<PAGE>
File No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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Virginia Electric and Power Company
(Exact name of Registrant as specified in its charter)
Virginia 54-0418825
(State of incorporation) (I.R.S. Employer Identification No.)
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701 East Cary Street, Richmond, Virginia 23219-3932
(804) 771-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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John A. Shaw, Senior Vice President, Chief Financial Officer and Treasurer
Philip W. Nichols, Coordinator-Finance Administration
Virginia Electric and Power Company
701 East Cary Street, Richmond, Virginia 23219-3932
(804) 771-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Thomas F. Farrell II F. Claiborne Johnston, Jr.
Virginia Electric and Power Company Mays & Valentine, L.L.P.
701 East Cary Street 1111 East Main Street
Richmond, Virginia 23219-3932 Richmond, Virginia 23218-1122
Approximate date of commencement of proposed sale to the public: From time
to time after effectiveness.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Amount Maximum Amount of
Title of Each Class of to be Aggregate Registration
Seurities to be Registered Registered Offering Price (*) Fee
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<S> <C> <C> <C>
Medium-Term Notes.......... U.S. $400,000,000 U.S. $400,000,000 $111,200
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</TABLE>
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(*) Exclusive of accrued interest and estimated solely for the purpose of
calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
PROSPECTUS
U.S. $400,000,000
Virginia Electric and Power Company
Medium-Term Notes, Series G
Due 9 Months or More from Date of Issue
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The Company: Virginia Electric and Power Company. Our principal executive
office is located at 701 East Cary Street, Richmond, Virginia 23219-3932 and
our telephone number is (804) 771-3000.
Terms: We plan to offer and sell Notes, ranking as senior unsecured
indebtedness of the Company, with various terms, including the following:
. Maturities of 9 months . Interest at fixed or
or more from date of floating rates. The
issue floating interest rate may
be based on one or more of
. Redemption and/or the following indices plus
repayment provisions, or minus a spread and/or
if applicable, whether multiplied by a spread
mandatory or at the multiplier:
option of the Company
or noteholders .CD rate .Prime rate
.LIBOR .Treasury
. Payments in U.S. .Federal funds rate
dollars or one or more rate .CMT rate
foreign currencies .Commercial paper
rate
. Minimum denominations
of $1,000 or other . Interest payments on fixed
specified rate Notes on a semiannual
denominations for basis
foreign currencies
. Interest payments on
. Book-entry (through floating rate Notes on a
The Depository Trust monthly, quarterly,
Company) or semiannual or annual basis
certificated form
We will specify the final terms for each Note, which may be different from the
terms described in this prospectus, in the applicable pricing supplement.
Investing in the Notes involves certain risks. See RISK FACTORS on page 4.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus or any applicable pricing or prospectus supplement is truthful
or complete. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Agent's Discounts
Public Offering Price And Commissions Proceeds to
--------------------- ----------------------- -----------------------------
<S> <C> <C> <C>
Per Note................ 100% .125%-.750%(2) 99.875%-99.250%
Total(1)................ U.S.$400,000,000 U.S.$500,000-$3,000,000 U.S.$399,500,000-$397,000,000
</TABLE>
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(1) Or the equivalent thereof in one or more foreign or composite currencies.
(2) Or as agreed, in the case of Notes with a maturity of more than 30 years.
We may sell Notes to the Agents referred to below as principal for resale at
varying or fixed offering prices or through the Agents as agent using their
reasonable efforts on our behalf. We may also sell Notes without the
assistance of the Agents (whether acting as principal or as agent).
----------------
Merrill Lynch & Co.
Goldman, Sachs & Co.
Lehman Brothers
Morgan Stanley Dean Witter
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The date of this prospectus is , 1999
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission or the SEC. You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings (file
number 01-2255) are also available to the public at the SEC's web site at
http://www.sec.gov. You may also read any copy of these documents at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and later information that we file
with the SEC will automatically update or supersede this information. We
incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), until such time as all of
the securities covered by this prospectus have been sold:
1. The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998; and
2. The Company's Current Report on Form 8-K, filed March 29, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us as follows:
Treasurer
Virginia Electric and Power Company
One James River Plaza
P.O. Box 26666,
Richmond, Virginia 23261-6666
Telephone (804) 771-3000
You should not assume that the information in this prospectus and the
accompanying pricing supplement is accurate as of any date other than the date
on the front of those documents regardless of the time of delivery of this
prospectus and the accompanying pricing supplement or any sale of the Notes.
Additional updating information with respect to the matters discussed in this
prospectus and the accompanying pricing supplement may be provided in the
future by means of appendices or supplements to this prospectus and the
accompanying pricing supplement or other documents including those
incorporated by reference.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this document, and in our public
filings to which we refer, that are subject to risks and uncertainties. These
forward-looking statements include information about possible or assumed
future results of our operations. Also, when we use any of the words or
phrases "anticipate," "estimate," "plans," "projects," "continuing,"
"ongoing," "expects," "management believes," "the Company believes," "the
Company intends," "we believe," "we intend" or similar words or phrases, we
are making forward-looking statements. Many possible events or factors could
affect the future financial results and performance of our company. This could
cause results or performance to differ materially from those expressed in our
forward-looking statements. You should consider these risks when you purchase
securities. These possible events or factors include the following: political
and economic risks, market demand for energy, inflation, capital market
conditions, current governmental policies, legislative and regulatory actions
(including those of the Federal Energy Regulatory Commission (FERC), the
Environmental Protection Agency, the Department of Energy, the Nuclear
Regulatory Commission, the State Corporation Commission of Virginia (Virginia
Commission) and the North Carolina Utilities Commission (the North Carolina
Commission)), industry deregulation and rate structure and legal and
administrative proceedings. Some other important factors that could cause
actual results or outcomes to differ
2
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materially from those discussed in the forward-looking statements include
changes in and compliance with environmental laws and policies, weather
conditions and catastrophic weather-related damage, present or prospective
wholesale and retail competition, competition for new energy development
opportunities, pricing and transportation of commodities, operation of nuclear
power facilities, acquisition and disposition of assets and facilities,
recovery of the cost of purchased power, nuclear decommissioning costs, our
ability as well as the ability of our suppliers and customers to successfully
address Year 2000 compliance issues, exposure to changes in the fair value of
commodity contracts, counter-party credit risk and unanticipated changes in
operating expenses and capital expenditures. All of these factors are
difficult to predict, contain uncertainties that may materially affect actual
results, and may be beyond our control. New factors emerge from time to time
and it is not possible to predict all factors, nor can we assess the impact of
each factor on the Company.
The forward-looking statements contained or referred to in this prospectus
speak only as of the date on which the statements are made. We disclaim any
obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement to reflect changes in our expectations or any change
in events, conditions or circumstances on which any of these statements are
based.
IMPORTANT INFORMATION FOR NON-U.S. RESIDENTS
The information set forth in this prospectus and any prospectus supplement
is directed to prospective purchasers who are United States residents, and we
disclaim any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of (and
premium, if any) and interest on the Notes. Non-U.S. residents should consult
their own financial and legal advisers with regard to these matters.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for the Notes in U.S. dollars, or in other
currencies, including composite currencies, as may be specified in the
applicable pricing supplement (the Specified Currency), and payments of
principal (and premium, if any) and interest on the Notes will also be made in
U.S. dollars, unless the applicable pricing supplement provides that payments
will be made in a Specified Currency. Currently, there are limited facilities
in the United States for the conversion of U.S. dollars into the Specified
Currencies and vice versa. Most banks do not currently offer non-U.S. dollar
denominated checking or savings account facilities in the United States.
Accordingly, unless otherwise specified in the applicable pricing supplement
or unless alternative arrangements are made, payment of principal (and
premium, if any) and interest made in a Specified Currency other than U.S.
dollars will be made to an account at a bank outside of the United States. See
DESCRIPTION OF THE NOTES and SPECIAL PROVISIONS RELATING TO NOTES DENOMINATED
IN A CURRENCY OTHER THAN U.S. DOLLARS.
THE PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process. Under this shelf process, we may
sell any combination of the debt securities described in this prospectus in
one or more offerings up to a total dollar amount of $400,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a pricing supplement that
will contain specific information about the terms of that offering. A
supplement to this prospectus may also add, update or change information
contained in this prospectus. If you are considering an investment in the
Notes, you should read this prospectus and any supplement together with
additional information described under the heading WHERE YOU CAN FIND MORE
INFORMATION.
3
<PAGE>
RISK FACTORS
Your investment in the Notes will include certain risks. In consultation
with your own financial and legal advisers, you should carefully consider,
among other matters, the following discussion of risks before deciding whether
an investment in the Notes is suitable for you. Notes are not an appropriate
investment for you if you are unsophisticated with respect to the significant
components of these risks and their relationship to the Notes.
Structure Risks
General
If you invest in Notes indexed to one or more interest rate, currency or
other indices or formulas, there will be significant risks not associated with
a conventional fixed rate or floating rate debt security. These risks include
fluctuation of the particular indices or formulas and the possibility that you
will receive a lower (or no) amount of principal, premium or interest and at
different times than you expected. We have no control over a number of
matters, including economic, financial and political events, that are
important in determining the existence, magnitude and longevity of risks and
their results. In addition, if an index or formula used to determine any
amounts payable in respect of the Notes contains a multiplier or leverage
factor, the effect of any change in the applicable index or formula will be
magnified. In recent years, values of certain indices and formulas have been
volatile and that volatility may continue in the future.
Redemption and Repayment
If your Notes are redeemable at our option, or are otherwise subject to
mandatory redemption, or are repayable at your option, we may choose to (in
the case of optional redemption) or must (in the case of mandatory redemption
or repayment) redeem or repay your Notes at times when prevailing interest
rates are lower than the rates established by your Notes. Accordingly, you
generally will not be able to reinvest the redemption or repayment proceeds,
as the case may be, in a comparable security at an effective interest rate as
high as that of the Notes.
Uncertain Trading Markets
We cannot assure you a trading market for your Notes will ever develop or be
maintained. Many factors independent of our creditworthiness affect the
trading market. These factors include:
. the complexity and volatility of the index or formula applicable to the
Notes,
. the method of calculating the premium, if any, and interest in respect
of the Notes,
. the time remaining to the maturity of the Notes,
. the outstanding amount of the Notes,
. the redemption or repayment features of the Notes,
. the amount of other debt securities linked to the index or formula
applicable to the Notes, and
. the level, direction and volatility of market interest rates generally.
In addition, certain Notes have a more limited trading market and experience
more price volatility because they were designed for specific investment
objectives or strategies. There may be a limited number of buyers when you
decide to sell these Notes. This may affect the price you receive for your
Notes or your ability to sell your Notes at all. You should not purchase Notes
unless you understand and know you can bear these investment risks.
4
<PAGE>
Exchange Rates and Exchange Controls
If you invest in Notes that are denominated and/or payable in a foreign
currency or composite currency, there will be significant risks not associated
with an investment in a debt security denominated and payable in U.S. dollars,
including the possibility of material changes in the exchange rate between
U.S. dollars and your payment currency and the imposition or modification of
exchange controls by the applicable governments. We have no control over the
factors that generally affect these risks, such as economic, financial and
political events and the supply and demand for the applicable currencies.
Moreover, if payments on Notes denominated in foreign currencies or composite
currencies are determined by reference to a formula containing a multiplier or
leverage factor, the effect of any change in the exchange rates between the
applicable currencies will be magnified. In recent years, exchange rates
between certain currencies have been highly volatile and volatility between
these currencies or with other currencies may be expected in the future.
Fluctuations between currencies in the past are not necessarily indicative,
however, of fluctuations that may occur in the future. Depreciation of your
payment currency would result in a decrease in the U.S. dollar equivalent
yield of your Notes, in the U.S. dollar equivalent value of the principal and
any premium payable at maturity or earlier redemption or repayment of these
Notes and, generally, in the U.S. dollar equivalent market value of Notes
denominated in foreign currencies or currency units.
Governments have imposed from time to time, and may in the future impose or
modify, exchange controls that could affect exchange rates and the
availability of your payment currency (other than U.S. dollars) on the date
interest payments are due or at a Note's maturity or earlier redemption or
repayment. The imposition or modification of exchange or currency controls may
not be a matter of public knowledge prior to its occurrence. Even if there are
no exchange controls, it is possible that your payment currency will not be
available on a required payment date for circumstances beyond our control. In
these cases, we will be allowed to satisfy in U.S. dollars our obligations in
respect of Notes denominated in foreign currencies or composite currencies.
Credit Ratings
The credit ratings of our medium-term note program may not reflect the
potential impact of all risks related to structure and other factors on the
value of your Notes. In addition, real or anticipated changes in our credit
ratings will generally affect the market value of your Notes.
THE COMPANY
The Company is a Virginia corporation with its principal office located at
701 East Cary Street, Richmond, Virginia 23219-3932. The telephone number is
(804) 771-3000. All of our common stock is held by Dominion Resources, Inc., a
Virginia corporation (Dominion Resources).
The Company is a public utility engaged in the generation, transmission,
distribution and sale of electric energy within a 30,000 square-mile area in
Virginia and northeastern North Carolina. We supply energy at retail to
approximately two million customers. In addition we sell electricity at
wholesale to rural electric cooperatives, power marketers and certain
municipalities.
In Virginia we trade under the name "Virginia Power." The Virginia service
area comprises about 65 percent of Virginia's total land area, but accounts
for over 80 percent of its population. In North Carolina we trade under the
name "North Carolina Power" and serve retail customers in the northeastern
region of the state, excluding certain municipalities. We also engage in off-
system wholesale purchases and sales of electricity and purchases and sales of
natural gas and are developing trading relationships beyond the geographic
limits of our retail service territory. The FERC, the Virginia Commission and
the North Carolina Commission are the principal regulators of our electric
operations.
5
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USE OF PROCEEDS
The proceeds from the sale of the Notes will be added to our general funds
and will be used to meet a portion of our capital requirements. These
requirements consist principally of construction, operating and maintenance
expenditures and refunding of outstanding securities. For a more detailed
discussion of our capital requirements and our financing program, see CAPITAL
REQUIREMENTS AND FINANCING PROGRAM and MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS under the headings CAPITAL
REQUIREMENTS and RESULTS OF OPERATIONS, respectively, in our most recent
Annual Report on Form 10-K (incorporated by reference).
RATIO OF EARNINGS TO FIXED CHARGES
In the ratio of earnings to fixed charges, earnings was computed by adding
taxes on income and fixed charges to Net Income. Fixed charges consist of
interest charges (without reduction for Allowance for Funds Used During
Construction) on long-term and short-term debt, which approximates the
interest factor. These earnings are then divided by total fixed charges.
<TABLE>
<CAPTION>
Year
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1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.................. 2.19 3.21 3.14 2.99 3.19
</TABLE>
DESCRIPTION OF THE NOTES
The Notes will be issued under an Indenture, dated as of April 1, 1988, as
supplemented by a First Supplemental Indenture, dated as of August 1, 1989 and
a Second Supplemental Indenture dated as of May 1, 1999 (as further amended or
modified from time to time, the Indenture) between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), a New York banking
corporation, as trustee (the Trustee). The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended. The statements under
this heading do not purport to be complete and are subject to the detailed
provisions of the Indenture. Wherever particular provisions of the Indenture
are referred to in the following discussion, those provisions are incorporated
by reference into this discussion. The statements herein are qualified in
their entirety by the particular provisions of the Indenture. Except as
otherwise provided, capitalized terms used in this prospectus shall have the
meanings given to them in the Indenture.
General
The terms and conditions set forth in this prospectus will apply to each
Note unless otherwise specified herein or in the applicable pricing supplement
and in the Note. The Notes will be issued in fully registered certificated or
book-entry form and will constitute a series of Securities issued under the
Indenture, in the maximum aggregate principal amount of U.S. $400,000,000, or
its equivalent in foreign currencies or composite currencies. Notes issued in
certificated form will be represented by certificates delivered to the
purchasers designated by the Agent. Notes issued in book-entry form will be
represented by certificates deposited with, or on behalf of, The Depository
Trust Company (the Depositary) and registered in the name of the Depositary's
nominee (Book-Entry Notes).
The Notes will be offered on a continuing basis and each Note will be due 9
months or more from its date of issue, as selected by the purchaser and agreed
to by the Company prior to the issuance thereof (the date on which a Note is
due is referred to as the Stated Maturity Date). Maturity Date means the date
on which the principal amount of a Note is due, whether at the Stated Maturity
Date, or the date of earlier redemption or repayment.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the
Notes purchased in any single transaction.
6
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The pricing supplement for each Note will state the following:
. the principal amount of the Note;
. the Specified Currency in which the Note is denominated (or, if the
currency is no longer legal tender for the payment of public and private
debts in the country issuing the applicable currency or, in the case of
the euro, in the member states of the European Union that have adopted
the single currency in accordance with the Treaty establishing the
European Community, as amended by the Treaty on European Union, the
currency which is then legal tender);
. the date on which the Note will be issued;
. the Stated Maturity Date of the Note;
. the Fixed Rate if a Fixed Rate Note or, if a Floating Rate Note, the
Base Rate at which the Note will bear interest (including the Spread
and/or Spread Multiplier (each as defined below) applicable thereto and
any Minimum and/or Maximum Interest Rates (each as defined below)
applicable thereto);
. the specified Interest Payment Date;
. the redemption terms, if any, of the Note;
. the repayment terms, if any, of the Note; and
. additional terms (if any) applicable to the Note. If the Note is
denominated in a Specified Currency other than U.S. dollars, the pricing
supplement will include information relative to the Specified Currency.
Priority
All of the Notes will be unsecured and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company. Substantially all of
the Company's assets are subject to a first and prior lien in favor of holders
of its First and Refunding Mortgage Bonds (the Bonds), of which approximately
$2.6 billion aggregate principal amount are outstanding as of the date hereof.
Additional Bonds of any series may be issued from time to time without limit
in aggregate principal amount, but not in excess of the amount authorized by
the Company's common shareholder (presently $5 billion), subject to certain
financial tests. These tests presently would permit the issuance of
approximately $2.3 billion principal amount of Bonds in addition to those
outstanding, for an aggregate principal amount of approximately $4.9 billion.
Interest
General
Unless otherwise specified in the applicable pricing supplement, each Note
will bear interest from its date of issue at the rate per annum, in the case
of a Fixed Rate Note, or pursuant to the interest rate formula, in the case of
a Floating Rate Note, in each case as specified in the applicable pricing
supplement, until the principal thereof is paid or duly made available for
payment. Interest payments in respect of the Notes will equal the amount of
interest accrued from and including the immediately preceding Interest Payment
Date in respect of which interest has been paid or duly made available for
payment (or from and including the date of issue, if no interest has been paid
with respect to the applicable Note) to but excluding the related Interest
Payment Date or the Maturity Date.
Interest will be payable in arrears on each Interest Payment Date specified
in the applicable pricing supplement on which an installment of interest is
due and payable and on the Maturity Date. Unless otherwise specified in the
applicable pricing supplement, the first payment of interest on any Note
originally issued between a Record Date (as defined below) and the related
Interest Payment Date or on an Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Record Date to
the Holder on the next succeeding Record Date. Unless otherwise specified in
the applicable pricing supplement, a Record Date shall be the fifteenth
calendar day (whether or not a Business Day) immediately preceding the related
Interest Payment Date.
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Fixed Rate Notes
Unless otherwise specified in the applicable pricing supplement, the Interest
Payment Dates for the Fixed Rate Notes will be May 1 and November 1 of each
year. Unless otherwise specified in the applicable pricing supplement, interest
on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve
30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls
on a day that is not a Business Day, the required payment of principal (and
premium, if any), and/or interest will be made on the next succeeding Business
Day as if made on the date the payment was due, and no interest will accrue on
the payment for the period from and after the Interest Payment Date or the
Maturity Date, as the case may be, to the date of the payment on the next
succeeding Business Day.
Floating Rate Notes
Each Floating Rate Note will bear interest from the date of issuance until
the principal thereof is paid or made available for payment at a rate
determined by reference to an interest rate basis or formula (the Base Rate),
which may be adjusted by a Spread and/or Spread Multiplier (each as defined
below). The applicable pricing supplement will designate one or more of the
following Base Rates as applicable to each Floating Rate Note:
. the CD Rate (a CD Rate Note),
. the Commercial Paper Rate (a Commercial Paper Rate Note),
. the Federal Funds Rate (a Federal Funds Rate Note),
. LIBOR (a LIBOR Note),
. the Prime Rate (a Prime Rate Note),
. the Treasury Rate (a Treasury Rate Note),
. the CMT Rate (a CMT Rate Note) or
. some other Base Rate or interest rate formula as is set forth in the
pricing supplement and in the Floating Rate Note.
The Index Maturity for any Floating Rate Note is the period to maturity of
the instrument or obligation from which the Base Rate is calculated and will be
specified in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the interest
rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii)
multiplied by the Spread Multiplier, if any. The Spread is the number of basis
points (one one-hundredth of a percentage point) specified in the applicable
pricing supplement to be added to or subtracted from the Base Rate for the
Floating Rate Note, and the Spread Multiplier is the percentage specified in
the applicable pricing supplement to be applied to the Base Rate for the
Floating Rate Note.
As specified in the applicable pricing supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period
(Maximum Interest Rate); and (ii) a minimum limitation, or floor, on the rate
of interest which may accrue during any interest period (Minimum Interest
Rate). In addition to any Maximum Interest Rate that may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on a
Floating Rate Note will in no event be higher than the maximum rate from time
to time permitted by New York law, as the same may be modified by United States
law of general application.
