee or Paying Agent and (iv) that should they be entitled to
receive partial payment of principal from the Insurer, they must surrender their
Series A Notes for payment thereon first to the Trustee or Paying Agent, which
shall note on such Series A Notes the portion of the principal paid by the
Company through the Trustee or Paying Agent and then, along with an appropriate
instrument of assignment in form satisfactory to the Insurance Trustee, to the
Insurance Trustee, which will then pay the unpaid portion of principal.
(e) In the event that the Trustee or Paying Agent has notice that any
payment of principal of or interest on Series A Notes which has become Due for
Payment (as defined in the Policy) and which is made to a Holder of Series A
Notes by or on behalf of the Company has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States
Bankruptcy Code by a trustee in bankruptcy in accordance with the final,
nonappealable order of a court having competent jurisdiction, the Trustee or
Paying Agent shall, at the time the Insurer is notified pursuant to (a)(ii)
above, notify all registered owners that in the event that any registered
owner's payment is so recovered, such registered owner will be entitled to
payments from the Insurer to the extent of such recovery if sufficient funds are
not otherwise available, and the Trustee or Paying Agent shall furnish to the
Insurer its records evidencing the payments of principal of and interest on the
Series A Notes which have been made by the Trustee or Paying Agent and
subsequently recovered from registered owners and the dates on which such
payments were made.
8
<PAGE>
(f) In addition to those rights granted the Insurer under the Indenture,
the Insurer shall, to the extent it makes payment of principal of or interest on
the Series A Notes, become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Policy, and to evidence such
subrogation (i) in the case of subrogation as to claims for past due interest,
the Trustee or Paying Agent shall note the Insurer's rights as subrogee on the
registration books of the Company maintained by the Trustee or Paying Agent upon
receipt from the Insurer of proof of the payment of interest thereon to the
registered owners of the Series A Notes, and (ii) in the case of subrogation as
to claims for past due principal, the Trustee or Paying Agent shall note the
Insurer's rights as subrogee on the registration books of the Company maintained
by the Trustee or Paying Agent upon surrender of the Series A Notes by the
registered owners thereof together with proof from the Insurer of the payment of
principal thereof.
SECTION 207. Insurer's Rights Concerning the Trustee.
---------------------------------------
(a) The Insurer shall receive prompt written notice from the Company of
any Trustee or Paying Agent resignation.
(b) Notwithstanding any other provision of the Indenture, in determining
whether the rights of the Holders of Series A Notes will be adversely affected
in any material respect by any action taken pursuant to the terms and provisions
of the Indenture, the Trustee or Paying Agent shall consider the effect on the
Holders of Series A Notes as if there were no Policy.
SECTION 208. Insurer's Right to Accelerate, etc. Subject to Section 107
----------------------------------
of the Original Indenture and to the Trust Indenture Act, including without
limitation, Section 316(a)(1) thereof, upon the occurrence and continuance of an
Event of Default, so long as the Policy shall be in full force and effect and
the Insurer is not in default under the terms of the Policy, the Insurer shall
be entitled to control and direct the enforcement of all rights and remedies
granted to the Holders of Series A Notes.
ARTICLE 3
MISCELLANEOUS PROVISIONS
SECTION 301. Recitals by Company. The recitals in this Second
-------------------
Supplemental Indenture are made by the Company only and not by the Trustee, and
all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of the Series A Notes and of this Second Supplemental
Indenture as fully and with like effect as if set forth herein in full.
SECTION 302. Ratification and Incorporation of Original Indenture. As
----------------------------------------------------
supplemented hereby, the Original Indenture is in all respects ratified and
confirmed, and the
9
<PAGE>
Original Indenture and this Second Supplemental Indenture shall be read, taken
and construed as one and the same instrument.
SECTION 303. Executed in Counterparts. This Supplemental Indenture may
------------------------
be executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
SECTION 304. Assignment. The Company shall have the right at all times
----------
to assign any of its rights or obligations under this Indenture with respect to
the Series A Notes to a direct or indirect wholly-owned subsidiary of the
Company; provided that, in the event of any such assignment, the Company shall
remain primarily liable for the performance of all such obligations. The
Indenture may also be assigned by the Company in connection with a transaction
described in Article Eight of the Original Indenture.
10
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this instrument to be
signed in its name and behalf by its duly authorized officers, all as of the day
and year first above written.
VIRGINIA ELECTRIC AND POWER COMPANY
By:_______________________________________
Name:____________________________________
Title:_____________________________________
(SEAL)
Attest:
_______________________________
[Assistant] Corporate Secretary
THE CHASE MANHATTAN BANK, as Trustee
By:_______________________________________
Name:____________________________________
Title:_____________________________________
(SEAL)
Attest:
_______________________________
Trust Officer
11
<PAGE>
State of ____________
City/County of _________________ss.:
On the ____ day of June, 1999, before me personally came
_______________________ to me known, who, being by me duly sworn, did depose and
say that (s)he is ________________________ of Virginia Electric and Power
Company, one of the corporations described in and which executed the foregoing
instrument; that (s)he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that (s)he signed his/her
name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
____day of June, 1999.
(Notarial Seal) ________________
Notary Public
My commission expires:_______________.
State of New York
City/County of New York ss.:
On the ____ day of June, 1999, before me personally came
___________________ to me known, who, being by me duly sworn, did depose and say
that (s)he is _________________________ of The Chase Manhattan Bank, one of the
corporations described in and which executed the foregoing instrument; that
(s)he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that (s)he signed his/her name
thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
____day of June, 1999.
(Notarial Seal) ________________
Notary Public
My commission expires:_______________.