Unless otherwise specified in the applicable pricing supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (that period being the Interest Reset
Period for the Note, and the first day of each Interest Reset Period being an
Interest Reset Date), as specified in the applicable pricing supplement. Unless
otherwise specified in the pricing supplement, the Interest Reset Date will be,
in the case of Floating Rate Notes which reset:
. daily, on each Business Day;
. weekly, on the Wednesday of each week (other than Treasury Rate Notes
which reset the Tuesday of each week, unless otherwise provided below);
8
<PAGE>
. monthly, on the third Wednesday of each month;
. quarterly, on the third Wednesday of March, June, September and
December;
. semiannually, on the third Wednesday of two months of each year, as
specified in the applicable pricing supplement; and
. annually, on the third Wednesday of one month of each year, as specified
in the applicable pricing supplement;
provided, however, that the interest rate in effect from the date of issue to
the first Interest Reset Date with respect to a Floating Rate Note will be the
initial interest rate set forth in the applicable pricing supplement (the
Initial Interest Rate). If any Interest Reset Date for any Floating Rate Note
would otherwise be a day that is not a Business Day, the Interest Reset Date
shall be postponed to the next succeeding Business Day, except that in the
case of a LIBOR Note, if the next succeeding Business Day is in the next
succeeding calendar month, the Interest Reset Date shall be the immediately
preceding Business Day.
Except as provided below, unless otherwise specified in the applicable
pricing supplement, the date on which interest on Floating Rate Notes will be
payable is, in the case of Floating Rate Notes which reset:
. daily, weekly or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December, as specified in
the applicable pricing supplement;
. quarterly, on the third Wednesday of March, June, September and
December;
. semiannually, on the third Wednesday of the two months specified in the
applicable pricing supplement; and
. annually, on the third Wednesday of the month specified in the
applicable pricing supplement.
If any Interest Payment Date for any Floating Rate Note would fall on a day
that is not a Business Day with respect to that Floating Rate Note, the
Interest Payment Date will be postponed to the following day that is a
Business Day with respect to that Floating Rate Note, except that, in the case
of a LIBOR Note, if the following Business Day is in the next succeeding
calendar month, the Interest Payment Date shall be the immediately preceding
day that is a Business Day with respect to the LIBOR Note. If the Maturity
Date of a Floating Rate Note falls on a day that is not a Business Day, the
payment of principal, premium, if any, and interest will be made on the next
succeeding Business Day, and no interest on the payment shall accrue for the
period from and after the Maturity Date.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of the Floating Rate Note by an accrued
interest factor. The accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable pricing supplement,
the interest factor for each day in the interest period is computed by
dividing the interest rate applicable to the day by 360, in the case of CD
Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes
and Prime Rate Notes or by the actual number of days in the year, in the case
of Treasury Rate Notes and CMT Rate Notes. All percentages used in or
resulting from any calculation of the rate of interest on a Floating Rate Note
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward, and all amounts used in or resulting from that calculation on Floating
Rate Notes will be rounded, in the case of U.S. dollars, to the nearest cent
or, in the case of a foreign currency, to the nearest unit (with one-half cent
or unit being rounded upwards. The interest rate in effect on any Interest
Reset Date will be the applicable rate as reset on that date. The interest
rate applicable to any other day is the interest rate from the immediately
preceding Interest Reset Date (or, if none, the Initial Interest Rate).
Unless otherwise stated in the applicable pricing supplement, the
calculation agent (the Calculation Agent) with respect to any issue of
Floating Rate Notes shall be The Chase Manhattan Bank. Upon the request of the
holder of any Floating Rate Note, the Calculation Agent will provide the
interest rate then in effect and, if determined, the interest rate that will
become effective on the next Interest Reset Date with respect to that Floating
Rate Note.
The Interest Determination Date pertaining to an Interest Reset Date for CD
Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate
Notes and Prime Rate Notes will be the second Business Day
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next preceding that Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a LIBOR Note will be the second
London Business Day immediately preceding that Interest Reset Date, unless the
Index Currency is British pounds sterling, in which case the Interest
Determination Date will be the applicable Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate
Note will be the day of the week in which that Interest Reset Date falls on
which Treasury bills would normally be auctioned. Treasury bills are normally
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the immediately following Tuesday,
but the auction may be held on the preceding Friday. If, as the result of a
legal holiday, an auction is held on the preceding Friday, that Friday will be
the Interest Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week. If an auction falls on a day that is an
Interest Reset Date, the Interest Reset Date will be the next following
Business Day.
Unless otherwise specified in the applicable pricing supplement, the
Calculation Date, where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after that Interest
Determination Date, or, if that day is not a Business Day, the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest
Payment Date or Maturity Date, as the case may be.
References to U.S. dollars, U.S. $, dollars or $ in this prospectus or any
supplement hereto are to the legal currency of the United States of America.
As used herein, Business Day means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which commercial banking
institutions are authorized or required by law, regulation or executive order
to close in New York City provided, however, that, with respect to Notes the
payment of which is to be made in a Specified Currency other than U.S.
dollars, that day is also not a day on which commercial banking institutions
are authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as defined below) of the country issuing the
Specified Currency (or, in the case of the euro, is also a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET)
System is open); provided, further, that, with respect to Notes as to which
LIBOR is an applicable Interest Rate Basis, the day is also a London Business
Day (as defined below). London Business Day means any day (i) if the Index
Currency (as defined below) is other than the euro, on which dealings in the
Index Currency are transacted in the London interbank market or (ii) if the
Index Currency is the euro, on which the TARGET System is open. Principal
Financial Center will generally be the capital city of the country of the
specified Index Currency or the Specified Currency, as the case may be, except
that with respect to United States dollars, Deutsche marks, Dutch guilders,
Italian lire, Portuguese escudos, Swiss francs Australian dollars, Canadian
dollars, South African rand and the euro, the Principal Financial Center shall
be New York City, Frankfurt, Amsterdam, Milan, London (solely in the case of
the Index Currency), Zurich, Melbourne, Toronto, Johannesburg and Frankfurt,
respectively.
Unless otherwise specified in the applicable pricing supplement, interest
rates will be determined by the Calculation Agent as follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CD Rate Notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, CD Rate
means, with respect to any Interest Determination Date, the rate on that date
for negotiable U.S. dollar certificates of deposit having the Index Maturity
designated in the applicable pricing supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of
Governors of the Federal Reserve System (H.15(519)) under the heading "CDs
(Secondary Market)."
The following procedures will be followed if the CD Rate cannot be
determined as described above:
. If the above rate is not published by 3:00 p.m., New York City time, on
the Calculation Date pertaining to the applicable Interest Determination
Date, the CD Rate will be the rate on that Interest Determination Date
for negotiable certificates of deposit of the Index Maturity designated
in the
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applicable pricing supplement as published in the daily update of
H.15(519), available through the internet site of the Board of Governors
of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication (the H.15 Daily Update), or some other recognized electronic
source for the purpose of displaying the rate, under the heading "CDs
(Secondary Market)".
. If the rate is not yet published in H.15(519), the H.15 Daily Update or
another recognized electronic source, by 3:00 P.M., New York City time,
on the Calculation Date pertaining to the applicable Interest
Determination Date, the CD Rate on the Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean
of the secondary market offered rates as of 10:00 A.M., New York City
time, on the Interest Determination Date for certificates of deposit in
an amount that is representative for a single transaction at that time
with a remaining maturity closest to the Index Maturity designated in
the pricing supplement of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in New York City (which may include
the Agents or their affiliates) selected by the Calculation Agent for
negotiable certificates of deposit of major United States money center
banks.
. If the dealers selected by the Calculation Agent are not quoting as set
forth above, the CD Rate in effect for the applicable period will be the
same as the CD Rate for the immediately preceding Interest Reset Period
(or, if there was no Interest Reset Period, the rate of interest payable
on the CD Rate Notes for which the CD Rate is being determined shall be
the Initial Interest Rate).
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes
and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, Commercial
Paper Rate means, with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on that date for commercial paper
having the Index Maturity specified in the applicable pricing supplement, as
the rate shall be published in H.15(519), under the heading "Commercial Paper
- -Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above:
. If the above rate is not published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to the applicable Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of
the rate on the Interest Determination Date for commercial paper of the
specified Index Maturity as published in H.15 Daily Update under the
heading "Commercial Paper--Nonfinancial."
. If by 3:00 P.M., New York City time, on the Calculation Date the rate is
not yet available in either H.15(519) or H.15 Daily Update, or another
recognized electronic source, then the Commercial Paper Rate shall be
the Money Market Yield of the arithmetic mean of the offered rates as of
11:00 A.M., New York City time, on the Interest Determination Date of
three leading dealers of U.S. dollar commercial paper in New York City
(which may include the Agents or their affiliates) selected by the
Calculation Agent for commercial paper of the specified Index Maturity,
placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating
organization.
. If the dealers selected by the Calculation Agent are not quoting offered
rates as mentioned above, the Commercial Paper Rate in effect for the
applicable period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period (or, if there was no
Interest Reset Period, the rate of interest payable on the Commercial
Paper Rate Notes for which the Commercial Paper Rate is being determined
shall be the Initial Interest Rate).
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Money Market Yield shall be a yield calculated in accordance with the
following formula and expressed as a percentage:
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
D = the applicable per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal,
M = the actual number of days for which interest is being calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate (calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in the Federal Funds Rate Notes and in the
applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the Federal
Funds Rate means, with respect to any Interest Determination Date, the rate on
that date for U.S. dollar federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)," as that rate is displayed on Bridge
Telerate, Inc. (or any successor service) (the Telerate) on page 120 (or any
other page as may replace that page on the service) (Telerate Page 120).
The following procedures will be followed if the Federal Funds Rate cannot
be determined as set forth above:
. If the rate does not appear on Telerate Page 120 or is not so published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to
the Interest Determination Date, the Federal Funds Rate will be the rate
on the applicable Interest Determination Date as published in the H.15
Daily Update under the heading "Federal Funds/Effective Rate", or
another recognized electronic source used for the purpose of displaying
that rate, under the caption "Federal Funds (Effective)."
. If the rate does not appear on Telerate Page 120, or is not yet
published in either H.15(519), the H.15 Daily Update, or another
recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date pertaining to the Interest Determination Date, the
Federal Funds Rate for the applicable Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean
of the rates for the last transaction in overnight U.S. dollar federal
funds, as of 9:00 A.M., New York City time, on the Interest
Determination Date, arranged by three leading brokers of federal funds
transactions in New York City (which may include the Agents or their
affiliates) selected by the Calculation Agent.
. If the brokers selected by the Calculation Agent are not quoting as set
forth above, the Federal Funds Rate in effect for the applicable period
will be the same as the Federal Funds Rate for the immediately preceding
Interest Reset Period (or, if there was no Interest Reset Period, the
rate of interest payable on the Federal Funds Rate Notes for which the
Federal Funds Rate is being determined shall be the Initial Interest
Rate).
LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the LIBOR Notes and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, LIBOR for
each Interest Determination Date will be determined by the Calculation Agent
as follows:
. As of the Interest Determination Date, LIBOR will be either: (a) if
"LIBOR Reuters" is specified in the applicable pricing supplement, the
arithmetic mean of the offered rates (unless the specified Designated
LIBOR Page (as defined below) by its terms provides only for a single
rate, in which case
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the single rate shall be used) for deposits in the Index Currency having
the Index Maturity designated in the applicable pricing supplement,
commencing on the second London Business Day immediately following the
applicable Interest Determination Date, that appear on the Designated
LIBOR Page as of 11:00 A.M., London time, on that Interest Determination
Date, if at least two offered rates appear (unless, as described above,
only a single rate is required) on the Designated LIBOR Page, or (b) if
"LIBOR Telerate" is specified in the applicable pricing supplement, the
rate for deposits in the Index Currency having the Index Maturity
designated in the applicable pricing supplement, commencing on the
second London Business Day immediately following the applicable Interest
Determination Date, that appears on the Designated LIBOR Page as of
11:00 A.M., London time, on that Interest Determination Date. If fewer
than two offered rates appear (if "LIBOR Reuters" is specified in the
applicable pricing supplement) or no rate appears (if as described
above, only a single rate is required or if "LIBOR Telerate" is
specified in the applicable pricing supplement), LIBOR in respect of the
related Interest Determination Date will be determined as if the parties
had specified the rate described below.
. With respect to an Interest Determination Date on which fewer than two
offered rates appear (if "LIBOR Reuters" is specified in the applicable
pricing supplement) or on which no rate appears (if as described above,
only a single rate is required or if "LIBOR Telerate" is specified in
the applicable pricing supplement), the Calculation Agent will request
the principal London offices of each of four major reference banks
(which may include affiliates of the Agents) in the London interbank
market, as selected by the Calculation Agent, to provide the Calculation
Agent with its offered quotation for deposits in the Index Currency for
the period of the Index Maturity designated in the applicable pricing
supplement, commencing on the second London Business Day immediately
following the applicable Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on
the Interest Determination Date and in a principal amount of not less
than $1,000,000 (or the equivalent in the Index Currency, if the Index
Currency is not the U.S. dollar) that is representative for a single
transaction in the Index Currency in the market at that time. If at
least two quotations are provided, LIBOR determined on that Interest
Determination Date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided, LIBOR determined on that
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M. (or any other time specified in the
applicable pricing supplement), in the applicable Principal Financial
Center for the country of the Index Currency on the Interest
Determination Date, by three major banks (which may include affiliates
of the Agents) in the Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European
banks, having the Index Maturity designated in the applicable pricing
supplement and in a principal amount of not less than $1,000,000 (or the
equivalent in the Index Currency, if the Index Currency is not the U.S.
dollar) that is representative for a single transaction in the Index
Currency in the market at that time; provided, however, that if the
banks selected by the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR in effect for the applicable period will be the
same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no Interest Reset Period, the rate of interest payable on
the LIBOR Notes for which LIBOR is being determined shall be the Initial
Interest Rate).
Index Currency means the currency (including composite currencies) specified
in the applicable pricing supplement as the currency for which LIBOR shall be
calculated. If no currency is specified in the applicable pricing supplement,
the Index Currency shall be U.S. dollars.
Designated LIBOR Page means either (a) if "LIBOR Reuters" is designated in
the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service (or any successor service) for the purpose of displaying the
London interbank rates of major banks for the applicable Index Currency, or
(b) if "LIBOR Telerate" is designated in the applicable pricing supplement,
the display on the Telerate for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency. If neither LIBOR
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Reuters nor LIBOR Telerate is specified in the applicable pricing supplement,
LIBOR for the applicable Index Currency will be determined as if LIBOR
Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had been
specified.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any) specified in the Prime Rate Notes and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, Prime Rate
means, with respect to any Interest Determination Date, the rate set forth in
H.15(519) for that date under the caption "Bank Prime Loan."
The following procedures will be followed if the Prime Rate cannot be
determined as set forth above:
. If the rate above is not yet published by 3:00 P.M. New York City time,
on the Calculation Date pertaining to the applicable Interest
Determination Date, the Prime Rate will be the rate on the applicable
Interest Determination Date as published in the H.15 Daily Update, or
such other recognized electronic source used for the purpose of
displaying such rate, under the caption "Bank Prime Loan."
. If by 3:00 P.M., New York City time, on the Calculation Date the rate is
not yet available in either H.15(519) or H.15 Daily Update or another
recognized electronic source, then the Prime Rate for that Interest
Determination Date will be the arithmetic mean of the rates of interest
publicly announced by each bank named on the Reuters Screen US PRIME 1
Page as that bank's prime rate or base lending rate as of 11:00 A.M.,
New York City time, on the Interest Determination Date as quoted on the
Reuters Screen US PRIME 1 Page on the Interest Determination Date.
. If fewer than four rates appear on the Reuters Screen US PRIME 1 Page
for any Interest Determination Date, the rate shall be the arithmetic
mean of the prime rates or base lending rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of
business on the applicable Interest Determination Date by three major
money center banks in New York City (which may include affiliates of the
Agents) selected by the Calculation Agent from which quotations are
requested. If fewer than two quotations are provided, the Prime Rate
shall be calculated by the Calculation Agent and shall be determined as
the arithmetic mean on the basis of the prime rates in New York City by
the appropriate number of substitute banks or trust companies organized
and doing business under the laws of the United States, or any State
thereof, in each case having total equity capital of at least U.S. $500
million and being subject to supervision or examination by federal or
state authority, selected by the Calculation Agent to quote the rate or
rates.
. If the banks or trust companies selected by the Calculation Agent are
not quoting as set forth above, the Prime Rate in effect for the
applicable period will be the same as the Prime Rate for the immediately
preceding Interest Reset Period (or, if there was no Interest Reset
Period, the rate of interest payable on the Prime Rate Notes for which
the Prime Rate is being determined shall be the Initial Rate).
Reuters Screen US PRIME 1 Page means the display designated as Page "US
PRIME 1" on the Reuters Monitor Money Rates Service (or any other page as may
replace the US PRIME 1 Page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate,
if any) specified in the Treasury Rate Notes and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, the
Treasury Rate means, with respect to any Interest Determination Date, the rate
for the auction held on that date of direct obligations of the United States
(Treasury Bills) having the Index Maturity designated in the applicable
pricing supplement under the heading "Investment Rate" on the display on the
Telerate on page 56 (or any other page as may replace that page on the
service) (Telerate Page 56) or page 57 (or any other page as may replace that
page on the service) (Telerate Page 57).
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The following procedures will be followed if the Treasury Rate cannot be
determined as set forth above:
. If the rate above is not published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to the applicable Interest Determination
Date, the Treasury Rate for the Interest Determination Date will be the
yield to maturity (expressed as a bond equivalent, on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of
the rate for the applicable Treasury Bills, published in the H.15 Daily
Update, or any other recognized electronic source used for the purpose
of displaying the rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High" on the Interest Determination
Date, or if not so published by 3:00 P.M., New York City time, on the
Calculation Date, the yield to maturity (expressed as a bond equivalent,
on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) of the auction rate of the applicable Treasury Bills as
otherwise announced by the United States Department of the Treasury.
. In the event that the results of the auction of Treasury Bills having
the Index Maturity designated in the applicable pricing supplement are
not published or reported as provided above by 3:00 P.M., New York City
time, on the Calculation Date or if no auction is held on the Interest
Determination Date, then the Treasury Rate will be the yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the rate on the
Interest Determination Date of Treasury Bills having the Index Maturity
designated in the applicable pricing supplement as published in
H.15(519), or such other recognized electronic source used for the
purpose of displaying that rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market."
. If the rate above is not published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to the applicable Interest Determination
Date, the Treasury Rate shall be the yield to maturity (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the rate on the Interest
Determination Date of such Treasury Bills as published in the H.15 Daily
Update, or other recognized electronic source used for the purpose of
displaying that rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market."
. If the rate above is not published in H.15(519), H.15 Daily Update, or
another recognized electronic source, by 3:00 P.M., New York City time,
on the Calculation Date pertaining to the applicable Interest
Determination Date, the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) calculated using the arithmetic mean of
the secondary market bid rates, as of approximately 3:30 P.M., New York
City time, on the Interest Determination Date, of three primary United
States government securities dealers (which may include the Agents or
their affiliates) selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity
designated in the applicable pricing supplement.
. If the dealers selected by the Calculation Agent are not quoting bid
rates as mentioned in the preceding paragraph, the Treasury Rate for the
affected Interest Reset Date will be the same as the Treasury Rate for
the immediately preceding Interest Reset Period (or, if there was no
Interest Reset Period, the rate of interest payable on the Treasury Rate
Notes for which the Treasury Rate is being determined shall be the
Initial Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and
subject to the Minimum Interest Rate and the Maximum Interest Rate, if any)
specified in the CMT Rate Notes and in the applicable pricing supplement.
Unless otherwise indicated in an applicable pricing supplement, CMT Rate
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption
". . . Treasury Constant Maturities. . . Federal Reserve Board Release
H.15. . . Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index (as defined below) for
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(i) if the Designated CMT Telerate Page is 7051, the Interest Determination
Date and (ii) if the Designated CMT Telerate Page is 7052, the weekly or
monthly average, as specified in the applicable pricing supplement, for the
week or the month, as applicable, ended immediately preceding the week or the
month, as applicable, in which the related Interest Determination Date occurs.
The following procedures will be followed if the CMT Rate cannot be
determined as set forth above:
. If the rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for the applicable Interest Determination Date
will be the Treasury Constant Maturity rate for the Designated CMT
Maturity Index as published in the relevant H.15(519).
. If the rate is no longer published, or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the CMT Rate
for the applicable Interest Determination Date will be the Treasury
Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for
the Interest Determination Date with respect to the Interest Reset Date
as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519).
. If the relevant information is not provided by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for the
Interest Determination Date will be calculated by the Calculation Agent
and will be a yield to maturity, based on the arithmetic mean of the
secondary market offered rates as of approximately 3:30 P.M., New York
City time, on the Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers in New York City (which may include the Agents or
their affiliates) (each, a Reference Dealer) selected by the Calculation
Agent (from five Reference Dealers selected by the Calculation Agent,
after consultation with the Company, and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
the most recently issued direct noncallable fixed rate obligations of
the United States (Treasury notes) with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to
maturity of not less than the Designated CMT Maturity Index minus one
year.
. If the Calculation Agent cannot obtain three Treasury notes quotations,
the CMT Rate for the applicable Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on the Interest
Determination Date of three Reference Dealers in New York City (from
five Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest)
and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity Index and
a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least U.S. $100,000,000.
. If three or four (and not five) of the Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean
of the offered rates obtained and neither the highest nor the lowest of
the quotes will be eliminated.
. If fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described above, the CMT Rate for the applicable Interest
Reset Date will be the same as the CMT Rate for the immediately
preceding Interest Reset Period (or, if there was no Interest Reset
Period, the rate of interest payable on the CMT Rate Notes for which the
CMT Rate is being determined shall be the Initial Interest Rate).
. If two Treasury notes with an original maturity as described in the
second preceding sentence have remaining terms to maturity equally close
to the Designated CMT Maturity Index, the quotes for the Treasury note
with the shorter remaining term to maturity will be used.
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Designated CMT Telerate Page means the display on the Telerate on the page
designated in an applicable pricing supplement (or any other page as may
replace that page on that service for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519)), for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no page is specified
in the applicable pricing supplement, the Designated CMT Telerate Page shall
be 7052, for the most recent week.
Designated CMT Maturity Index shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in an applicable pricing supplement with respect to which the CMT
Rate will be calculated. If no maturity is specified in the applicable pricing
supplement, the Designated CMT Maturity Index shall be two years.
Purchase Price; Registered Form; Minimum Denomination
Each Note will be issued for a purchase price equal to 100% of the principal
amount thereof (unless otherwise provided in the applicable pricing
supplement) in fully registered certificated or book-entry form. Unless
otherwise specified in the applicable pricing supplement, each Note will be
issued in a minimum denomination of U.S. $1,000 and integral multiples of U.S.
$1,000 in excess thereof or, in the case of a Note denominated in a Specified
Currency other than U.S. dollars, a minimum denomination of the equivalent of
U.S. $1,000 in the Specified Currency, as determined by application of the
Exchange Rate on the Business Day immediately preceding the trade date for the
Notes, rounded down to an integral multiple of 1,000 units of the Specified
Currency, and in any amount in excess thereof that is an integral multiple of
1,000 units of the Specified Currency.
Redemption or Conversion
No Note will be subject to conversion, amortization, or any sinking fund,
unless otherwise provided in the pricing supplement therefor. The Notes will
be subject to redemption by the Company on and after their respective
Redemption Dates, if any. Redemption Dates and the applicable Redemption
Prices, if any, will be fixed at the time of sale and set forth in the
applicable pricing supplement and on the applicable Note. If no Redemption
Date or Redemption Price is indicated with respect to a Note, the Note will
not be redeemable prior to its Stated Maturity Date. On and after the
Redemption Date, the applicable Note will be redeemable in whole or in part
(provided that any remaining principal amount of the Note shall be equal to an
authorized denomination thereof) at the option of the Company at the
applicable Redemption Price, together with interest thereon payable to the
date of redemption, on notice given not more than 60 nor less than 30 calendar
days prior to the date of redemption. Notwithstanding the foregoing, if a date
prior to which the Company may not redeem the Note as a part of, or in
anticipation of, a refunding operation (Limitation Date) is specified in the
applicable pricing supplement and on the applicable Note, the Company may not
redeem the Note prior to the Limitation Date as a part of, or in anticipation
of, any refunding operation by the application, directly or indirectly, of
monies borrowed having an interest cost to the Company of less than the rate
(Refunding Rate) specified in the pricing supplement and on the applicable
Note.
Repayment at the Option of the Holder; Repurchases by the Company
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Repayment Dates
are specified in the applicable pricing supplement. If so specified, the Notes
will be subject to repayment at the option of the Holders thereof on any
Repayment Date in whole or from time to time in part in increments of $1,000
or any other integral multiple of an authorized denomination specified in the
applicable pricing supplement (provided that any remaining principal amount
thereof shall be at least $1,000 or any other minimum authorized denomination
applicable thereto), at a repayment price equal to 100% of the unpaid
principal amount to be repaid, together with unpaid interest accrued thereon
to the date of repayment. For any Note to be repaid, the Trustee must receive,
at its office maintained for that purpose in the Borough of Manhattan, The
City of New York (currently the corporate trust office of the Trustee located
at 55 Water Street, New York, New York 10041) not more than 60 nor less than
30 calendar days prior to the date of repayment, (i) in the case of a
certificated Note, the certificated Note and the form thereon entitled "Option
to Elect Repayment" duly completed or (ii) in the case of a Book-Entry Note,
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instructions to that effect from the applicable Beneficial Owner (as
hereinafter defined) to the Depositary and forwarded by the Depositary.
Exercise of the repayment option by the Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of
beneficial interests in the Book-Entry Notes. Accordingly, Beneficial Owners
that desire repayment in respect of all or any portion of their beneficial
interests must instruct the Participant (as hereinafter defined) through which
they own their interests to direct the Depositary to exercise the repayment
option on their behalf. In order to ensure that the instructions are received
by the Trustee on a particular day, the applicable Beneficial Owner must so
instruct the Participant (as defined below) through which it owns its interest
before the Participant's deadline for accepting instructions for that day.
Different firms may have different deadlines for accepting instructions from
their customers. Accordingly, Beneficial Owners should consult the
Participants through which they own their interest for the respective
deadlines for each of the applicable Participants. All instructions given to
Participants from Beneficial Owners relating to the option to elect repayment
shall be irrevocable. In addition, at the time the instructions are given,
each Beneficial Owner shall cause the Participant through which it owns its
interest to transfer its interest in the Book-Entry Notes or Securities
representing the related Book-Entry Notes, on the Depositary's records, to the
Trustee. See DESCRIPTION OF THE NOTES--BOOK-ENTRY NOTES.
If applicable, the Company will comply with the requirements of Section
14(e) of the Exchange Act, and the rules promulgated thereunder, and any other
securities laws or regulations in connection with any repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes purchased by the Company in this manner may,
at the discretion of the Company, be held, resold or surrendered to the
Trustee for cancellation.
Payment of Principal, Premium and Interest
Payments of principal of (and premium, if any) and interest on all Notes
will be made by the Company to the registered owners of the Notes, which in
the case of Book-Entry Notes is the Depositary or its nominee. Neither the
Company nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a Book-Entry Note, or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests. The
Company expects that the Depositary, upon receipt of any payment of principal
(and premium, if any) or interest in respect of a Book-Entry Note, will credit
immediately the accounts of the related Participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Book-Entry Note as shown on the records of the Depositary. The
Company also expects that payments by Participants to Beneficial Owners will
be governed by standing customer instructions and customary practices, as is
now the case with securities held for the accounts of customers in bearer form
or registered in "street name" and will be the responsibility of the
Participants.
Payments of principal of (and premium, if any) and interest on all Notes
will be made in the applicable Specified Currency; provided, however, that
Holders of Notes denominated in a Specified Currency other than U.S. dollars
may elect to have principal and interest payments converted into U.S. dollars.
Payments of principal of and interest on Notes made in a Specified Currency
other than U.S. dollars will be made by wire transfer to an account designated
by the Holder at a bank outside of the United States. Payments of principal of
(and premium, if any) and interest on Notes paid in U.S. dollars and issued in
certificated form will be made by wire transfer to an account designated by
the Holder or, in the absence of a designation, by check mailed to the address
of the Holder as it appears on the Security Register maintained by the Trustee
acting in its capacity as Security Registrar for the Notes. The Holder shall
make its designation by filing the appropriate information with the Trustee at
its Corporate Trust Office in New York City on or prior to the Record Date for
an Interest Payment Date or at least 16 days prior to the Maturity Date, or
with respect to Notes denominated in a currency other than U.S. dollars, in
connection with any transfer after the 16th day. Until a Note is transferred
or until the Trustee receives notice to the contrary, the Trustee will make
the payment and all succeeding payments to the
Holders of Notes by wire transfer to the designated account. Payments of
interest with respect to Notes will be made to the Holder appearing on the
Security Register on the applicable Record Date (as defined below) or, in
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the case of interest payable at the Maturity Date, to the person presenting
the Note for payment of principal (and premium, if any).
In the case of a Note issued between a Record Date and the Interest Payment
Date relating to that Record Date, interest for the period beginning on the
date of issue and ending on that Interest Payment Date will be paid to the
Holder appearing on the Security Register on the next succeeding Record Date.
Payments of the principal of (and premium, if any) and interest on a Note at
the Maturity Date will be made in immediately available funds (at a bank
outside the United States, in the case of payments made in a Specified
Currency other than U.S. dollars) in the Specified Currency, upon surrender of
the Note to the Trustee. See IMPORTANT CURRENCY INFORMATION and RISK FACTORS.
The Trustee maintains in the Borough of Manhattan, New York City, an office
where Notes may be presented for payment and may be transferred or exchanged.
Principal (and premium, if any) and interest at the Maturity Date will be
payable, and Notes will be transferable, at the Corporate Trust Office of the
Trustee, which presently is located at 55 Water Street, New York, New York
10041.
Book-Entry Notes
The Company has established a depository arrangement with the Depositary
with respect to the Book-Entry Notes, the terms of which are summarized below.
If there are any additional or differing terms of the depository arrangement
with respect to the Book-Entry Notes, they will be described in the applicable
pricing supplement.
Book-Entry Notes of like tenor and terms up to $200,000,000 aggregate
principal amount may be represented by a single global security. Each global
security will be deposited with, or on behalf of, the Depositary and
registered in the name of the Depositary or its nominee. Except as set forth
below, a global security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or any nominee to a
successor of the Depositary or a nominee of a successor.
So long as the Depositary or its nominee is the registered owner of a global
security representing Book-Entry Notes, the Depositary or its nominee, as the
case may be, will be the sole holder of the Book-Entry Notes represented by
that global security for all purposes under the Indenture. Except as provided
below, Beneficial Owners will not be entitled to have Notes registered in
their names, will not receive or be entitled to receive physical delivery of
Notes in certificated form and will not be considered the owners or holders
thereof for any purpose under the Indenture, and no global security
representing Book-Entry Notes will be exchangeable or transferable.
Accordingly, each Beneficial Owner must rely on the procedures of the
Depositary, and if a Beneficial Owner is not a Participant, on the procedures
of the Participant through which that Beneficial Owner owns its interest in
order to exercise any rights of a holder under the global security or the
Indenture. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in certificated form. These
limits and laws may impair the ability to transfer beneficial interests in a
global security representing Book-Entry Notes.
Unless otherwise specified in the applicable pricing supplement, each global
security representing Book-Entry Notes will be exchangeable for certificated
Notes of like tenor and terms and of differing authorized denominations in a
like aggregate principal amount, only if:
. the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the global securities or the Company is aware
that the Depositary has ceased to be a clearing agency registered under
the Exchange Act and, in any case, the Company shall not have appointed
a successor to the Depositary within 90 calendar days thereafter; or
. the Company, in its sole discretion, determines that the global
securities shall be exchangeable for certificated Notes.
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Upon any exchange, the certificated Notes shall be registered in the names
of the Beneficial Owners of the global security or securities representing
Book-Entry Notes, which names shall be provided by the Depositary's relevant
Participants (as identified by the Depositary to the Trustee).
The following is based on information furnished to the Company and the
Agents by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co., the Depository's partnership nominee.
One fully registered global security will be issued for each issue of Book-
Entry Notes, each in the aggregate principal amount of the issue, and will
be deposited with the Depositary. If, however, the aggregate principal
amount of any issue exceeds $200,000,000, one global security will be
issued with respect to each $200,000,000 of principal amount and an
additional global security will be issued with respect to any remaining
principal amount of the issue.
The Depositary is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depositary was created to hold securities of
its participants (Participants) and to facilitate the clearance and
settlement of securities transactions among its Participants in these
securities through electronic book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of
securities certificates. The Depositary's Direct Participants (Direct
Participants) include securities brokers and dealers (including the
Agents), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the
Depositary. Persons who are not Participants may beneficially own
securities held by the Depositary only through Participants.
The Depositary is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, and the
National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to others including securities brokers and
dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or
indirectly (Indirect Participants). The rules applicable to the Depositary
and its Participants are on file with the SEC.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for the
applicable Book-Entry Notes on the Depositary's records. The ownership
interest of each actual purchaser of each Book-Entry Note represented by a
global security (Beneficial Owner) is in turn to be recorded on the records
of Direct Participants and Indirect Participants. Beneficial Owners will
not receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in Book-Entry Notes are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificated Notes representing their
ownership interests therein, except in the event that use of the book-entry
system for the Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all global securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of Cede & Co. The deposit of global securities
with, or on behalf of, the Depositary and their registration in the name of
Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners; the Depositary's records reflect
only the identity of the Direct Participants to whose accounts the Book-
Entry Notes are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial
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Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the global securities representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal (and premium, if any) and interest payments on the global
securities representing the Book-Entry Notes will be made in immediately
available funds to the Depositary. The Depositary's practice is to credit
Direct Participants' accounts on the applicable payment date in accordance
with their respective holdings shown on the Depositary's records unless the
Depositary has reason to believe that it will not receive payment on that
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of the Participant and not
of the Depositary, the Trustee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal (and premium, if any) and/or interest to the Depositary is the
responsibility of the Company and the Trustee, disbursement of the payments
to Direct Participants shall be the responsibility of the Depositary, and
disbursement of the payments to the Beneficial Owners shall be the
responsibility of Direct Participants and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes of like tenor and terms are being
redeemed, the Depositary's practice is to determine by lot the amount of
the interest of each Direct Participant in the affected issue to be
redeemed.
A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of the Book-Entry Notes to be repaid by
causing the Direct Participant to transfer the Participant's interest in
the Book-Entry Notes, on the Depositary's records, to the Trustee. The
requirement for physical delivery of Book-Entry Notes in connection with a
demand for repayment will be deemed satisfied when the ownership rights in
the global security or securities representing the applicable Book-Entry
Notes are transferred by Direct Participants on the Depositary's records.
Management of the Depositary is aware that some computer applications,
systems and the like for processing data (Systems) that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter Year 2000 problems. The Depositary has informed Direct
Participants and Indirect Participants and other members of the financial
community (the Industry) that it has developed and is implementing a
program so that its Systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to
securityholders, book-entry deliveries, and settlement of trades within the
Depositary (Depositary Services), continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of
which is complete. Additionally, the Depositary's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is
also dependent upon other parties, including, but not limited to, issuers
and their agents, as well as the Depositary's Direct Participants and
Indirect Participants, third party vendors from whom the Depositary
licenses software and hardware, and third party vendors on whom the
Depositary relies for information or the provision of services, including
telecommunication and electrical utility service providers, among others.
The Depositary has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom the Depositary acquires
services to: (i) impress upon them the importance of these services being
Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, the Depositary is in the process of developing contingency plans
as it deems appropriate.
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According to the Depositary, the information in the preceding two
paragraphs with respect to the Depositary has been provided to the Industry
for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. In the event that a
successor securities depository is not obtained, certificated Notes are
required to be printed and delivered. The Company may decide to discontinue
use of the system of book-entry transfers through the Depositary (or a
successor securities depository). In that event, certificated Notes will be
printed and delivered. Unless otherwise specified in the applicable pricing
supplement, Notes issued in this manner in certificated form will be issued
in denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in
excess thereof and will be issued in registered form only, without coupons.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes
to be reliable, but neither the Company nor any Agent takes any responsibility
for the accuracy thereof.
The Indenture
The Indenture provides that, in addition to the Notes offered hereby,
additional debt securities (including both interest bearing and original issue
discount securities in both bearer form and certificated or book-entry
registered form) may be issued thereunder, without the consent of the Holders
of the Notes and without limitation as to the aggregate principal amount
(Section 301). The Indenture does not limit the amount of other debt, secured
or unsecured, which may be issued by the Company.
Except as may be described in the applicable pricing supplement, there are
no covenants or other provisions in the Indenture providing for a put or
increased interest or otherwise that would afford Holders of the Notes
additional protection in the event of a recapitalization transaction, a change
of control of the Company or a highly leveraged transaction. However, any of
the listed transactions would require regulatory approval, and management of
the Company believes that approval would be unlikely for a transaction that
would result in the Company having a highly leveraged capital structure.
No service charge will be made for any transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 305).
The Indenture provides that the Notes may be issued at various times, may
have differing Stated Maturity Dates, may have varying redemption or repayment
provisions, may be issued in multiple currencies and may bear interest at
differing rates.
Events of Default
The following constitute Events of Default under the Indenture with respect
to the Notes: (1) default in the payment of principal of (and premium, if any)
on any Note when due and the continuation thereof uncured for a period of
three Business Days; (2) default in the payment of interest on any Note when
due and the continuation thereof uncured for a period of 30 days; (3) default
in the performance or breach of any other covenant or warranty of the Company
in the Indenture (other than a covenant included in the Indenture solely for
the benefit of one or more series of Securities other than the Notes), and the
continuation thereof uncured for a period of 60 days after written notice as
provided in the Indenture; (4) default in the payment of principal or interest
on, or acceleration of, Securities of any other series issued under the
Indenture or any other bond, debenture, note or other evidence of indebtedness
for borrowed money, in an aggregate amount exceeding U.S. $5,000,000, of the
Company which default is not cured or acceleration not annulled or
indebtedness not discharged, within a period of 90 days after written notice
as provided in the Indenture; and (5) certain events of bankruptcy, insolvency
or reorganization (Section 501). No Event of Default with respect to the Notes
necessarily constitutes an Event of Default with respect to other Securities
issued under the Indenture.
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If an Event of Default with respect to the Notes occurs and is continuing,
either the Trustee or the Holders of at least 33% in aggregate principal
amount of the outstanding Notes may declare the principal amount of all Notes
to be due and payable immediately. At any time after a declaration of
acceleration with respect to Notes has been made, but before a judgment or
decree based on that acceleration has been obtained, the Holders of a majority
in principal amount of the outstanding Notes may, under certain circumstances,
rescind and annul an acceleration (Section 502).
The Indenture provides that, subject to the duty of the Trustee during the
pendency of a default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless the
Holders shall have offered to the Trustee reasonable indemnity therefor
(Section 603). Subject to the provisions for the indemnification of the
Trustee, the Holders of a majority in principal amount of the outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or the exercise of any
trust or power conferred on the Trustee, with respect to the Notes (Section
512). The right of the Holder of a Note to institute a proceeding with respect
to the Indenture is subject to certain conditions precedent, but each Holder
has an absolute right to receive payment of the principal of (and premium, if
any) and interest on the Note held by it when due and to institute suit for
the enforcement of any right of payment (Sections 507 and 508). The Indenture
provides that the Trustee, within 90 days after the occurrence of a default
with respect to the Notes, is required to give the Holders of the Notes notice
of the default unless cured or waived, provided that, except in the case of
default in the payment of principal of (and premium, if any) or interest on
any Note, the Trustee may withhold notice if it determines it is in the
interest of the Holders to do so (Section 602).
The Company is required under the terms of the Indenture to furnish annually
to the Trustee a statement as to the performance by the Company of certain of
its obligations thereunder and as to any default in its performance (Section
1008).
Concerning The Trustee
The Chase Manhattan Bank, which is the Trustee under the Indenture, acts as
a depository of funds of, has made or from time to time in the future may make
loans to, and acts as trustee with respect to other debt of and performs
certain other services for, the Company and certain of its affiliates in the
normal course of its business. It has purchased, and is likely to purchase in
the future, securities of the Company and its affiliates.
Listing
The Notes will not be listed on any national or regional securities
exchange.
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SPECIAL PROVISIONS RELATING TO NOTES DENOMINATED IN A SPECIFIED CURRENCY OTHER
THAN U.S. DOLLARS
General
Unless otherwise specified in the applicable pricing supplement, Notes
denominated in a Specified Currency other than U.S. dollars will not be sold
in, or to residents of, the country issuing the Specified Currency. The
information set forth in this prospectus is directed to prospective purchasers
who are United States residents and, with respect to Notes denominated in a
Specified Currency other than U.S. dollars, is by necessity incomplete. The
Company and the Agents disclaim any responsibility to advise prospective
purchasers who are residents of countries other than the United States with
respect to any matters that may affect the purchase, holding or receipt of
payments of principal of (and premium, if any) and interest on Notes
denominated in a Specified Currency other than U.S. dollars. These persons
should consult their own financial and legal advisors with regard to these
matters. See RISK FACTORS--EXCHANGE RATES AND EXCHANGE CONTROLS and IMPORTANT
CURRENCY INFORMATION.
Payment of Principal, Premium and Interest
Unless otherwise specified in the applicable pricing supplement, the Company
is obligated to make payments of principal of (and premium, if any) and
interest on a Note in the Specified Currency. Any amounts payable by the
Company in a Specified Currency other than U.S. dollars will be converted by
the exchange rate agent named in the applicable pricing supplement (Exchange
Rate Agent) into U.S. dollars for payment to Holders unless otherwise
specified in the applicable pricing supplement or the Holder of the Note
elects, in the manner described below, to receive those amounts in the
Specified Currency.
The U.S. dollar amount to be received by a Holder of a Note denominated in a
Specified Currency other than U.S. dollars who elects to receive one or more
payments of principal (and premium, if any) and interest in U.S. dollars will
be based on the highest bid quotation in New York City received by the
Exchange Rate Agent as of 11:00 A.M., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer of the Specified Currency for U.S. dollars for
settlement on the applicable payment date in the aggregate amount of the
Specified Currency payable to all Holders of Notes electing to receive U.S.
dollar payments and at which the applicable dealer commits to execute a
contract. If three bid quotations are not available, payments will be made in
the Specified Currency. All currency exchange costs in respect of any payment
will be borne by the Holder of the Note to which the payment relates by
deduction from that payment.
The Holder of a Note denominated in a Specified Currency other than U.S.
dollars may elect to receive payment of the principal of (and premium, if any)
and interest on the Note in U.S. dollars by transmitting a written request for
payment to the Trustee at its Corporate Trust Office in New York City on or
prior to the Record Date or at least 16 calendar days prior to the Maturity
Date. The written request may be mailed or hand delivered or sent by cable,
telex or other form of facsimile transmission. The Holder of a Note
denominated in a Specified Currency other than U.S. dollars may elect to
receive payment in U.S. dollars for all principal (and premium, if any) and
interest payments and need not file a separate election for each payment. This
election will remain in effect until the Note is transferred or until the
election is changed by written notice to the Trustee, but written notice of
any change must be received by the Trustee on or prior to the Record Date or
at least 16 calendar days prior to the Maturity Date. Holders of Notes
denominated in a Specified Currency other than U.S. dollars whose Notes are to
be held in the name of a broker or nominee should contact that broker or
nominee to determine whether and how an election to receive payments in U.S.
dollars may be made.