12
<PAGE>
EXHIBIT A
FORM OF
1999 SERIES A 6.70% SENIOR NOTE,
DUE JUNE 30, 2009
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF [CEDE & CO.] OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO [CEDE & CO.], ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, [CEDE & CO.,] HAS AN INTEREST HEREIN.]**
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]**
---------------------------
VIRGINIA ELECTRIC AND POWER COMPANY
---------------------------
$_____________
1999 SERIES A 6.70% SENIOR NOTE,
DUE JUNE 30, 2009
No. ___ CUSIP No. ____
Virginia Electric and Power Company, a corporation duly organized and
existing under the laws of Virginia (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to
_______________
** Insert in Global Securities.
13
<PAGE>
[Cede & Co.]**, or registered assigns (the "Holder"), the principal sum of
__________________ Dollars ($______________) on June 30, 2009, and to pay
interest thereon from June, 1999 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, quarterly on March 31,
June 30, September 30 and December 31 in each year, commencing June 30, 1999, at
the rate of 6.70% per annum, until the principal hereof is paid or made
available for payment, provided that any principal and premium, and any such
installment of interest, that is overdue shall bear interest at the rate of
6.70% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on demand. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the fifteenth calendar day (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Company in
the Borough of Manhattan, City and State of New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Trustee
at least sixteen (16) days prior to the date for payment by the Person entitled
thereto.
Financial Guaranty Insurance Policy No. _______________ (the "Policy")
with respect to payments due for principal of and interest on this Security has
been issued by Ambac Assurance Corporation (the "Insurer"). The Policy has been
delivered to United States Trust Company of New York, as the Insurance Trustee
under said Policy and will be held by such Insurance Trustee or any successor
insurance trustee. The Policy is on file and available for inspection at the
principal office of the Insurance Trustee and a copy thereof may be secured from
the Insurer or the Insurance Trustee. All payments required to be made under the
Policy shall be made in accordance with the provisions thereof. The owner of
this Security acknowledges and consents to the subrogation rights of the Insurer
as more fully set forth in the Policy.
14
<PAGE>
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Virginia Electric and Power Company
By_______________________________________
Attest:
______________________________
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Senior Indenture, dated as of June 1, 1998, as supplemented by
the First Supplemental Indenture dated as of June 1, 1998 and the Second
Supplemental Indenture dated as of June 1, 1999 (as amended or supplemented from
time to time, herein called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The Chase Manhattan
Bank, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), and reference is hereby made to the Indenture for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof limited in aggregate principal amount to $150,000,000.
The Securities of this series are subject to redemption upon not less
than 30 days notice by mail, at any time on or after June 30, 2002, as a whole
or in part, at the election of the Company, at a Redemption Price equal to 100%
of the principal amount, together in the case of any such redemption with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
15
<PAGE>
In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange therefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than a majority in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, and the
Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder
of this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed or
provided for herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security
16
<PAGE>
for registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $25.00 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series having the same Stated Maturity and of like
tenor of any authorized denominations as requested by the Holder upon surrender
of the Security or Securities to be exchanged at the office or agency of the
Company.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
17
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with rights of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- ________________________Custodian for
(Cust)
____________________________
(Minor)
Under Uniform Gifts to Minors Act of
_____________________________
(State)
Additional abbreviations may also be used though not on the above list.
_______________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s)unto
____________________ (please insert Social Security or other identifying number
of assignee).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
18
<PAGE>
agent to transfer said Security on the books of the Company, with full power of
-------
substitution in the premises.
Dated: __________________ __, ____
-----------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular without
alteration or enlargement, or any change whatever.
19
<PAGE>
EXHIBIT B
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By: _____________________
Authorized Officer
<PAGE>
EXHIBIT 12
VIRGINIA ELECTRIC AND POWER COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(thousands of dollars)
<TABLE>
<CAPTION>
Twelve Months Ended
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Mar-99
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Income Before Extraordinary Item $447,144 $432,844 $ 457,304 $ 469,114 $229,873 $ 245,655
Add: Income Taxes 225,647 228,785 243,993 249,293 157,298 165,177
------------------------------------------------------------------------
Total Pretax Income Before Extraordinary Item $672,791 $661,629 $ 701,297 $ 718,406 $387,171 410,852
========================================================================
Fixed Charges:
Interest on Long-Term Debt 291,864 302,618 287,928 274,850 308,200 305,183
Other Interest 7,551 19,998 22,380 30,703 0 0
Pfd Distribution of Affiliate-Gross 0 3,653 10,867 10,868 10,868 10,868
Estimated Interest Factor
of Rents Charged to Op-
erating Expenses, Clear-
ing & Other Accounts 7,132 6,475 6,291 8,595 6,389 8,825
------------------------------------------------------------------------
Total Fixed Charges $306,547 $332,744 $ 327,466 $ 325,015 $325,457 $ 324,876
========================================================================
------------------------------------------------------------------------
Earnings as Defined $979,339 $994,373 $1,028,764 $1,043,421 $712,627 $ 735,708
========================================================================
Ratio of Earnings to
Fixed Charges 3.19 2.99 3.14 3.21 2.19 2.27
========================================================================
</TABLE>
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Ambac Assurance Corporation
We consent to the incorporation by reference in the registration statement (No.
333-47119) of Virginia Electric and Power Company (the "Registrant"), and in the
Prospectus Supplement of the Registrant (the "Prospectus Supplement"), via the
Form 8-K of the Registrant dated June 3, 1999, of our report dated January 27,
1999 on the consolidated financial statements of Ambac Assurance Corporation and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, which report appears in the Form 10-K
of Ambac Financial Group, Inc., which was filed with the Securities and Exchange
Commission on March 30, 1999 and to the reference to our firm under the heading
"Experts" in the Prospectus Supplement.
/s/ KPMG LLP
New York, New York
June 3, 1999