Unless otherwise specified in the applicable pricing supplement, if the
Specified Currency is other than U.S. dollars, a Beneficial Owner which elects
to receive payments of principal (and premium, if any) and/or interest in the
Specified Currency must notify the Participant through which it owns its
interest on or prior to the
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applicable Record Date or at least fifteen calendar days prior to the Maturity
Date, as the case may be, of its election. The applicable Participant must
notify the Depositary of the election on or prior to the third Business Day
after the applicable Record Date or at least twelve calendar days prior to the
Maturity Date, as the case may be, and the Depositary will notify the Trustee
of the election on or prior to the fifth Business Day after the Record Date or
at least ten calendar days prior to the Maturity Date, as the case may be. If
complete instructions are received by the Participant from the Beneficial
Owner and forwarded by the Participant to the Depositary, and by the
Depositary to the Trustee, on or prior to the applicable dates, then the
affected Beneficial Owner will receive payments in the Specified Currency.
In order for a Holder of a Note who has elected to receive payments of
principal (and premium, if any) and interest in a Specified Currency other
than U.S. dollars to receive payments by wire transfer, the Holder must
designate an appropriate account with a bank located in the country of the
Specified Currency. The designation should be made by filing the appropriate
information with the Trustee at its Corporate Trust Office in New York City on
or prior to the Record Date for an Interest Payment Date or at least 16
calendar days prior to the Maturity Date or in connection with any transfer
after the 16th day. Until the Note is transferred or until the Trustee
receives notice to the contrary, the Trustee will make the payments to the
Holder by wire transfer to the designated account. If a payment cannot be made
by wire transfer because the required information has not been received by the
Trustee on or before the requisite date, a notice will be mailed to the Holder
at its registered address requesting the relevant information, and no payment
will be made until a designation is made. The Company will pay any
administrative costs imposed by banks in connection with making wire transfers
of payments, but any tax, assessment, governmental or other charges imposed
upon the payments will be borne by the Holder of the Note in respect of which
the payment is made and deducted from the payment.
Availability of Specified Currency
If the Specified Currency for a Note denominated in a Specified Currency
other than U.S. dollars is not available for the required payment of principal
(and premium, if any,) and/or interest in respect thereof due to the
imposition of exchange controls or other circumstances beyond the control of
the Company, the Company will be entitled to satisfy its obligations to the
Holder of the Note by making the payment in U.S. dollars on the basis of the
Market Exchange Rate, computed by the Exchange Rate Agent, on the second
Business Day prior to payment or, if the Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate,
or as otherwise specified in the applicable pricing supplement.
The Market Exchange Rate for a Specified Currency other than U.S. dollars
means the noon dollar buying rate in The City of New York for cable transfers
for the Specified Currency as certified for customs purposes (or, if not so
certified, as otherwise determined) by the Federal Reserve Bank of New York.
Any payment made in U.S. dollars under those circumstances where the required
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture with respect to the Notes.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of Notes denominated in
a Specified Currency other than U.S. dollars. See RISK FACTORS--EXCHANGE RATES
AND EXCHANGE CONTROLS.
Judgments
Under current New York law, a state court in the State of New York rendering
a judgment in respect of a Note denominated in a Specified Currency other than
U.S. dollars would be required to render the judgment in the Specified
Currency, and the judgment would be converted into U.S. dollars at the
exchange rate prevailing on the date of entry of the judgment. Accordingly,
the Holder of the Note would be subject to exchange rate fluctuations between
the date of entry of a judgment in a foreign currency and the time the amount
of the foreign currency judgment is paid to the Holder in U.S. dollars and
converted by the Holder into the Specified Currency. It is not certain,
however, whether a non-New York state court would follow the same rules and
procedures with respect to conversions of foreign currency judgments.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion represents the opinion of McGuire, Woods, Battle &
Boothe LLP, counsel to the Company, regarding certain United States Federal
income tax consequences of the purchase, ownership and disposition of the
Notes. This discussion is based upon laws, regulations, rulings and decisions
now in effect, all of which are subject to change possibly with retroactive
effect or possible differing interpretations. This discussion deals only with
Notes held as capital assets by original purchasers who are U.S. Holders (as
defined below) and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a straddle for tax
purposes, or persons whose functional currency is not the United States
dollar.
Persons considering the purchase of the Notes should consult their own tax
advisors concerning the application of United States federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
As used herein, the term U.S. Holder means a beneficial owner of a Note that
is for United States federal income tax purposes (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), (iii) an estate
whose income is subject to United States federal income tax regardless of its
source, (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States persons have the authority to control all substantial decisions
of the trust, or (v) any other person whose income or gain in respect of a
Note is effectively connected with the conduct of a United States trade or
business. Notwithstanding the preceding clause (iv), to the extent provided in
regulations, certain trusts in existence on August 20, 1996 and treated as
United States persons prior to that date that elect to continue to be so
treated also shall be considered U.S. Holders. As used herein, the term non-
U.S. Holder means a beneficial owner of a Note that is not a U.S. Holder.
Payments of Interest
Except as provided below under Original Issue Discount, payments of interest
on a Note generally will be taxable to a U.S. Holder as ordinary interest
income at the time the payments are accrued or are received (in accordance
with the U.S. Holder's regular method of tax accounting).
Original Issue Discount
Certain Notes may be issued with original issue discount (Original Issue
Discount) within the meaning of section 1273(a) of the Internal Revenue Code
of 1986, as amended (the Code). The following summary is a general discussion
of the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue
discount. The following summary is based upon final Treasury regulations (the
OID Regulations) released by the Internal Revenue Service (IRS) under the
original issue discount provisions of the Code.
For United States federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if the excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a
Note providing for the payment of any amount other than qualified stated
interest (as defined below) prior to maturity, multiplied by the weighted
average maturity of that Note). The issue price of each Note in an issue of
Notes equals the first price at which a substantial amount of the Notes of
that issue has been sold (ignoring sales to bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers). The stated redemption price at maturity of a Note is
the sum of all payments provided by the Note other than qualified stated
interest payments. The
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term qualified stated interest generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually at a single fixed rate. In addition, under the
OID Regulations, if a Note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of that Note (e.g.,
Notes with teaser rates or interest holidays), and if the greater of either
the resulting foregone interest on that Note or any "true" discount on that
Note (i.e., the excess of the Note's stated principal amount over its issue
price) equals or exceeds a specified de minimis amount, then the stated
interest on the Note would be treated as original issue discount rather than
qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time the payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of an Original Issue Discount Note must include
original issue discount in income as ordinary interest for United States
federal income tax purposes as it accrues under a constant yield method in
advance of receipt of the cash payments attributable to that income,
regardless of the U.S. Holder's regular method of tax accounting. In general,
the amount of original issue discount included in income by the initial U.S.
Holder of an Original Issue Discount Note is the sum of the daily portions of
original issue discount with respect to the Original Issue Discount Note for
each day during the taxable year (or portion of the taxable year) on which the
U.S. Holder held the Original Issue Discount Note. The daily portion of
original issue discount on any Original Issue Discount Note is determined by
allocating to each day in any accrual period a ratable portion of the original
issue discount allocable to that accrual period. An accrual period may be of
any length and the accrual periods may vary in length over the term of the
Original Issue Discount Note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or interest occurs
either on the final day of an accrual period or on the first day of an accrual
period. The amount of original issue discount allocable to each accrual period
is generally equal to the difference between (i) the product of the Original
Issue Discount Note's adjusted issue price at the beginning of the applicable
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period) and (ii) the
amount of any qualified stated interest payments allocable to the applicable
accrual period. The adjusted issue price of an Original Issue Discount Note at
the beginning of any accrual period is the sum of the issue price of the
Original Issue Discount Note plus the amount of original issue discount
allocable to all prior accrual periods minus the amount of any prior payments
on the Original Issue Discount Note that were not qualified stated interest
payments. Under these rules, U.S. Holders generally will have to include in
income increasingly greater amounts of original issue discount in successive
accrual periods.
A U.S. Holder who purchases an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of qualified stated interest,
will be considered to have purchased the Original Issue Discount Note at an
acquisition premium. Under the acquisition premium rules, the amount of
original issue discount which the U.S. Holder must include in its gross income
with respect to the Original Issue Discount Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Original Issue Discount
Note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes (Variable
Notes) are subject to special rules whereby a Variable Note will qualify as a
variable rate debt instrument if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
A qualified floating rate is any variable rate where variations in the value
of the rate can reasonably be expected to measure contemporaneous variations
in the cost of newly borrowed funds in the currency in which the Variable Note
is denominated. Although a multiple of a qualified floating rate will
generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed
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multiple that is greater than .65 but not more than 1.35 will constitute a
qualified floating rate. A variable rate equal to the product of a qualified
floating rate and a fixed multiple that is greater than .65 but not more than
1.35, increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, two or more qualified
floating rates that can reasonably be expected to have approximately the same
values throughout the term of the Variable Note (e.g., two or more qualified
floating rates with values within 25 basis points of each other as determined
on the Variable Note's issue date) will be treated as a single qualified
floating rate. Notwithstanding the foregoing, a variable rate that would
otherwise constitute a qualified floating rate but which is subject to one or
more restrictions such as a maximum numerical limitation (i.e., a cap) or a
minimum numerical limitation (i.e., a floor) may, under certain circumstances,
fail to be treated as a qualified floating rate under the OID Regulations
unless the cap or floor is fixed throughout the term of the Note. An objective
rate is a rate that is not itself a qualified floating rate but which is
determined using a single fixed formula and that is based on objective
financial or economic information. A rate will not qualify as an objective
rate if it is based on information that is within the control of the issuer
(or a related party) or that is unique to the circumstances of the issuer (or
a related party), such as dividends, profits, or the value of the issuer's
stock (although a rate does not fail to be an objective rate merely because it
is based on the credit quality of the issuer). A qualified inverse floating
rate is any objective rate where the rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. The OID Regulations also provide that if a Variable Note
provides for stated interest at a fixed rate for an initial period of one year
or less followed by a variable rate that is either a qualified floating rate
or an objective rate and if the variable rate on the Variable Note's issue
date is intended to approximate the fixed rate (e.g., the value of the
variable rate on the issue date does not differ from the value of the fixed
rate by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a variable rate debt instrument under the OID Regulations and if
the interest on the Note is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually, then all stated
interest on the Note will constitute qualified stated interest and will be
taxed accordingly. Thus, a Variable Note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a variable rate debt instrument under
the OID Regulations will generally not be treated as having been issued with
original issue discount unless the Variable Note is issued at a "true"
discount (i.e., at a price below the Note's stated principal amount) in excess
of a specified de minimis amount. The amount of qualified stated interest and
the amount of original issue discount, if any, that accrues during an accrual
period on a Variable Note is determined under the rules applicable to fixed
rate debt instruments by assuming that the variable rate is a fixed rate equal
to (i) in the case of a qualified floating rate or qualified inverse floating
rate, the value, as of the issue date, of the qualified floating rate or
qualified inverse floating rate, or (ii) in the case of an objective rate
(other than a qualified inverse floating rate), a fixed rate that reflects the
yield that is reasonably expected for the Variable Note. The qualified stated
interest allocable to an accrual period is increased (or decreased) if the
interest actually paid during an accrual period exceeds (or is less than) the
interest assumed to be paid during the accrual period pursuant to the
foregoing rules.
In general, any other Variable Note that qualifies as a variable rate debt
instrument will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on this type of Variable Note. The OID
Regulations generally require that a Variable Note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of that
Variable Note with a fixed rate equal to the value of the qualified floating
rate or qualified inverse floating rate, as the case may be, as of the
Variable Note's issue date. Any objective rate (other than a qualified inverse
floating rate) provided for under the terms of the Variable Note is converted
into a fixed rate that reflects the yield that is reasonably expected for the
Variable Note. In the case of a Variable Note that qualifies as a variable
rate debt instrument and provides for stated interest at a fixed rate in
addition to either one or more qualified floating rates or a qualified inverse
floating rate,
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the fixed rate is initially converted into a qualified floating rate (or a
qualified inverse floating rate, if the Variable Note provides for a qualified
inverse floating rate). Under these circumstances, the qualified floating rate
or qualified inverse floating rate that replaces the fixed rate must be a
figure so that the fair market value of the Variable Note as of the Variable
Note's issue date is approximately the same as the fair market value of an
otherwise identical debt instrument that provides for either the qualified
floating rate or qualified inverse floating rate rather than the fixed rate.
Subsequent to converting the fixed rate into either a qualified floating rate
or a qualified inverse floating rate, the Variable Note is then converted into
an "equivalent" fixed rate debt instrument in the manner described above. Once
the Variable Note is converted into an "equivalent" fixed rate debt instrument
pursuant to the foregoing rules, the amount of original issue discount and
qualified stated interest, if any, are determined for the "equivalent" fixed
rate debt instrument by applying the general original issue discount rules to
the "equivalent" fixed rate debt instrument and a U.S. Holder of the Variable
Note will account for the original issue discount and qualified stated
interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that those amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a variable rate debt instrument under
the OID Regulations, then the Variable Note would be treated as a contingent
payment debt obligation. U.S. Holders should be aware that on June 11, 1996,
the Treasury Department issued final regulations (the CPDI Regulations)
concerning the proper United States federal income tax treatment of contingent
payment debt instruments. In general, the CPDI Regulations would cause the
timing and character of income, gain or loss reported on a contingent payment
debt instrument to substantially differ from the timing and character of
income, gain or loss reported on a contingent payment debt instrument under
general principles of current United States federal income tax law.
Specifically, the CPDI Regulations generally require a U.S. Holder of this
type of instrument to include future contingent and noncontingent interest
payments in income as the interest accrues based upon a projected payment
schedule. Moreover, in general, under the CPDI Regulations, any gain
recognized by a U.S. Holder on the sale, exchange, or retirement of a
contingent payment debt instrument will be treated as ordinary income and all
or a portion of any loss realized could be treated as ordinary loss as opposed
to capital loss (depending upon the circumstances). The CPDI Regulations apply
to debt instruments issued on or after August 13, 1996. The proper United
States federal income tax treatment of Variable Notes that are treated as
contingent payment debt obligations will be more fully described in the
applicable pricing supplement. Furthermore, any other special United States
federal income tax considerations, not otherwise discussed herein, which are
applicable to any particular issue of Notes will be discussed in the
applicable pricing supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their Stated Maturity Date (a call option) and/or (ii) may be
repayable at the option of the holder prior to their Stated Maturity Date (a
put option). Notes containing these features may be subject to rules that
differ from the general rules discussed above. Investors intending to purchase
Notes with these features should consult their own tax advisors, since the
original issue discount consequences will depend, in part, on the particular
terms and features of the purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less (Short-Term Notes) will
be treated as having been issued with original issue discount. In general, an
individual or other cash method U.S. Holder is not required to accrue this
original issue discount unless the U.S. Holder elects to do so. If the
election is not made, any gain recognized
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by the U.S. Holder on the sale, exchange or maturity of the Short-Term Note
will be ordinary income to the extent of the original issue discount accrued
on a straight-line basis, or upon election under the constant yield method
(based on daily compounding), through the date of sale, exchange or maturity,
and a portion of the deductions otherwise allowable to the U.S. Holder for
interest on borrowings allocable to the Short-Term Note will be deferred until
a corresponding amount of income is realized. U.S. Holders who report income
for United States federal income tax purposes under the accrual method, and
certain other holders including banks and dealers in securities, are required
to accrue original issue discount on a Short-Term Note on a straight-line
basis unless an election is made to accrue the original issue discount under a
constant yield method (based on daily compounding).
Market Discount
If a U.S. Holder purchases a Note, other than an Original Issue Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, the U.S. Holder will be treated
as having purchased the Note at a market discount, unless the market discount
is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of an Original Issue Discount Note,
any payment that does not constitute qualified stated interest) on, or any
gain realized on the sale, exchange, retirement or other disposition of, a
Note as ordinary income to the extent of the lesser of (i) the amount of the
payment or realized gain or (ii) the market discount which has not previously
been included in income and is treated as having accrued on the Note at the
time of the payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
date of the Note, unless the U.S. Holder elects to accrue market discount on
the basis of semiannual compounding. A U.S. Holder may be required to defer
the deduction of all or a portion of the interest paid or accrued on any
indebtedness incurred or maintained to purchase or carry a Note with market
discount until the maturity of the Note or certain earlier dispositions,
because a current deduction is only allowed to the extent the interest expense
exceeds an allocable portion of market discount. A U.S. Holder may elect to
include market discount in income currently as it accrues (on either a ratable
or semiannual compounding basis), in which case the rules described above
regarding the treatment as ordinary income of gain upon the disposition of the
Note and upon the receipt of certain cash payments and regarding the deferral
of interest deductions will not apply. Generally, this currently included
market discount is treated as ordinary interest for United States federal
income tax purposes. This election will apply to all debt instruments acquired
by the U.S. Holder on or after the first day of the first taxable year to
which the election applies and may be revoked only with the consent of the
IRS.
Premium
If a U.S. Holder purchases a Note for an amount that is greater than the sum
of all amounts payable on the Note after the purchase date other than payments
of qualified stated interest, the U.S. Holder will be considered to have
purchased the Note with amortizable bond premium equal in amount to the
excess. A U.S. Holder may elect to amortize the premium using a constant yield
method over the remaining term of the Note and may offset interest otherwise
required to be included in respect of the Note during any taxable year by the
amortized amount of the excess for the taxable year. However, if the Note may
be optionally redeemed after the U.S. Holder acquires it at a price in excess
of its stated redemption price at maturity, special rules would apply which
could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies
to all taxable debt instruments acquired by the U.S. Holder on or after the
first day of the first taxable year to which the election applies and may be
revoked only with the consent of the IRS.
Disposition of a Note
Except as discussed above, upon the sale, exchange or retirement of a Note,
a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or
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retirement (other than amounts representing accrued and unpaid interest) and
the U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal the U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included that market
discount in income) and decreased by the amount of any payments, other than
qualified stated interest payments, received and amortizable bond premium
taken with respect to the Note. This gain or loss generally will be long-term
capital gain or loss if the Note were held for more than the applicable
holding period. Non-corporate taxpayers are subject to reduced maximum rates
on long-term capital gains and are generally subject to tax at ordinary income
rates on short-term capital gains. The deductibility of capital losses is
subject to certain limitations. Prospective investors should consult their own
tax advisors concerning these tax law provisions.
Notes Payable in a Currency other than U.S. Dollars
Cash Method
A U.S. Holder who uses the cash method of accounting for United States
federal income tax purposes and who receives a payment of interest on a Note
(other than original issue discount or market discount) will be required to
include in income the U.S. dollar value of the foreign currency payment
(determined on the date the payment is received) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and the U.S. dollar
value will be the U.S. Holder's tax basis in the foreign currency.
Accrual Method
A U.S. Holder who uses the accrual method of accounting for United States
federal income tax purposes, or who otherwise is required to accrue interest
prior to receipt, will be required to include in income the U.S. dollar value
of the amount of interest income (including original issue discount or market
discount and reduced by amortizable bond premium to the extent applicable)
that has accrued and is otherwise required to be taken into account with
respect to a Note during an accrual period. The U.S. dollar value of the
accrued income will be determined by translating the income at the average
rate of exchange for the accrual period or, with respect to an accrual period
that spans two taxable years, at the average rate for the partial period
within the taxable year. A U.S. Holder may elect, however, to translate the
accrued interest income using the rate of exchange on the last day of the
accrual period or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within five business days of the date of
receipt of the accrued interest, a U.S. Holder may translate the interest
using the rate of exchange on the date of receipt. The above election will
apply to other debt obligations held by the U.S. Holder and may not be changed
without the consent of the IRS. A U.S. Holder should consult a tax advisor
before making the above election. A U.S. Holder will recognize exchange gain
or loss (which will be treated as ordinary income or loss) with respect to
accrued interest income on the date the income is received. The amount of
ordinary income or loss recognized will equal the difference, if any, between
the U.S. dollar value of the foreign currency payment received (determined on
the date the payment is received) in respect of the applicable accrual period
and the U.S. dollar value of interest income that has accrued during the
accrual period (as determined above).
Purchase, Sale and Retirement of Notes
A U.S. Holder who purchases a Note with previously owned foreign currency
will recognize ordinary income or loss in an amount equal to the difference,
if any, between the U.S. Holder's tax basis in the foreign currency and the
U.S. dollar fair market value of the foreign currency used to purchase the
Note, determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and the U.S. Holder's adjusted tax basis in the Note. This gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the
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U.S. Holder's income) and will be long-term capital gain or loss if at the
time of sale, exchange or retirement the Note has been held by the U.S. Holder
for more than one year. To the extent the amount realized represents accrued
but unpaid interest, however, these amounts must be taken into account as
interest income, with exchange gain or loss computed as described in NOTES
PAYABLE IN A CURRENCY OTHER THAN U.S. DOLLARS--ACCRUAL METHOD above. If a U.S.
Holder receives foreign currency on this type of sale, exchange or retirement
the amount realized will be based on the U.S. dollar value of the foreign
currency on the date the payment is received or the Note is disposed of (or
deemed disposed of as a result of a material change in the terms of the Note).
In the case of a Note that is denominated in foreign currency and is traded on
an established securities market, a cash basis U.S. Holder (or, upon election,
an accrual basis U.S. Holder) will determine the U.S. dollar value of the
amount realized by translating the foreign currency payment at the spot rate
of exchange on the settlement date of the sale. A U.S. Holder's adjusted tax
basis in a Note will equal the cost of the Note to that holder, increased by
the amounts of any market discount or original issue discount previously
included in income by the holder with respect to the Note and reduced by any
amortized acquisition or other premium and any principal payments received by
the holder. A U.S. Holder's tax basis in a Note, and the amount of any
subsequent adjustments to the holder's tax basis, will be the U.S. dollar
value of the foreign currency amount paid for the Note, or of the foreign
currency amount of the adjustment, determined on the date of the purchase or
adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain
or loss attributable to fluctuations in exchange rates will equal the
difference between the U.S. dollar value of the foreign currency principal
amount of the Note, determined on the date the payment is received or the Note
is disposed of, and the U.S. dollar value of the foreign currency principal
amount of the Note, determined on the date the U.S. Holder acquired the Note.
The foreign currency gain or loss will be recognized only to the extent of the
total gain or loss realized by the U.S. Holder on the sale, exchange or
retirement of the Note.
Original Issue Discount
In the case of an Original Issue Discount Note or Short-Term Note, (i)
original issue discount is determined in units of the foreign currency, (ii)
accrued original issue discount is translated into U.S. dollars as described
in NOTES PAYABLE IN A CURRENCY OTHER THAN U.S. DOLLARS--ACCRUAL METHOD above
and (iii) the amount of foreign currency gain or loss on the accrued original
issue discount is determined by comparing the amount of income received
attributable to the discount (either upon payment, maturity or an earlier
disposition), as translated into U.S. dollars at the rate of exchange on the
date of the receipt, with the amount of original issue discount accrued, as
translated above.
Premium and Market Discount
In the case of a Note with market discount, (i) market discount is
determined in units of the foreign currency, (ii) accrued market discount
taken into account upon the receipt of any partial principal payment or upon
the sale, exchange, retirement or other disposition of the Note (other than
accrued market discount required to be taken into account currently) is
translated into U.S. dollars at the exchange rate on the disposition date (and
no part of the accrued market discount is treated as exchange gain or loss)
and (iii) accrued market discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during the applicable accrual period, and
the exchange gain or loss is determined upon the receipt of any partial
principal payment or upon the sale, exchange, retirement or other disposition
of the Note in the manner described in NOTES PAYABLE IN A CURRENCY OTHER THAN
U.S. DOLLARS--ACCRUAL METHOD above with respect to computation of exchange
gain or loss on accrued interest.
With respect to a Note acquired with amortizable bond premium, the premium
is determined in the relevant foreign currency and reduces interest income in
units of the foreign currency. Although not entirely clear, a U.S. Holder
should recognize exchange gain or loss equal to the difference between the
U.S. dollar value of the bond
32
<PAGE>
premium amortized with respect to a period, determined on the date the
interest attributable to that period is received, and the U.S. dollar value of
the bond premium determined on the date of the acquisition of the Note.
Exchange of Foreign Currencies
A U.S. Holder will have a tax basis in any foreign currency received as
interest or on the sale, exchange or retirement of a Note equal to the U.S.
dollar value of that foreign currency, determined at the time the interest is
received or at the time of the sale, exchange or retirement. Any gain or loss
realized by a U.S. Holder on a sale or other disposition of foreign currency
(including its exchange for U.S. dollars or its use to purchase Notes) will be
ordinary income or loss.
Backup Withholding
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are
not exempt recipients and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the
required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section would establish an exemption from backup withholding for
those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that the seller is a non-U.S.
Holder (and certain other conditions are met). This type of sale must also be
reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its non-
U.S. status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against the
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc. and Morgan Stanley &
Co. Incorporated (Agents), who have agreed to use their best efforts to
solicit purchases of the Notes. The Company will pay an Agent a commission in
U.S. dollars ranging from .125% to .750% (or as agreed, in the case of Notes
with a maturity of more than 30 years) of the principal amount of each Note
sold through that Agent depending on the Specified Currency and maturity of
the Note. The Company may also sell Notes to any Agent at a discount from the
principal amount thereof equal to the commission and that Agent may later
resell those Notes to investors and other purchasers at varying prices related
to prevailing market prices at the time of resale, as determined by the Agent
or, if so agreed, at a fixed public offering price. The Company has reserved
the right to appoint other agents from time to time to or through whom the
Notes may be sold. The Notes may also be sold by the Company directly to
purchasers. No commission will be payable to the Agents on Notes sold directly
to purchasers by the Company.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable pricing supplement, the discount
allowed to any dealer may include all or part of the discount to be received
from the Company. Unless otherwise indicated in the applicable pricing
supplement, any Note sold to an Agent as principal will be purchased by the
Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the
33
<PAGE>
commission applicable to any agency sale of a Note of identical maturity.
After the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price), concession and discount may be changed.
The Company reserves the right to withdraw, cancel or modify the offering of
Notes at any time without notice and may reject orders in whole or in part
whether placed directly with the Company or through the Agents. Each Agent
will have the right, exercisable in its reasonable discretion, to reject any
proposed purchase of Notes in whole or in part.
The Notes are a new issue of securities with no established trading market.
The Notes will not be listed on any national or regional securities exchange.
The Agents have informed the Company that they intend to make a market in the
Notes, but are under no obligation to do so and any Agent may cease making a
market in the Notes at any time. Therefore, no assurance can be given that a
trading market for the Notes will exist in the future.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, the applicable Agent(s) will be
permitted to engage in certain transactions that stabilize the price of Notes.
These transactions may consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of Notes. If the Agent creates or the
Agents create, as the case may be, a short position in Notes, i.e., if it
sells or they sell Notes in an aggregate principal amount exceeding that set
forth in the applicable pricing supplement, the applicable Agent(s) may reduce
that short position by purchasing Notes in the open market. In general,
purchases of Notes for the purpose of stabilization or to reduce a short
position could cause the price of Notes to be higher than it might be in the
absence of those purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of Notes. In addition, neither the Company nor any of the Agents makes
any representation that the Agents will engage in any stabilizing transactions
or that these transactions, once commenced, will not be discontinued without
notice.
Each of the Agents from time to time has acted as a financial advisor to the
Company and has underwritten certain of the Company's public securities
offerings, and may do so in the future.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. The Company has agreed to indemnify the Agents against
certain liabilities, including liabilities under the Securities Act of 1933,
or to contribute to payments the Agents may be required to make in respect
thereof. The Company has agreed to reimburse the Agents for certain other
expenses.
EXPERTS
The financial statements in the Company's Annual Report on Form 10-K filed
with the SEC, which is incorporated in this prospectus by reference, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report included in the Form 10-K. Those financial statements have been so
incorporated in reliance upon the report of Deloitte & Touche LLP, also
incorporated herein by reference, which report is given upon their authority
as experts in accounting and auditing.
Legal conclusions relating to the Company's franchises and title to its
properties in the Company's Annual Report on Form 10-K and legal conclusions
under DESCRIPTION OF THE NOTES, including limitations upon the Company's
issuance of bonds, herein have been reviewed by McGuire, Woods, Battle &
Boothe LLP, Richmond, Virginia, except that, insofar as matters relating to
title to properties are governed by the laws of West Virginia, they have been
reviewed by Jackson & Kelly PLLC, Charleston, West Virginia. The statements
are included on the authority of these firms, respectively, as experts.
34
<PAGE>
LEGAL OPINIONS
Certain legal matters in connection with the Notes will be passed upon for
the Company by McGuire, Woods, Battle & Boothe LLP, Richmond, Virginia, and
for any underwriters, dealers or agents, by Mays & Valentine, L.L.P.,
Richmond, Virginia, which also performs certain legal services for the Company
and its affiliates on other matters.
35
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
You should rely only on the information contained or incorporated by reference
in this prospectus and any pricing supplement. Neither we nor any Agent has
authorized anyone to provide you with information different from that
contained in this prospectus and any pricing supplement. We are offering to
sell the Notes, and seeking offers to buy the Notes, only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus and any pricing supplement is accurate only as of their respective
dates, regardless of the time of their delivery or any sale of the Notes.
---------------
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information...................................... 2
Disclosure Regarding Forward-Looking Statements.......................... 2
Important Information for Non-U.S. Residents............................. 3
Important Currency Information........................................... 3
The Prospectus........................................................... 3
Risk Factors............................................................. 4
The Company.............................................................. 5
Use of Proceeds.......................................................... 6
Ratio of Earnings to Fixed Charges....................................... 6
Description of the Notes................................................. 6
Special Provisions Relating to Notes Denominated in a Specified Currency
other than U.S. Dollars................................................. 24
Certain United States Federal Income Tax Considerations.................. 26
Plan of Distribution..................................................... 33
Experts.................................................................. 34
Legal Opinions........................................................... 35
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S. $400,000,000
Virginia Electric and Power Company
Medium-Term Notes,Series G
---------------
PROSPECTUS
---------------
Merrill Lynch & Co.
Goldman, Sachs & Co.
Lehman Brothers
Morgan Stanley Dean Witter
, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Fee.............................. $111,200
Fees and Expense of Trustee......................................... 30,000
Printing Expenses................................................... 25,000
Counsel Fees........................................................ 90,000
Rating Organization Fees............................................ 330,000
Accountant Fees..................................................... 65,000
Miscellaneous....................................................... 13,800
--------
Total............................................................. $665,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Article VI of the Restated Articles of Incorporation, as amended, of the
registrant provides that the registrant shall indemnify its directors and
officers to the fullest extent permitted by law. Article 10, Chapter 9, Title
13.1 of the Code of Virginia of 1950, as amended, permits indemnification of
directors and officers, but does not permit indemnification against willful
misconduct or a knowing violation of the criminal law. The registrant
maintains director and officer liability insurance protecting the registrant's
directors and officers against certain claims resulting from their service in
such capacities, and the registrant from the liability assumed by it in
accordance with Article VI of its Restated Articles of Incorporation, as
amended. The current policy covers all occurrences during the period ended
September 1, 2001, and is expected to be renewed in the ordinary course of
business. In general, the policy provides coverage for any misstatement,
misleading statement, act, omission, neglect or breach of duty committed or
attempted by a director or officer, but excludes, among other things, acts of
deliberate dishonesty, and acts for personal profit or advantage to which the
director or officer was not entitled.
Item 16. Exhibits.
<TABLE>
<C> <S>
1 --Form of Distribution Agreement for the Notes between the Company and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc., (filed herewith).
4.1 --Trust Indenture, dated as of April 1, 1988, Exhibit 4(i), File No. 33-
21319, incorporated by reference; First Supplemental Indenture, dated
August 1, 1989, Exhibit 4(ii), File No. 33-30532, incorporated by
reference.
4.2 --Form of Second Supplemental Indenture (filed herewith).
4.3 --Form of Fixed Rate Medium-Term Note, Series G (filed herewith).
4.4 --Form of Floating Rate Medium-Term Note, Series G (filed herewith).
5 --Legality Opinion of McGuire, Woods, Battle & Boothe LLP (filed
herewith).
8 --Tax Opinion of McGuire, Woods, Battle & Boothe LLP (filed herewith).
12 --Statements regarding computation of ratios (filed herewith).
23.1 --Consents of McGuire, Woods, Battle & Boothe LLP (contained in Exhibits
5 and 8).
23.2 --Consent of Jackson & Kelly PLLC (filed herewith).
23.3 --Consent of Deloitte & Touche LLP (filed herewith).
24 --Power of Attorney (included herein).
25 --Statement of eligibility of Trustee (filed herewith).
</TABLE>
II-1
<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any
delayed offering or throughout a continuous offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes each Agent for
Service named in the registration statement, as attorney-in-fact, to sign on
his or her behalf individually and in each capacity stated below and file all
amendments and post-effective amendments to the registration statement, and
the registrant hereby confers like authority to sign and file on its behalf.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Richmond, Commonwealth of Virginia, on the 13th day
of April, 1999.
Virginia Electric and Power Company
/s/ Thos. E. Capps
By __________________________________
(Thos. E. Capps, Chairman of the
Board of Directors)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities stated below and on the 13th day of April, 1999.
Signatures Title
/s/ Thos. E. Capps Chairman of the Board of
- ------------------------------------- Directors and Director
Thos. E. Capps
/s/ John B. Adams, Jr. Director
- -------------------------------------
John B. Adams, Jr.
/s/ N. Askew President (Chief
- ------------------------------------- Executive Officer) and
Norman Askew Director
Director
- -------------------------------------
John B. Bernhardt
/s/ James F. Betts Director
- -------------------------------------
James F. Betts
/s/ Jean E. Clary Director
- -------------------------------------
Jean E. Clary
/s/ John W. Harris Director
- -------------------------------------
John W. Harris
/s/ Benjamin J. Lambert, III Director
- -------------------------------------
Benjamin J. Lambert, III
Director
- -------------------------------------
Richard L. Leatherwood
II-3
<PAGE>
Signatures Title
/s/ Harvey L. Lindsay, Jr. Director
- ------------------------------------
Harvey L. Lindsay, Jr.
/s/ Kenneth A. Randall Director
- ------------------------------------
Kenneth A. Randall
/s/ William T. Roos Director
- ------------------------------------
William T. Roos
/s/ Frank S. Royal Director
- ------------------------------------
Frank S. Royal
/s/ S. Dallas Simmons Director
- ------------------------------------
S. Dallas Simmons
/s/ Robert H. Spilman Director
- ------------------------------------
Robert H. Spilman
/s/ William G. Thomas Director
- ------------------------------------
William G. Thomas
/s/ Judith B. Warrick Director
- ------------------------------------
Judith B. Warrick
/s/ David A. Wollard Director
- ------------------------------------
David A. Wollard
/s/ John A. Shaw Senior Vice President,
- ------------------------------------ Chief Financial
John A. Shaw Officer and Treasurer
/s/ M. S. Bolton, Jr. Vice President and
- ------------------------------------ Controller (Principal
M. S. Bolton, Jr. Accounting Officer)
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S>
1 --Form of Distribution Agreement for the Notes between the Company
and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc., (filed herewith).
4.1 --Trust Indenture, dated as of April 1, 1988, Exhibit 4(i), File
No. 33-21319, incorporated by reference; First Supplemental
Indenture, dated August 1, 1989, Exhibit 4(ii), File No. 33-
30532, incorporated by reference.
4.2 --Form of Second Supplemental Indenture (filed herewith).
4.3 --Form of Fixed Rate Medium-Term Note, Series G (filed herewith).
4.4 --Form of Floating Rate Medium-Term Note, Series G (filed
herewith).
5 --Legality Opinion of McGuire, Woods, Battle & Boothe LLP (filed
herewith).
8 --Tax Opinion of McGuire, Woods, Battle & Boothe LLP (filed
herewith).
12 --Statements regarding computation of ratios (filed herewith).
23.1 --Consents of McGuire, Woods, Battle & Boothe LLP (contained in
Exhibits 5 and 8).
23.2 --Consent of Jackson & Kelly PLLC (filed herewith).
23.3 --Consent of Deloitte & Touche LLP (filed herewith).
24 --Power of Attorney (included herein).
25 --Statement of eligibility of Trustee (filed herewith).
</TABLE>
II-5
<PAGE>
U.S. $400,000,000
VIRGINIA ELECTRIC AND POWER COMPANY
Medium-Term Notes
Series G
DISTRIBUTION AGREEMENT
----------------------
_________, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Lehman Brothers Inc.
Three World Financial Center
200 Vesey Street
New York, NY 10285
The undersigned, Virginia Electric and Power Company (the "Company"),
hereby confirms its agreement with each of you with respect to the issuance and
sale by the Company of the below-described Notes.
Subject to the terms and conditions stated herein, the Company (i) hereby
appoints each of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill"), Goldman, Sachs & Co. ("Goldman"), Morgan Stanley & Co.
Incorporated ("Morgan") and Lehman Brothers Inc. ("Lehman"), as an agent of the
Company, for the purpose of soliciting and receiving offers to purchase such
Notes from the Company by others, and (ii) hereby agrees that whenever the
Company determines to sell such Notes directly to one or more of you as
principal for resale to others it will, if
<PAGE>
requested by any of you to whom such Notes are to be sold, enter into a Terms
Agreement relating to such sale in accordance with the provisions of paragraph
3(b) hereof. The Company reserves the right to sell such Notes directly on its
own behalf to investors, and to or through any of you or any other person whom
the Company may appoint as agent in the future. As used herein, the terms "you",
"your" and the like shall refer to each of Merrill, Goldman, Morgan and Lehman,
individually, and, as the context requires, to all of such firms collectively.
1. Description of Notes. The Company proposes to issue and sell up to
--------------------
U.S. $400,000,000* aggregate principal amount of its Medium-Term Notes, Series G
due 9 Months or more from the date of issue (the "Notes"). The Notes will have
the maturity ranges, interest rates per annum, redemption and repayment
provisions and other terms specified from time to time in the Prospectus
referred to below. The Notes are to be issued pursuant to an Indenture, dated
as of April 1, 1988, as amended and supplemented by the First Supplemental
Indenture, dated as of August 1, 1989, and the Second Supplemental Indenture,
dated as of May 1, 1999, (such Indenture, as amended and supplemented, hereafter
referred to as the "Indenture") between the Company and The Chase Manhattan Bank
(formerly known as Chemical Bank), as trustee (the "Trustee"). All capitalized
terms not defined herein have the meanings ascribed to them in the Indenture.
2. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to you that:
(a) The Registration Statement on Form S-3 (Reg. No. 333-_______) for
the registration of the 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 been declared effective. Unless the context
otherwise requires, such Registration Statement is hereinafter called the
"Registration Statement" and such Prospectus, as the same may be amended or
supplemented, is hereinafter called the "Prospectus". Whenever the term
"Registration Statement", "prospectus" or "Prospectus" is used herein, it
shall be deemed to include all documents or portions thereof incorporated
therein by reference (the "Incorporated Documents") pursuant to the
requirements of Form S-3 under the Securities Act, including documents
filed or to be filed by the Company pursuant to the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act") and incorporated by
reference into the Prospectus. The Company will not file any amendment or
supplement to the Registration Statement unless you shall have been advised
of the proposed amendment or supplement and the same shall not
- ---------------------------
* Or the equivalent in foreign currencies or composite currencies as specified
in a pricing supplement (with U.S. dollars or such specified foreign currencies
or composite currencies being referred to herein as the "Specified Currency").
2
<PAGE>
have been disapproved as to substance by you or as to form by Mays &
Valentine, L.L.P., who are acting as counsel for you.
(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 and the rules, regulations and releases of the Commission
thereunder and the Securities Exchange Act, and the rules, regulations and
releases of the Commission thereunder, and neither the Registration
Statement nor the 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; provided, however,
that the foregoing representations and warranties in this subparagraph (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 you or on behalf of any
of you 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.
(c) The Indenture qualifies under, and conforms in all material
respects to the requirements of, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(d) Deloitte & Touche LLP have examined certain of the 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, regulations and releases of the
Commission thereunder.
(e) Except as reflected in, or contemplated by, the Registration
Statement, 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
which is not disclosed in the Registration Statement and Prospectus.
(f) 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
3
<PAGE>
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, regulation or
release applicable to the Company of any federal or state regulatory board
or body or administrative agency having jurisdiction over the Company or
its property.
(g) The 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 Notes, and no other filings or regulatory
approvals are necessary.
(h) This Agreement has been duly authorized, executed and delivered
by the Company.
(i) The Indenture has been duly authorized, executed and
delivered by the Company and is a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
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), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any debt securities issued under
the Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
(j) The Notes have been duly authorized by the Company for offer,
sale, issuance and delivery pursuant to this Agreement and, when issued,
authenticated and delivered in the manner provided for in the Indenture and
delivered against payment of the consideration therefor, will constitute
valid and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms, 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), and except further as
enforcement thereof may be limited by requirements that a claim with
respect to any Notes payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States;
the Notes will be substantially in the form attached as Exhibits 4.3 and
4.4 to the Registration Statement; and each Holder of Notes will be
entitled to the benefits of the Indenture.
3. Solicitations as Agent; Purchases as Principal.
----------------------------------------------
4
<PAGE>
(a) Solicitations as Agent. On the basis of the representations and
----------------------
warranties herein contained, but subject to the terms and conditions herein
set forth, each of you agree, as agent of the Company, to use your best
efforts to solicit offers to purchase the Notes upon the terms and
conditions set forth in the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Notes in any Specified Currency, for
any period of time or permanently. Upon receipt of instructions from the
Company, you will, as soon as practicable, but in no event later than one
business day after receipt of instruction from the Company, suspend
solicitation of offers to purchase the Notes from the Company until such
time as the Company has advised you that such solicitation may be resumed.
The Company agrees to pay you a commission, at the time of settlement
of each sale of Notes by the Company as a result of a solicitation made by
you, in an amount in U.S. dollars (which, in the case of Notes denominated
in currency units or in currencies other than U.S. dollars, shall be based
on the Exchange Rate (as defined below)) equal to the following percentage
of the aggregate principal amount of such Notes sold:
Commission
(percentage of aggregate
principal amount
Range of Maturities of Notes sold)
------------------- --------------
More than 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to 30 years .750%
More than 30 years As agreed
Unless otherwise agreed to, as agent, you are authorized to solicit
orders for the Notes at the principal amount thereof only in denominations
of U.S. $1,000 or any amount in excess thereof which is an integral
multiple of U.S.
5
<PAGE>
$1,000* at a purchase price equal to 100% of the principal amount thereof,
unless otherwise specified in a supplement to the Prospectus. You shall
communicate to the Company, orally or in writing, each offer to purchase
Notes received by you as agent, other than those rejected by you. The
Company shall have the sole right to accept offers to purchase Notes and
may reject any such offer in whole or in part. You shall have the right, in
your discretion reasonably exercised, to reject any offer received by you
to purchase the Notes, in whole or in part, and any such rejection shall
not be deemed a breach of your agreement contained herein.
No Note which the Company has agreed to sell pursuant to this Agreement
shall be deemed to have been purchased and paid for, or sold, by the
Company until such Note shall have been delivered to the purchaser thereof
against payment by such purchaser.
The "Exchange Rate" on a given date for a Specified Currency other than
U.S. dollars means the noon dollar buying rate in New York City on such
date for cable transfers for the Specified Currency as certified for
customs purposes (or if not so certified, as otherwise determined) by the
Federal Reserve Bank of New York.
(b) Purchases as Principal. Each sale of Notes to you as principal
----------------------
shall be made in accordance with the terms of this Agreement and a separate
agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by, you. Each such separate agreement
(which may be oral (subsequently confirmed in writing) or written, and
which may be substantially in the form of Exhibit A hereto and which may
take the form of an exchange of any standard form of written
telecommunication between you and the Company) is herein referred to as a
"Terms Agreement". Your commitment to purchase Notes as principal, whether
pursuant to a Terms Agreement or otherwise, shall be deemed to have been
made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein
set forth. Each agreement by you to purchase Notes as principal (whether or
not set forth in a Terms Agreement) shall specify the principal amount of
Notes to be purchased by you pursuant thereto, the price to be paid to the
Company for such Notes, and such other terms, conditions and requirements
as may be agreed upon between us. Each such agreement shall also specify
any requirements for officers' certificates, opinions of counsel and
letters from the independent public accountants of the Company pursuant to
paragraph 7 hereof. A Terms Agreement may also specify certain provisions
relating to the reoffering of such Notes by you. You may utilize a selling
or dealer group in connection with the resale of the Notes purchased by you
as principal.
- ----------------------------
*Or the equivalent of U.S. $1,000 (rounded down to an integral multiple of 1,000
units of the Specified Currency) in the Specified Currency or such larger amount
in integral multiples of 1,000 units of the Specified Currency.
6
<PAGE>
4. Procedures. Procedural details relating to the issuance and
----------
delivery of Notes, the solicitation of offers to purchase by others, and
purchase by you as principal of, Notes, and the payment in each case therefor,
are set forth in the Medium-Term Note Administrative Procedures and the Multi-
Currency Procedures Supplement attached hereto as Exhibit B and are hereby
incorporated herein by reference (the "Procedures"). Each of you and the Company
agree to perform the respective duties and obligations specifically provided to
be performed by each in the Procedures, as they may be amended from time to
time. The Procedures may only be amended by written agreement of the Company and
you.
5. Time and Place of Closing. The documents required to be delivered on
-------------------------
the "Closing Date" pursuant to paragraph 7 hereof shall be delivered at the
offices of McGuire, Woods, Battle & Boothe LLP, 901 E. Cary Street, Richmond,
Virginia, at 10:00 a.m., Richmond, Virginia time, on May __, 1999, or at such
other time as you and the Company may agree upon in writing, the time and date
of such delivery being herein called the "Closing Date".
6. Covenants of the Company. The Company agrees that:
------------------------
(a) The Company, at or prior to the Closing Date, will deliver to you
conformed copies of the Registration Statement as originally filed and of
all amendments or supplements thereto, including any post-effective
amendment (in each case including all exhibits filed therewith and
including copies of each consent and certificate included therein or filed
as an exhibit thereto, except exhibits incorporated by reference unless
specifically requested). As soon as the Company is advised thereof, it will
advise you orally of the issuance of any stop order under the Securities
Act with respect to the Registration Statement, or the institution of any
proceedings therefor of which the Company shall have received notice, and
will use its best efforts to prevent the issuance of any such stop order
and to secure the prompt removal thereof, if issued. The Company will
deliver to you as many copies of the Registration Statement and Prospectus
and of all amendments thereto (in each case without exhibits) as you may
reasonably request for the purposes contemplated by the Securities Act or
the Securities Exchange Act.
(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 the Notes and (iii) the
reproduction and delivery to you in accordance with this Agreement of
copies of this Agreement, the Registration Statement and Prospectus (each
as originally filed and as subsequently amended or supplemented). The
Company also will pay all taxes, if any, on the issuance of the Notes. In
addition, the Company will pay the reasonable fees and disbursements of
your counsel, Mays & Valentine, L.L.P., including fees and disbursements
incurred in connection with qualifying the Notes
7
<PAGE>
under state securities or blue-sky laws or investment laws (if and to the
extent such qualification is required by you or the Company), your
reasonable out-of-pocket expenses in connection with the transactions
contemplated hereby and your advertising expenses, which have been
approved, in writing in advance, by the Company.
(c) The Company will furnish you with copies of each further amendment
and supplement to the Prospectus in such quantities as you may from time to
time reasonably request. If at any time when the delivery of a prospectus
shall be required by law in connection with the sale of any Note, any event
relating to or affecting the Company, or of which the Company shall be
advised in writing by you, shall occur, which in the opinion of the Company
or of your counsel should be set forth in a supplement to or an amendment
of the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances when it is delivered, or if for any other reason
it shall be necessary during such period to amend or supplement the
Prospectus or any document incorporated by reference in the Prospectus in
order to comply with the Securities Act, the Securities Exchange Act or the
Trust Indenture Act, the Company forthwith will (i) notify you to suspend
solicitation of purchases of Notes and (ii) at its expense, prepare and
furnish to you a reasonable number of copies of a supplement or supplements
or an amendment or amendments to the Prospectus which will supplement or
amend the Prospectus so that, as supplemented or amended, it will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered, not misleading
or which will effect any other necessary compliance. During the period
specified in the preceding sentence, 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 pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act; provided, that the Company shall
not file such documents or amendments without also furnishing copies
thereof to you and Mays & Valentine, L.L.P. Notwithstanding any other
provision of this paragraph 6(c), until the distribution of any Notes you
may own as principal has been completed, if any event described above in
this paragraph 6(c) occurs, the Company will, at its own expense, forthwith
prepare and cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or Prospectus, as then amended or
supplemented, satisfactory in all respects to you; will supply such amended
or supplemented Prospectus to you in such quantities as you may reasonably
request; and will furnish to you pursuant to paragraph 7(c) and (d) such
documents, certificates, opinions and letters as you may request in
connection with the preparation and filing of such amendment or supplement.
(d) The Company will make 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
8
<PAGE>
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.
(e) During any period when delivery of a prospectus shall be required
by law in connection with the sale of any Note, and for a period of five
years following the termination of such period, the Company will deliver to
you, 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 you
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.
(f) 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 to the delivery by it of the
Notes.
(g) The Company will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the Notes for offer
and sale under the securities or blue-sky laws of such states as you 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 that it deems unduly
burdensome.
(h) If required pursuant to the terms of a Terms Agreement, between
the dates of any Terms Agreement and the settlement date with respect to
such Terms Agreement, the Company will not, without your prior written
consent, offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company in a public offering which are substantially
similar to the Notes.
(i) If the Company enters into any amendment to this Agreement, then
such amendment shall be entered into by each of you; provided, however,
that this Agreement may be terminated in accordance with paragraphs 7 or 12
as to any one of you without being terminated as to the others of you.
(j) If the Company adds a new agent with respect to the Notes, then
such agent shall enter into an agreement substantially similar to this
Agreement, as such may be amended from time to time.
7. Conditions of Your Obligations. Your obligations as agent of the
------------------------------
Company to initiate solicitations of offers to purchase the Notes and to
continue such solicitations, as the case may be, and your obligations to
purchase Notes as principal pursuant to any Terms Agreement or otherwise, shall
be subject to the continuing
9
<PAGE>
solicitations, as the case may be, and your obligations to purchase Notes as
principal pursuant to any Terms Agreement or otherwise, shall be subject to the
continuing accuracy of the representations and warranties on the part of the
Company contained herein, to the accuracy of the statements of the Company's
officers made in any certificate furnished pursuant to the provisions hereof, to
the performance and observance by the Company of all covenants and agreements
contained herein on its part to be performed and observed and to the following
additional conditions:
(a) An order or orders of the Virginia Commission permitting the
issuance and sale of the Notes substantially in accordance with the terms
and conditions hereof shall be in full force and effect and shall contain
no provision unacceptable to you or the Company (but all provisions of such
order or orders heretofore entered, copies of which have heretofore been
delivered to you, are deemed acceptable to you and the Company, and all
provisions of such order or orders hereafter entered shall be deemed
acceptable to you and the Company unless within 24 hours after receiving a
copy of any such order any party to this Agreement shall give notice to the
other parties to the effect that such order contains an unacceptable
provision).
(b) You shall receive on the Closing Date the opinion of Mays &
Valentine, L.L.P., dated the Closing Date, substantially in the form
attached hereto as Exhibit C.
(c) You shall receive (i) on the Closing Date, (ii) on any date that
the Registration Statement or the Prospectus shall be amended or
supplemented (other than by an amendment or supplement relating solely to a
change in the Specified Currency or in the interest rate offered on the
Notes), (iii) each time a document filed under the Securities Act or the
Securities Exchange Act is incorporated by reference into the Prospectus
(other than Current Reports on Form 8-K filed exclusively to incorporate
exhibits, required to be filed as Exhibits 1, 4 and 12 under Item 601 of
Regulation S-K of the Securities Exchange Act, in registration statements
on Form S-3), and (iv) each time, if so indicated in the applicable Terms
Agreement or otherwise, the Company sells Notes to you as principal, the
legal opinion of McGuire, Woods, Battle & Boothe LLP or other counsel
satisfactory to you in your reasonable judgment, dated the Closing Date,
the date of such amendment, supplement, incorporation by reference or
settlement date, relating to a sale of Notes pursuant to a Terms Agreement
or otherwise, as the case may be, substantially in the form attached hereto
as Exhibit D. In lieu of such opinion to be delivered upon such amendment,
supplement, incorporation by reference or settlement date relating to a
sale of Notes under a Terms Agreement or otherwise, each counsel last
furnishing such an opinion to you shall furnish you with a letter to the
effect that you may rely upon such last opinion to the same extent as
though it were dated the date of such letter authorizing reliance (except
that statements in such last opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such letter authorizing reliance).
10
<PAGE>
(d) You shall receive (i) on the Closing Date, (ii) each time that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by an amendment or supplement relating solely to a change in
the Specified Currency or in the interest rate offered on the Notes) and
each time a document filed under the Securities Act or the Securities
Exchange Act is incorporated by reference in the Prospectus (other than
Current Reports on Form 8-K filed exclusively to incorporate exhibits,
required to be filed as Exhibits 1, 4 and 12 of Item 601 under Regulation
S-K of the Securities Exchange Act, in registration statements on Form S-
3), in the case of each such amendment, supplement or incorporation by
reference to set forth financial information included in or derived from
the Company's financial statements, and (iii) each time, if so indicated in
the applicable Terms Agreement or otherwise, the Company sells Notes to you
as principal, from Deloitte & Touche LLP, or another independent public
accounting firm satisfactory to you, a letter addressed to you, dated the
Closing Date, the date of such amendment, supplement, incorporation or
settlement date relating to a sale pursuant to a Terms Agreement or
otherwise, as the case may be: (1) confirming that they are independent
public accountants as required by the Securities Act; (2) stating in effect
that, in their opinion, the financial statements included in or
incorporated by reference in the Registration Statement and the Prospectus
and examined by them as stated in their report incorporated by reference in
the Registration Statement, comply as to form in all material respects with
the applicable accounting requirements adopted pursuant to the Securities
Exchange Act; (3) 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 most recent fiscal year with
respect to which an audit report has been issued and inquiries of officials
of the Company responsible for financial and accounting matters (which
procedures did not constitute an audit conducted in accordance with
generally accepted auditing standards) nothing came to their attention that
caused them to believe that the most recent unaudited financial statements
included in or incorporated by reference in the Registration Statement and
the Prospectus are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by reference therein;
and (4) stating, in effect, that on the basis of more limited procedures
than those set forth in the foregoing clause (3), 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 (i) at
such date there was any decrease in the common stockholders equity or any
increase in long-term debt (including amounts classified as due within one
year, but excluding unamortized discount (net of premium)) of the Company
or any decrease in net assets as compared with the amounts shown in the
most recent audited balance sheet incorporated by reference in the
Registration Statement, or (ii) for the period from the date of the most
recent unaudited financial statements included in or incorporated by
reference in the Registration
11
<PAGE>
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,
in operating income, or net income except (with respect to (i) or (ii)) in
all instances for changes or decreases which the Registration Statement
discloses have occurred or may occur; provided, however, that such letters
may vary from the requirements specified in clause (4) hereof in such
manner as you in your sole discretion may deem to be acceptable. Such
letters shall also state that the unaudited 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) which appear (i) in the Prospectus under the caption Ratio of
Earnings to Fixed Charges, or (ii) in the Company's most recent Annual
Report on Form 10-K under the caption "Selected Financial Data" 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. Each such letter shall relate
to the Registration Statement and Prospectus as amended or supplemented to
the date of each such letter.
(e) Since the date of the most recent audited or unaudited financial
statements included in or incorporated by reference in the Registration
Statement and Prospectus, and up to (in the case of your obligation to
solicit offers to purchase Notes) the time of such solicitations or since
the date of any agreement by you to purchase Notes as principal and up to
(in the case of your obligation to purchase Notes as principal) the
settlement date relating to such purchase pursuant to a Terms Agreement or
otherwise, there shall not have been any material adverse change in the
condition of the Company, financial or otherwise.
(f) Since the respective most recent dates as of which information is
given (i) in the Registration Statement and Prospectus, as amended or
supplemented through the date of this Agreement, including by incorporation
by reference therein, and up to the Closing Date, the Company shall not
have any material contingent liability, except as reflected in or
contemplated by the Registration Statement or Prospectus as so amended or
supplemented, (ii) in the Registration Statement and Prospectus as amended
or supplemented through the date of any agreement by you to purchase Notes
as principal, including by incorporation by reference, and prior to each
corresponding settlement date, the Company shall not have any material
contingent liability, except as reflected in or contemplated by the
Registration Statement or Prospectus as so amended or supplemented.
(g) On the Closing Date or any applicable date referred to in paragraph
7(c) hereof, as the case may be, the representations and
warranties of
12
<PAGE>
the Company in this Agreement shall be true and correct, and the Company
shall have performed all obligations and satisfied all conditions required
of it under this Agreement.
(h) At the Closing Date or any applicable date referred to in paragraph
7(c) hereof, as the case may be, you shall have received a certificate to
such effect, signed by the Chairman of the Board, the President or any Vice
President of the Company, it being understood that such certificate shall
relate to the Registration Statement and Prospectus as amended or
supplemented to the date of such certificate.
(i) All legal proceedings to be taken in connection with the
transactions contemplated by this Agreement shall have been satisfactory to
Mays & Valentine, L.L.P.
In case any of the conditions specified above in this paragraph 7 shall not
have been fulfilled, this Agreement may be terminated by any of you, as to
yourself only, upon mailing or delivering written notice thereof to the Company.
Any such termination shall be without liability of the terminating party and the
Company to each other, except as otherwise provided in paragraphs 6(b), 9(e) and
10 hereof.
8. Additional Covenant of the Company. The Company agrees that each
----------------------------------
acceptance by it of an offer for the purchase of Notes hereunder shall be deemed
to be an affirmation to you that the representations and warranties of the
Company contained in this Agreement are true and correct as of the date of such
acceptance as though made at and as of such time, and a covenant that such
representations and warranties will be true and correct as of the date of
delivery to the purchaser or the purchaser's agent of the Note or Notes relating
to such acceptance and (in the case of your obligation to purchase Notes as
principal) as of the settlement date relating to such purchase pursuant to a
Terms Agreement or otherwise, as though made at and as of each such date (except
that such representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to each
such date).
9. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless you, your
officers and directors and each person who controls you 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 you and each of your officers, directors and
controlling persons for any legal or other expenses (including, to the
extent hereunder provided, reasonable counsel fees) incurred by you or them
in connection with investigating any such losses, claims, damages,
liabilities, or in connection with defending any actions that arise out of
or are
13
<PAGE>
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 as amended or supplemented from time to time (if such
amendments or supplements thereto shall have been furnished pursuant to
paragraph 2(a) hereof), 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 indemnity
agreement contained in this paragraph 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 information furnished in writing to the Company by any of you
or on behalf of any of you for use in the Registration Statement or any
amendment thereto, in the Prospectus or in any supplement thereto.
(b) Each of you agree to indemnify and hold harmless the Company, its
officers and directors and each person who controls the Company 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 as amended or supplemented from time to
time (if such amendments or supplements thereto shall have been furnished
pursuant to paragraph 2(a) hereof) 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 information furnished in writing to the Company
by you or on your behalf for use in the Registration Statement or the
Prospectus or any amendment or supplement to either thereof.
(c) Each of you and the Company agree 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
you, your officers, directors or any controlling person as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, you or the Company, as the case may be, 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 or parties otherwise
14
<PAGE>
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 (a) or (b), as the case
may be, of this paragraph 9 who are parties to such action), (ii) the
indemnifying party shall elect 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 any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional 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 paragraph 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (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 to 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 any of you participating in the transaction at issue, on the other,
in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any
15
<PAGE>
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 you on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and each of you agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined
by pro rata allocation (even if all of you were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subsection (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 subsection (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 subsection (d), none of you
shall be required to contribute any amount in excess of the amount by which
the total price at which the Notes purchased by or through you were sold
exceeds the amount of any damages which you have 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 obligation of each of you under this subparagraph
(d) to contribute are several in proportion to the respective purchases
made by or through you to which such loss, claim, damage or liability (or
action in respect thereof) relates and are not joint.
(e) The agreements contained in this paragraph 9 shall remain
operative and in full force and effect regardless of any termination of
this Agreement, any investigation made by or on behalf of such party, or
any person controlling such party, and shall survive each delivery of the
Notes.
10. 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 you or on your behalf or on behalf of any controlling
person of you, or by or on behalf of the Company, and shall survive each
delivery of and payment for any of the Notes.
11. Status as Agent. In soliciting offers by others to purchase Notes
---------------
from the Company, you are acting solely as agent for the Company, and not as
principal. You will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes has been accepted by
the Company, but you shall not have any liability to the Company in the event
such purchase is not
16
<PAGE>
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company shall hold
you harmless against any loss, claim or damage arising from or as a result of
such default by the Company.
12. Termination. This Agreement may be terminated for any reason, at any
-----------
time by any of you as to the Company or by the Company as to any of you upon the
giving by the terminating party of five (5) business days' written notice of
such termination to the other parties hereto. Each of you may also terminate
any agreement by you to purchase Notes as principal, immediately upon notice to
the Company, at any time prior to the settlement date relating thereto if during
such period (a) there shall have occurred any material adverse change in the
financial markets in the United States or in the financial markets of the
country or countries of origin of any foreign currency or currencies in which
the Notes are denominated or payable or any outbreak or escalation of
hostilities or other national or international calamity or crisis the effect of
which is such as to make it, in your judgment, impracticable or inadvisable to
market the Notes or enforce contracts for the sale of Notes on the terms and in
the manner contemplated in the Prospectus, or (b) if trading in any securities
of the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange shall have been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either of such exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium shall have been
declared either by federal or New York authorities or by the relevant
authorities in the country or countries of origin of any foreign currency or
currencies in which the Notes are denominated or payable, or (c) after the
acceptance by you of such agreement to purchase Notes as principal and at or
prior to the settlement date relating thereto, the Company shall have sustained
a substantial loss by fire, flood, accident or other calamity which in your
judgment renders it inadvisable to consummate the sale of the Notes and the
delivery of the Notes upon the terms set forth in such agreement, regardless of
whether or not such loss shall have been insured, or (d) there shall have
occurred a downgrading in the rating accorded the Company's unsecured debt
securities 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.
In the event of any such termination, neither the terminating party nor the
terminated party shall have any liability to the other except as provided in the
third full paragraph of paragraph 3(a), paragraph 6(b), paragraph 9 and
paragraph 10 and except that, if at the time of termination you shall own any of
the Notes with the intention of reselling them or an offer for the purchase of
Notes shall have been accepted by the Company but the time of delivery to the
purchaser or such purchaser's agent of the Note or Notes relating thereto shall
not yet have occurred, you shall comply with the Procedures, and the Company
shall also have the obligations provided in paragraphs 7(c) through (h) and
paragraph 8 hereof until such Notes have been resold or delivered, as the case
may be; provided, however, that the Company's obligation to comply with the
17
<PAGE>
provisions of paragraphs 7(c) through (h) and paragraph 8 hereof as set forth in
the immediately preceding clause of this sentence 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, and (ii) at the Closing Date an
order or orders of the Virginia Commission permitting the issuance and sale of
the Notes substantially in accordance with the terms and conditions hereof shall
be in full force and effect and shall contain no provision unacceptable to you
or the Company (but all provisions of such order or orders heretofore entered,
copies of which have heretofore been delivered to you, are deemed acceptable to
you and the Company, and all provisions of such order or orders hereafter
entered shall be deemed acceptable to you and the Company unless within 24 hours
after receiving a copy of any such order any party to this Agreement shall give
notice to the other parties to the effect that such order contains an
unacceptable provision).
13. Miscellaneous. The validity and interpretation of this Agreement
-------------
shall be governed by the laws of the State of New York. This Agreement may be
executed in two or more counterparts. This Agreement shall inure to your
benefit, the benefit of the Company and, with respect to the provisions of
paragraph 9 hereof, each person who controls you and each of your officers and
directors and each controlling person and each officer and director of the
Company referred to in such paragraph 9, and their respective successors,
assigns, executors and administrators. Nothing in this Agreement is intended or
shall be construed to give to any 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 of the purchasers, as such, of any of the Notes.
14. Notices. Except as otherwise specifically provided herein or in the
-------
Procedures, all communications hereunder shall be in writing or by telegram and,
if to you, shall be sent by telex, facsimile transmission, registered mail or
delivered to the address set forth under your signature below and, if to the
Company, shall be sent by telex, facsimile transmission, registered mail or
delivered to it, attention of Treasurer, Virginia Electric and Power Company,
701 E. Cary Street, Richmond, Virginia 23219-3932 (fax: (804) 771-4066).
Please sign and return to us eight copies of this letter, whereupon
this letter will become a binding agreement between the Company and you in
accordance with its terms.
Very truly yours,
VIRGINIA ELECTRIC AND POWER COMPANY
By:
18
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Title:
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:
----------------------------------
Authorized Signatory
Address for Notices:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
World Financial Center, North Tower
10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
GOLDMAN, SACHS & CO.
By:
----------------------------------
(Goldman, Sachs & Co.)
Address for Notices:
Goldman, Sachs & Co.
85 Broad Street
27th Floor
New York, New York 10004
Attention: Medium-Term Note Desk
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
MORGAN STANLEY & CO. INCORPORATED
By:
----------------------------------
Authorized Signatory
19
<PAGE>
Address for Notices:
Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, New York 10036
Attention: Manager--Continuously Offered Products
Telephone: (212) 761-4000
Telecopy: (212) 761-0780
With copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway
34th Floor
New York, New York 10036
Attention: Peter Cooper, Investment Banking Information Center
Telephone: (212) 761-8385
Telecopy: (212) 761-0260
LEHMAN BROTHERS INC.
By:
----------------------------------
Authorized Signatory
Address for Notices:
Lehman Brothers Inc.
Three World Financial Center
200 Vesey Street, 9th Floor
New York, NY 10285
Attention: MTN Department
Telephone: (212) 526-2012 or (212) 526-8400
Telecopy: (212) 528-7035
20
<PAGE>
EXHIBIT A
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTES, SERIES G
TERMS AGREEMENT
_________, 1999
Virginia Electric and Power Company
701 E. Cary Street
Richmond, Virginia 23219-3932
Attention: Treasurer
Re: Distribution Agreement dated _________, 1999
The undersigned agrees to purchase the following principal amount of
Securities:
$_______________
Interest Rate:
Stated Maturity:
Purchase Price: _____% of par
Specified Currency:
Original Issue Date:
Redemption Terms:
(i) Initial Redemption Date
(ii) Initial Redemption Percentage (% of par)
(iii) Annual Redemption Percentage Reduction
(iv) Limitation Date
(v) Refunding Rate
Repayment Terms:
(i) Repayment Date(s)
(ii) Repayment Rate(s)
Settlement Date and Time:
Requirements, if any, pursuant to paragraph 6(h) of the Distribution
Agreement:
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<PAGE>
[Insert the certificates, opinions and accountants' letters to be required
pursuant to paragraph 7 of the Distribution Agreement.]
[Name of Agent Purchasing as Principal]
By:
-----------------------------------
Title:
Accepted:
Virginia Electric and Power Company
By:
---------------------------
Title:
22
<PAGE>
EXHIBIT B
VIRGINIA ELECTRIC AND POWER COMPANY
Medium-Term Note Administrative Procedures
Medium-Term Notes, Series G due 9 Months or more from the date of issue
(the "Notes") in the aggregate principal amount at any time outstanding not to
exceed U.S. $400,000,000 or the equivalent thereof in Specified Currencies are
offered on a continuing basis by Virginia Electric and Power Company (the
"Company") through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc., as agents (the "Agents"), who have agreed to use their best
efforts to solicit offers to purchase the Notes and who may also purchase Notes,
as principals, for resale. Each of the Agents will not be obligated to purchase
Notes for its own account but may do so pursuant to the terms and settlement
details of a Terms Agreement entered into between the Company and such Agent, as
contemplated by the Distribution Agreement. Only those provisions contained in
these Administrative Procedures which are applicable to the particular role that
the Agent shall perform shall apply.
The Notes are being sold pursuant to Distribution Agreements, dated
_________, 1999 between the Company and each of the Agents (the "Distribution
Agreements"). The Company has reserved the right to sell Notes directly on its
own behalf. The Notes will be senior, unsecured debt and have been registered
with the Securities and Exchange Commission (the "Commission"). The Chase
Manhattan Bank (formerly known as Chemical Bank) is the trustee (the "Trustee"
or "Chase") under the Indenture, dated as of April 1, 1988, as supplemented by
the First Supplemental Indenture, dated as of August 1, 1989, and the Second
Supplemental Indenture, dated as of May 1, 1999, between the Company and the
Trustee (such Indenture, as amended and supplemented, hereafter referred to as
the "Indenture") covering the Notes. The Chase Manhattan Bank shall also act as
a paying agent, pursuant to an appointment by the Company, for payment of the
principal of (and premium, if any) and interest on the Notes when due.
In the case of purchases of Notes by any of the Agents, as principal, the
relevant terms and settlement details related thereto, including the settlement
date referred to in paragraph 3(b) of each Distribution Agreement, will be set
forth in a Terms Agreement or otherwise entered into between such Agent and the
Company pursuant to the relevant Distribution Agreement.
The Notes will bear interest at either fixed rates or floating rates. The
Notes will either be issued (i) in book-entry form and represented by one or
more fully registered Notes (each, a "Global Security") delivered to The Chase
Manhattan Bank or its successor (the "Trustee"), as agent for The Depository
Trust Company (the
23
<PAGE>
"Depositary"), and recorded in the book-entry system maintained by the
Depositary, or (ii) in certificated form delivered to the purchaser thereof or a
person designated by such purchaser (each, a "Certificated Note"). Owners of
beneficial interests in a Global Security will be entitled to physical delivery
of Notes in certificated form equal in principal amount to their respective
beneficial interests only upon certain limited circumstances described in the
Prospectus.
Administrative responsibilities, document control and record-keeping
functions will be handled for the Company by its Treasurer's Department. The
Company will advise the Agents in writing of those persons handling
administrative responsibilities with whom the Agents are to communicate
regarding offers to purchase Notes and the details of their delivery.
General procedures relating to the issuance and administration of all Notes
are set forth in Part I hereof. Additionally, Global Securities and beneficial
interests therein will be issued and administered in accordance with the
procedures set forth in Part II hereof and Certificated Notes will be issued and
administered in accordance with the procedures set forth in Part III hereof.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Notes, as the case may be.
Part I: Administrative
Procedures of General Applicability
Date of Issuance;
Authentication: Each Note will be dated as of the date of its authentication
by the Trustee. Each Note will also bear an original issue
date (the "Original Issue Date"). Except for the
consolidation of two or more Global Securities, the Original
Issue Date shall remain the same for all Notes subsequently
issued upon transfer, exchange or substitution of such
original Note regardless of their dates of authentication.
Maturity;
Redemption: Each Note will mature on a date selected by the purchaser and
agreed to by the Company, which will be at least 9 months
from the Original Issue Date. The Notes will be subject to
redemption by the Company on and after the Redemption Date,
if any, at the respective Redemption Prices. Redemption Dates
and the applicable Redemption Prices, if any, will be agreed
to by the Company and the purchaser at the time of sale and
set forth on the applicable Note and in the applicable
Pricing Supplement. If no Redemption Date is indicated with
respect to a Note, such Note will not be redeemable prior to
Stated Maturity. If the applicable
24
<PAGE>
Pricing Supplement so provides, the terms of a Note which is
subject to redemption prior to Stated Maturity may specify
that the Company may not redeem such Note prior to a specified
date (the "Limitation Date") as a part of, or in anticipation
of, a refunding operation by the application of monies
borrowed having an interest cost to the Company of less than a
specified rate (the "Refunding Rate"). The Notes will not be
subject to amortization or a sinking fund.
Repayment at
Holder's Option: Except as otherwise specified in the applicable Pricing
Supplement and on the Notes, the Company is not required to
repay the Notes at the option of the Holder prior to the
Stated Maturity. Repayment Dates and the applicable Repayment
Prices, if any, will be agreed to by the Company and the
purchaser at the time of sale and set forth on the applicable
Note and in the applicable Pricing Supplement. If no Repayment
Date is indicated with respect to a Note, such Note will not
be repayable prior to Stated Maturity.
Price to Public: Each Note will be issued at 100% of its principal amount,
unless otherwise mutually agreed upon by the purchaser and the
Company and specified in the applicable pricing supplement.
Denominations: Unless otherwise determined by the Company, Notes will be
issued and payable in U.S. dollars in the denomination of U.S.
$1,000 and any larger denomination which is an integral
multiple of U.S. $1,000.
Registration: Notes will be issued only in fully registered certificated or
book-entry form.
Base Rates
Applicable to
Floating Rate
Notes: Unless otherwise provided in the applicable Pricing
Supplement, Floating Rate Notes (except for certain Original
Issue Discount Notes) will bear interest at a rate determined
by reference to the CD Rate ("CD Rate Notes"), the Commercial
Paper Rate ("Commercial Paper Rate Notes"), LIBOR ("LIBOR
Notes"), the Prime Rate ("Prime Rate Notes"), the Federal
Funds Rate ("Federal Funds Rate Notes"), the Treasury Rate
("Treasury Rate Notes"), the CMT Rate ("CMT Rate Notes"), or
such other interest rate basis or formula as may be set forth
in the applicable Pricing Supplement, as adjusted by the
Spread and/or Spread Multiplier, if any, applicable to such
Floating Rate Notes.
25
<PAGE>
Interest Payments: Unless otherwise provided in an applicable Fixed Rate Note,
interest payments on Fixed Rate Notes (except defaulted
interest) will be made on each January 1 and July 1 and at
Stated Maturity or upon earlier redemption or repayment, as
the case may be. Interest payments on Floating Rate Notes
will be made as specified in the related Floating Rate Note
and Pricing Supplement. Interest payments will be made on
the interest payment dates established as set forth above
(the "Interest Payment Dates") to the registered owners at
the close of business on the immediately preceding record
dates, which shall, unless otherwise indicated in the
applicable Pricing Supplement, be the dates 15 calendar days
(whether or not a Business Day) preceding such Interest
Payment Dates, respectively (the "Record Dates"); except
that where a Note is issued between a Record Date and the
Interest Payment Date relating thereto, interest for the
period beginning on the Original Issue Date and ending on
such Interest Payment Date will be paid on the second
Interest Payment Date following the Original Issue Date to
the person in whose name such Note was registered on the
Record Date immediately preceding such Interest Payment
Date. Interest payable at Stated Maturity or upon earlier
redemption or repayment, as the case may be, will be paid to
the same person to whom principal is payable. Interest will
begin to accrue on the Original Issue Date of a Note for the
first interest period and from the most recent Interest
Payment Date to which interest has been paid for all
subsequent interest periods. Each payment of interest shall
include interest accrued through the day before the Interest
Payment Date, Stated Maturity or earlier redemption or
repayment, as the case may be (each Stated Maturity or
Redemption or Repayment Date is referred to herein as
"Maturity"). If an Interest Payment Date with respect to any
Fixed Rate Note falls on a day that is not a Business Day,
the payment of interest required to be made on such Interest
Payment Date need not be made on such day, but may be made
on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date and no
interest shall accrue on such payment for the period from
and after such Interest Payment Date. If an Interest Payment
Date (other than at Maturity) with respect to any Floating
Rate Note would otherwise fall on a day that is not a
Business Day, such Interest Payment Date will be the
following day that is a Business Day, except that in the
case of a LIBOR Note (or a Note for which LIBOR is an
applicable Base Rate), if such day falls in the next
succeeding calendar month, such Interest Payment Date will
be the preceding day that is a Business Day. If the date of
Maturity of a Note is not a Business Day, the payment of
principal and interest due on such day shall be made on the
next succeeding Business
26
<PAGE>
Day and no interest shall accrue on such payment for the
period from and after such Maturity. For additional special
provisions relating to Floating Rate Notes, see the
Prospectus and the applicable Pricing Supplement. "Business
Day" or "business day" means any day, other than a Saturday
or Sunday, that is neither a legal holiday nor a day on
which commercial banking institutions are authorized or
required by law, regulation or executive order to close in
New York City; provided, however, that with respect to Notes
the payment of which is to be made in a Specified Currency
other than U.S. dollars, such day is also not a day on which
commercial banking institutions are authorized or required
by law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the country
issuing such Specified Currency (or, in the case of the
euro, is also a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System
is open); provided, further, that, with respect to Notes as
to which LIBOR is an applicable Interest Rate Basis, the day
is also a London Business Day (as defined below). "London
Business Day" means any day: (i) if the Specified Currency
for a LIBOR Note is other than the euro, on which dealings
in such Specified Currency are transacted in the London
interbank market or (ii) if the Specified Currency for a
LIBOR Note is the euro, on which the TARGET System is open.
"Principal Financial Center" will generally be the capital
city of the country of the Specified Currency, as the case
may be, except that with respect to United States dollars,
Deutsche marks, Dutch guilders, Italian lire, Portuguese
escudos, Swiss francs, Australian dollars, Canadian dollars,
South African rand and the euro, the Principal Financial
Center shall be New York City, Frankfurt, Amsterdam, Milan,
London (but only in the case of the Index Currency), Zurich,
Melbourne, Toronto, Johannesburg and Frankfurt,
respectively.
Computation of
Interest: In the case of Fixed Rate Notes, interest (including payments for
partial periods) will be calculated on the basis of a 360-day
year of twelve 30-day months. (Examples of interest calculations
are as follows: 6-15-95 to 12-15-95 equals six months, zero days
or 180 days; thus the interest paid equals 180/360 x the annual
rate of interest x face value. The period from 6-17-95 to 11-15-
95 equals four months, 28 days or 148 days; thus the interest
paid equals 148/360 x the annual rate of interest x face value.)
Interest does not accrue on the 31st day of any month.
27
<PAGE>
The interest rate on each Floating Rate Note will be
calculated by reference to the specified Base Rate in
either case plus or minus the applicable Spread, if any,
and/or multiplied by the applicable Spread Multiplier, if
any.
Unless otherwise provided in the applicable Pricing
Supplement, interest on each Floating Rate Note will be
calculated by multiplying its face amount by an accrued
interest factor. Such accrued interest factor is computed
by adding the interest factor calculated for each day in
the period for which accrued interest is being calculated.
Unless otherwise specified in the applicable Pricing
Supplement, the interest factor for each such day is
computed by dividing the interest rate applicable to such
day by 360 in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes or Prime
Rate Notes, or by the actual number of days in the year in
the case of Treasury Rate Notes and CMT Rate Notes.
Acceptance and
Rejection of Offers: The Company will have the right to accept or reject in
whole or in part offers to purchase Notes. Each Agent
shall communicate to the Company, orally or in writing,
each offer to purchase Notes received by it, other than
those rejected by it as unreasonable. Each Agent may
reject any offer in whole or in part.
Payment: The Company, prior to the first sale of any of the Notes
hereunder, shall deliver to each Agent standing wire
transfer instructions for funds payable by such Agent to
the Company for Notes sold by such Agent hereunder. Such
instructions may be changed at any time by the Company.
Settlement: The receipt of immediately available funds by the Company
in payment for a Note and the authentication and issuance
of such Note shall constitute "settlement" with respect to
such Note. All offers accepted by the Company will be
settled not later than the third Business Day next
following such acceptance pursuant to the timetable for
settlement set forth in Parts II and III hereof unless the
Company and the purchaser agree to settlement on a later
date; provided, however, that in the case of a delayed
settlement the Company will notify the Trustee at least 24
hours prior to the time of settlement.
In the event of a purchase of Notes by an Agent, as
principal, appropriate settlement details will be set
forth in the applicable
28
<PAGE>
Terms Agreement or otherwise to be entered into between
the Agent and the Company pursuant to the Distribution
Agreements.
Procedure for Rate: When a decision has been reached to set the interest rates
of Notes being sold by the Company, the Company will
promptly advise the Agents, who will forthwith suspend
solicitation of offers to purchase Notes. At that time,
the Agents may recommend and the Company may establish new
or revised "posted" rates. Immediately thereafter, the
Agents may solicit offers to purchase Notes at the posted
rates. Until such time, only "indications of interest" may
be recorded. On the afternoon of or on the morning
following any sale of Notes, the Company will prepare
Pricing Supplements reflecting such posted rates and will
arrange to have ten Pricing Supplements filed with, or
mailed for filing to, the Commission pursuant to Rule
424(b) of the Securities Act of 1933, as amended. In each
instance that a Pricing Supplement is prepared, the Agents
will affix the Pricing Supplements to the Prospectuses
prior to its use. Outdated Pricing Supplements (other than
those retained for files) will be destroyed. The Company
will provide to the Agent the necessary quantity of
Pricing Supplements as provided in the Distribution
Agreement.
Preparation
of Pricing
Supplement: Information to be included in the Pricing Supplement shall include:
1. the name of the Company;
2. the title of the securities, including series designation, if
any;
3. the date of the Pricing Supplement and the dates of the
Prospectus and Prospectus Supplement to which the Pricing
Supplement relates;
4. the name of the Presenting Agent (as defined below);
5. whether such Notes are being sold to the Presenting Agent as
principal or to an investor or other purchaser through the
Presenting Agent acting as agent for the Company;
6. with respect to Notes sold to the Presenting Agent as
principal, whether such Notes will be resold by the Presenting
Agent to investors and other purchasers (i) at a fixed public
offering price of a specified percentage of their principal
amount, (ii) at varying prices related to prevailing market
prices at the time of resale to be
29
<PAGE>
determined by the Presenting Agent or (iii) at 100% of their
principal amount;
7. with respect to Notes sold to an investor or other purchaser
through the Presenting Agent acting as agent for the Company,
whether such Notes will be sold at (i) 100% of their
principal amount or (ii) at a specified percentage of their
principal amount;
8. the Presenting Agent's commission or underwriting discount;
9. Net proceeds to the Company;
10. the Principal Amount, Original Issue Date, Stated Maturity,
Redemption Date, if any, Initial Redemption Percentage, if
any, Annual Redemption Percentage Reduction, if any, and
Optional Repayment Date or Dates, if any, Repayment Price or
Prices, if any, and, in the case of Fixed Rate Notes, the
Interest Rate, the Interest Payment Date or Dates (if other
than July 1 and January 1 of each year) and the Record Date
or Dates (if other than June 15 and December 15 of each
year), and, in the case of Floating Rate Notes, the Base Rate
or Rates, the Index Maturity (if applicable), the Initial
Interest Rate, the Maximum Interest Rate, if any, the Minimum
Interest Rate, if any, the Interest Payment Date or Dates,
the Record Date or Dates, the Interest Reset Date or Dates,
the Spread and/or Spread Multiplier, if any, and the
Calculation Agent; and any other information needed to
complete a Floating Rate Note or a Fixed Rate Note;
11. the information with respect to the terms of the Notes set
forth below (whether or not the applicable Note is a Book-
Entry Note or a Certificated Note) under "Administrative
Procedures Relating to Global Securities - Settlement
Procedures", items (A)1, 2, 3 and 10; and
12. any other provisions of the Notes material to investors or
other purchasers of the Notes not otherwise specified in the
Prospectus or Pricing Supplement.
Pricing Supplement
Instructions: The Company shall have delivered a completed Pricing
Supplement via next day mail or telecopy to arrive no later
than 11:00 A.M. on the Business Day following the trade date,
to the Agent which made or presented the offer to purchase
the applicable Note (in such capacity, the Presenting Agent)
at the following locations:
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<PAGE>
Merrill Lynch & Co.:
Merrill Lynch & Co. - Tritech Services
44B Colonial Drive
Piscataway, NJ 08854
Attn: Prospectus Operations/Nachman Kimerling
Telephone: (732) 885-2786
Telecopy: (732) 885-2774/75/76
also, for record keeping purposes, please send a copy to:
Merrill Lynch & Co.
Merrill, Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
New York, NY 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, NY 10036
Attn: Medium-Term Note Trading Desk, Carlos Cabrera
Telephone: (212) 761-4000
Telecopy: (212) 761-0780
Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
27th Floor
New York, NY 10004
Attn: Medium-Term Note Desk
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
Lehman Brothers Inc.
31
<PAGE>
Three World Financial Center
200 Vesey Street, 9th Floor
New York, NY 10285
Attention: Medium-Term Notes/Bruni Vasquez
Telephone: (212) 526-6306
Telecopy: (212) 528-7035
Suspension of
Solicitation;
Amendment or
Supplement: Subject to its representations, warranties and covenants
contained in the Distribution Agreements, the Company may
instruct the Agents to suspend solicitation of offers to purchase
at any time. Upon receipt of such instructions, each Agent
forthwith will suspend solicitation until such time as the
Company has advised it that solicitation of offers to purchase
may be resumed. If the Company decides to amend or supplement the
Registration Statement or the Prospectus relating to the Notes
(other than to change rates), it will promptly advise the Agents
and will furnish them and the Trustee with copies of the proposed
amendment or supplement, all consistent with its obligations
under the Distribution Agreements. In the event that at the time
the solicitation of offers to purchase is suspended (other than
to change interest rates) there shall be any orders outstanding
which have not been settled, the Company will, consistent with
its obligations under the Distribution Agreements, promptly
advise the Agents and the Trustee whether such orders may be
settled and whether copies of the Prospectus as in effect at the
time of the suspension may be delivered in connection with the
settlement of such orders. The Company will have the sole
responsibility for such decision and for any arrangements which
may be made in the event that the Company determines that such
orders may not be settled or that copies of such Prospectus may
not be so delivered.
Delivery of
Prospectus: A copy of the Prospectus as most recently amended or supplemented
must be sent by the Agent to a customer or a customer's agent
prior to or together with the earlier of delivery of (i) each
written confirmation of a sale sent to such customer or agent or
(ii) each Note delivered to such customer or agent. If notice of
a change in the terms of the Note is received by the Agents
between the time an order for Notes is placed and the time
written confirmation thereof is sent to a customer or a
customer's agent, such confirmation shall be accompanied by a
Prospectus bearing a supplement setting forth the rates in effect
when the order was placed and a supplement setting forth the
revised rates.
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<PAGE>
Authenticity
of
Signatures: The Company will cause the Trustee to furnish the Agents from
time to time with the specimen signatures of each of the
officers, employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will have no
obligation or liability to the Company or the Trustee in respect
of the authenticity of the signature of any officer, employee or
agent of the Company or the Trustee on any Note.
Advertising
Costs: The Company will determine with the Agents the amount of
advertising that may be appropriate in connection with the
solicitation of offers to purchase the Notes. Advertising
expenses approved by the Company in connection with the
solicitation of offers to purchase Notes from the Company will be
paid by the Company.
Chase Not
to Risk
Funds: Nothing herein will be deemed to require Chase to risk or expend
its own funds in connection with any payment to the Company, the
Agent, the Depositary or any Holder, it being understood by all
parties that payments made by Chase to any party will be made
only to the extent that funds are provided to Chase for such
purpose.
Part II: Administrative
Procedures Relating to Global Securities
In connection with the qualification of Global Securities for eligibility
in the book-entry system maintained by the Depositary, Chase will perform the
custodial, document control and administrative functions described below, in
accordance with the obligations of Chase under a Letter of Representations from
the Company and Chase to the Depositary, dated _________, 1999, and a Medium-
Term Note Certificate Agreement, dated December 2, 1998, as amended on ______,
1999, between Chase and the Depositary (the "Certificate Agreement"), and
Chase's obligations as a participant in the Depositary, including the
Depositary's Same-Day Funds Settlement System ("SDFS"). It is understood that
the ownership interests of purchasers in Global Securities will be credited to
the book-entry accounts of one or more participants in the Depositary (each a
"Participant") in accordance with the Depositary's customary practices and
reflected in the records of such Participants or one or more indirect
participants in the Depositary designated by such purchasers in accordance with
the arrangements between such purchasers and such Participants and indirect
participants.
Issuance: All Fixed Rate Notes issued in book-entry form having the same
Original Issue Date, redemption and/or repayment terms, if any,
33
<PAGE>
Interest Payment Dates, interest rate, Specified Currency,
original issue discount provisions, if any, and Stated Maturity
(collectively, the "Fixed Rate Terms") will be represented
initially by a single Global Security in fully registered form
without coupons, and all Floating Rate Notes issued in book-
entry form having the same Original Issue Date, Base Rate, which
may be the CD Rate, the Commercial Paper Rate, the Federal Funds
Rate, LIBOR, the Prime Rate, the Treasury Rate, the CMT Rate or
any other interest rate basis or formula set forth by the
Company, Initial Interest Rate, Index Maturity, Spread and/or
Spread Multiplier, if any, Minimum Interest Rate, if any,
Maximum Interest Rate, if any, redemption and/or repayment
terms, if any, and Stated Maturity (collectively, "Floating Rate
Terms") will be represented initially by a single Global
Security in fully registered form without coupons. Each Global
Security will bear an Original Issue Date, which will be (i)
with respect to an original Global Security (or any portion
thereof), its issue date, and (ii) following a consolidation of
Global Securities, the most recent date to which interest has
been paid or duly provided for on the predecessor Global
Securities, regardless of the date of authentication of such
subsequently issued Global Security. No Global Security will
represent (i) both Fixed Rate and Floating Rate book-entry Notes
or (ii) any Certificated Note.
Identification: The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau") for
the reservation of approximately 900 CUSIP numbers which have
been reserved for future assignment to Global Securities, and
the Company has delivered to Chase and the Depositary an initial
written list of such CUSIP numbers. The Company will assign
CUSIP numbers to Global Securities as described below under
Settlement Procedure B. The Depositary will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the
Company has assigned to Global Securities. The Trustee will
notify the Company at any time when fewer than 100 of the
reserved CUSIP numbers remain assigned to Global Securities,
and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Securities. Upon
obtaining such additional CUSIP numbers, the Company will
deliver a list of such additional numbers to Chase and the
Depositary. Ownership interests of purchasers having an
aggregate principal amount in excess of U.S. $200,000,000 will
be represented by two or more Global Securities which shall all
be assigned the same CUSIP number.
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<PAGE>
Registration: Each Global Security will be registered in the name of the
nominee for the Depositary, Cede & Co. or such other nominee as
requested by an authorized representative of the Depositary
("Cede & Co."), on the register maintained by Chase under the
Indenture.
Transfers: Transfers of interests in a Global Security will be effected in
accordance with arrangements in effect between Participants (and
in certain cases, one or more indirect participants in the
Depositary) and the beneficial transferors and beneficial
transferees of such interests, which will be reflected as
appropriate by book entries made by the Depositary.
Exchanges;
Consolidation: Chase may deliver to the Depositary and the CUSIP Service Bureau
at any time a written notice specifying (i) the CUSIP numbers of
two or more Global Securities having the same Fixed Rate Terms
or Floating Rate Terms (except that Original Issue Dates need
not be the same) and for which interest (if any) has been paid
to the same date; (ii) a date, occurring at least 30 days after
such written notice is delivered and at least 30 days before the
next Interest Payment Date (if any) for such Global Securities,
on which such Global Securities shall be exchanged for a single
replacement Global Security; and (iii) a new CUSIP number
obtained from the Company to be assigned to such replacement
Global Security. A copy of such notice will be attached to such
replacement Global Security. Upon receipt of such a notice, the
Depositary will send to its Participants (including Chase) a
written reorganization notice to the effect that such exchange
will occur on such date. Prior to the specified exchange date,
Chase will deliver to the CUSIP Service Bureau written notice
setting forth such exchange date and the new CUSIP number and
stating that, as of such exchange date, the CUSIP numbers of the
Global Securities to be exchanged will no longer be valid. On
the specified exchange date, Chase will exchange such Global
Securities for a single Global Security bearing the new CUSIP
number and a new Original Issue Date, and the CUSIP numbers of
the exchanged Global Securities will, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately
reassigned. Notwithstanding the foregoing, if the Global
Securities to be exchanged exceed U.S. $200,000,000 in aggregate
principal amount, one replacement Global Security will be
authenticated and issued to represent each U.S. $200,000,000 of
principal amount of the exchanged Global Securities and an
additional Global Security will be authenticated and issued to
represent any remaining
35
<PAGE>
principal amount of such Global Securities (see "Denominations"
below).
Denominations: All Global Securities will currently be denominated in U.S.
dollars. Unless otherwise determined by the Company, beneficial
interests in such Securities will be issued in denominations of
U.S. $1,000 and any larger denomination which is an integral
multiple of U.S. $1,000. Global Securities will be denominated
in principal amounts not in excess of U.S. $200,000,000. If one
or more such beneficial interests having an aggregate principal
amount in excess of U.S. $200,000,000 would, but for the
preceding sentence, be represented by a single Global Security,
then one Global Security will be issued to represent each U.S.
$200,000,000 principal amount of such interest or interests and
an additional Global Security will be issued to represent any
remaining principal amount of such interest or interests. In
such a case, each of the Global Securities representing such
interest or interests shall be assigned the same CUSIP number.
Interest: General. The Depositary will arrange for each pending deposit
-------
message described under Settlement Procedure C below to be
transmitted to Standard & Poor's Corporation, which will use the
message to include certain information regarding the related
Global Security in the appropriate daily bond report published
by Standard & Poor's Corporation.
Regular Record Date. Unless otherwise specified in the related
-------------------
Pricing Supplement, the Record Dates with respect to any Global
Security bearing interest at a Fixed Rate will be the December
15 and June 15 next preceding the January 1 and July 1 Interest
Payment Dates, whether or not such date shall be a Business Day.
Unless otherwise specified in the related Pricing Supplement,
the Record Date with respect to any Interest Payment Date for
any Global Security bearing interest at a Floating Rate shall be
the date 15 calendar days (whether or not a Business Day)
preceding such Interest Payment Date.
Payments of
Principal,
Premium
and Interest: Payments of Interest Only. Promptly after each Record Date,
-------------------------
Chase will deliver to the Company and the Depositary a written
notice specifying by CUSIP number the amount of interest, if
then known, to be paid on each Global Security on the following
Interest Payment Date (other than an Interest Payment Date
36
<PAGE>
coinciding with Stated Maturity) and the total of such amounts.
The Company will confirm with Chase the amount payable on each
Global Security on such Interest Payment Date. The Depositary
will confirm the amount payable on each Global Security on such
Interest Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. On such Interest
Payment Date, the Company will pay to Chase, and Chase in turn
will pay to the Depositary, such total amount of interest due
(other than at Stated Maturity), at the times and in the manner
set forth below under "Manner of Payment".
Payments at Stated Maturity or upon Redemption or Repayment. On
-----------------------------------------------------------
or about the first Business Day of each month, Chase will deliver
to the Company and the Depositary a written list of principal
(and premium, if any) and interest to be paid, if then known, on
each Global Security maturing either at Stated Maturity or upon
earlier redemption or repayment in the following month. Chase,
the Company and the Depositary will confirm the amounts of such
principal (and premium, if any) and interest payments with
respect to each such Global Security on or about the fifth
Business Day preceding Stated Maturity or earlier redemption or
repayment of such Global Security. At such Stated Maturity or
earlier redemption or repayment, the Company will pay to Chase,
and Chase in turn will pay to the Depositary, the principal
amount of such Global Security, together with interest and
premium, if any, due on such Stated Maturity or upon such earlier
redemption or repayment, at the times and in the manner set forth
below under "Manner of Payment". Promptly after payment to the
Depositary of the principal (and premium, if any) and interest
due at Stated Maturity or upon earlier redemption or repayment of
such Global Security, the Trustee will cancel and dispose of such
Global Security, make appropriate entries in its records and
deliver a certificate of disposition with respect thereto.
Manner of Payment. The total amount of any principal (and
-----------------
premium, if any) and interest due on Global Securities on any
Interest Payment Date or at Stated Maturity or upon earlier
redemption or repayment shall be paid by the Company to Chase in
funds immediately available for use by Chase as of 9:30 a.m., New
York City time, on such date. The Company will make such payment
on such Global Securities by instructing Chase to withdraw funds
from the account (number 322-012120) maintained by the Company
with Chase. The Company will confirm such instructions in
writing by facsimile or other acceptable means to Chase. For
maturity, redemption and repayment, prior to 10:00
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<PAGE>
a.m., New York City time, on each Stated Maturity or upon earlier
redemption or repayment or as soon as possible thereafter, Chase,
following receipt of such funds from the Company, will pay by
separate wire transfer (using Fedwire message entry instructions
in a form previously specified by the Depositary) to an account
at the Federal Reserve Bank of New York previously specified by
the Depositary, in funds available for immediate use by the
Depositary, each payment of principal (and premium, if any) and
interest due on Global Securities on such date; and for interest
payments, Chase will pay the Depositary in same-day funds on the
Interest Payment Date in accordance with existing arrangements
between Chase and the Depositary. Thereafter on each such date,
the Depositary will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for
immediate use to the respective Participants in whose names the
beneficial interests in such Global Securities are recorded in
the book-entry system maintained by the Depositary. Once payment
has been made to the Depositary, neither the Company nor Chase
shall have any responsibility or liability for the payment by the
Depositary of the principal of (and premium, if any) or interest
on such beneficial interests to such Participants.
Withholding Taxes. The amount of any taxes required under
-----------------
applicable law to be withheld from any interest payment on a
beneficial interest in a Global Security will be determined and
withheld by the Participant, indirect participant in the
Depositary or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such interest,
or as applicable law may otherwise require.
Settlement
Procedures: Settlement Procedures with regard to each beneficial interest in
a Global Security purchased by the Agent, as principal, or sold
by the Agent, as agent of the Company, will be as follows:
A. After the acceptance of an offer by the Company with respect to a
beneficial interest in a Global Security, the Agent will
communicate the following details of the terms of such offer (the
Book-Entry Sale Information) to the Company by telephone or other
acceptable means:
1. Principal amount of the beneficial interest to be purchased;
2. (a) Fixed Rate Notes:
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<PAGE>
(i) Interest Rate,
(ii) Interest Payment Dates,
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multiplier, if any,
(iv) Interest Reset Date or Dates,
(v) Interest Reset Period,
(vi) Interest Payment Dates,
(vii) Record Dates,
(viii) Index Maturity,
(ix) Maximum and Minimum Interest Rates, if any,
(x) Calculation Agent;
3. Stated Maturity;
4. Specified Currency (presently, only U.S. dollars);
5. If the Specified Currency is other than U.S. dollars (see 4,
above), the applicable Exchange Rate (as hereinafter defined)
for such Specified Currency, and the authorized denominations
(including the minimum denomination);
6. Original Issue Date;
7. Commission due to Agent;
8. Net proceeds to the Company;
9. Settlement date;
10. (a) If the Note is redeemable by the Company, such of the
following as are applicable:
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<PAGE>
(i) Initial Redemption Date,
(ii) Initial Redemption Percentage (% of par),
(iii) Annual Redemption Percentage Reduction,
(iv) Limitation Date, and
(v) Refunding Rate;
(b) If the Note is repayable at the option of the Holder:
(i) Repayment Date(s), and
(ii) Repayment Rate(s);
11. Denomination of Global Securities to be delivered at
settlement;
12. Current interest rate of U.S. Treasury security with
comparable maturity;
13. Price;
14. Whether the Agent is acting as agent or principal; and
15. Any other information needed to complete the transaction or
the applicable form of Note.
B. The Company will assign a CUSIP number to the Global Security
relating to the beneficial interest sold by the Agent, and upon
receiving the Book-Entry Sale Information from the Agent, the
Company will advise Chase in writing, including facsimile or
electronic transmission, of the Book-Entry Sale Information
received from the Agent and the CUSIP number.
C. Chase will communicate to the Depositary, and the Agent, through
the Depositary's Participant Terminal System, a pending deposit
message specifying the following settlement information:
1. The applicable Book-Entry Sale Information;
2. Identification numbers of the Participant accounts maintained
by the Depositary on behalf of Chase and the Agent;
40
<PAGE>
3. Identification of the book-entry note as a Fixed Rate Note or
Floating Rate Note;
4. Initial Interest Payment Date for the Global Security, number
of days by which such date succeeds the related Record Date
for Depositary purposes (or, in the case of Floating Rate
Notes which reset daily or weekly, the date five calendar days
preceding the Interest Payment Date), and the amount of
interest payable on such Interest Payment Date per $1,000
principal amount of such Security;
5. CUSIP number of the Global Security; and
6. Whether the Global Security will represent any other
beneficial interests in such Security issued or to be issued
(to the extent then known).
D. The Company will deliver to the Trustee a Global Security
representing such interest or interests, and the Company will
instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate such Global Security, to
register such Global Security in the name of Cede & Co., as
nominee of the Depositary, and to effect delivery thereof to the
Depositary by Chase's possession of such authenticated Global
Security as agent for the Depositary.
E. Chase will complete and authenticate the Global Security
representing such interest or interests, and Chase will register
such Global Security in the name of Cede & Co., as nominee of the
Depositary, and take delivery thereof as agent for the
Depositary.
F. The Depositary will credit such interest or interests to the
Participant account of Chase maintained by the Depositary.
G. Chase will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to
debit such interest or interests to Chase's Participant account
and credit such interest or interests to the Participant account
of the Agent maintained by the Depositary and (ii) to debit the
settlement account of the Agent and credit the settlement account
of Chase maintained by the Depositary, in an amount equal to the
price of such interest or interests less the Agent's commission
(or discount, as the case may be). Any entry of such a deliver
order shall be deemed to constitute a representation and warranty
by Chase to the
41
<PAGE>
Depositary that (i) the Global Security representing such
interest or interests has been executed and authenticated and
(ii) Chase is holding such Global Security pursuant to the
Certificate Agreement.
H. The Agent will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the
Depositary (i) to debit each interest to the Participant account
of the Agent and credit each interest to the Participant account
of each Participant maintained by the Depositary with respect to
each interest and (ii) to debit the settlement account of each
Participant and credit the settlement account of the Agent
maintained by the Depositary in an amount equal to the price of
each interest.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures G and H will be settled in
accordance with SDFS operating procedures in effect on the
settlement date.
J. Chase will wire to the Company, in accordance with the standing
instructions of the Company theretofore delivered to Chase, the
amount transferred to Chase in accordance with Settlement
Procedure G in funds available for immediate use, subject to
later confirmation of the receipt of such funds.
K. The Agent will confirm the purchase of each beneficial interest
to the purchaser either by transmitting to the Participant with
respect to such interest a confirmation order through the
Depositary's Participant Terminal System or by mailing a written
confirmation to such purchaser.
Settlement
Procedures
Timetable: For orders of beneficial interests in a Global Security accepted
by the Company, Settlement Procedures "A" through "K" set forth
above shall be completed as soon as possible but not later than
the respective times (New York City time) set forth below:
Settlement
Procedure Time
--------- ----
A 11:00 a.m. on the trade date
B 12:00 noon on the trade date
C 2:00 p.m. on the trade date
D 3:00 p.m. on the Business Day
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<PAGE>
before settlement date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the
trade date, Settlement Procedures A, B and C may, if necessary,
be completed at any time prior to the specified times on the
first Business Day after such sale date. Settlement Procedure I
is subject to extension in accordance with any extension of
Fedwire closing deadlines and in the other events specified in
the SDFS operating procedures in effect on the settlement date.
If settlement of a beneficial interest in a Global Security is
rescheduled or cancelled, the Company will as soon as practicable
give Chase notice to such effect. Chase will deliver to the
Depositary, through the Depositary's Participant Terminal System,
a cancellation message to such effect by no later than 2:00 p.m.,
New York City time, on the Business Day immediately preceding the
scheduled settlement date (provided Chase has received such
notice from the Company by noon on the Business Day immediately
preceding the settlement date) and in any case as soon as
practicable. A copy of such message will be routed through the
facilities of the Depositary to the Agent by Chase and to
Standard & Poor's Corporation by the Depositary.
Failures: If Chase fails to enter an SDFS deliver order in timely fashion
with respect to any purchase of a beneficial interest in the
Global Security pursuant to Settlement Procedure G, Chase may
deliver to the Depositary, through the Depositary's Participant
Terminal System, as soon as practicable a withdrawal message
instructing the Depositary to debit such Global Security to the
Participant account of Chase, as applicable, maintained at the
Depositary. A copy of such message will be routed through the
facilities of the Depositary to the Agent. The Depositary will
process the withdrawal message, provided that such Participant
account contains beneficial interests having the same Fixed Rate
Terms or Floating Rate Terms, and having an aggregate principal
amount that is at least equal to the principal amount to be
debited. If withdrawal messages are processed with respect to all
the beneficial interests represented by a particular Global
Security, the Trustee will immediately cancel such Global
Security, make appropriate entries in its records and, unless
otherwise instructed
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<PAGE>
by the Company, dispose of the Global Security and deliver a
certificate of disposition with respect thereto. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately
reassigned. If withdrawal messages are processed with respect to
only a portion of the beneficial interests represented by a
particular Global Security, the Trustee will exchange such Global
Security for two Global Securities, one of which shall represent
the beneficial interest or interests for which withdrawal
messages are processed and shall be cancelled and disposed of
immediately after issuance, and the other of which shall
represent the other beneficial interest or interests previously
represented by the surrendered Global Security and shall bear the
CUSIP number of the surrendered Global Security. The Company will
reimburse the Agent on an equitable basis for its loss of the use
of funds during any period when the funds were credited to the
account of the Company in connection with such attempted
settlement.
If the purchase price for any beneficial interest in a Global
Security is not timely paid to the Participants with respect to
such interest by the purchaser thereof or by a Person, including
an indirect participant in the Depositary, acting on behalf of
such purchaser (other than the Agent, if any), such Participants
and, in turn, the Agent, may enter SDFS deliver orders through
the Depositary's Participant Terminal System debiting such
interest free to the Agent's Participant account maintained by
the Depositary and crediting such interest free to the
Participant account of Chase maintained by the Depositary and
shall notify Chase and the Company thereof. Thereafter, Chase
will (i) promptly confirm that such Note has been credited to its
Participant account and (ii) immediately notify the Company, and
the Company will immediately transfer by Fedwire immediately
available funds to the Agent an amount equal to the price of such
interest which was previously transferred from the account of the
Agent under Settlement Procedure G. Immediately thereafter, Chase
will deliver the withdrawal message and take the related actions
described in the preceding paragraph. The debits and credits
described in the previous sentence will be made on the settlement
date, if possible, and in any event not later than 5:00 p.m. on
the following Business Day. The Company will reimburse the Agent
on an equitable basis for its loss of the use of funds during any
period when the funds were credited to the account of the Company
in connection with such attempted settlement.
44
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Notwithstanding the foregoing, upon any failure to settle with
respect to any portion of a Global Security, the Depositary may
take any actions in accordance with its SDFS operating procedures
then in effect. In the event of a failure to settle with respect
to any beneficial interest in a Global Security that was to have
been represented by a Global Security also representing other
beneficial interests, Chase will provide, in accordance with
Settlement Procedures D and E, for the authentication and
issuance of a Global Security representing the remaining
principal amount to have been represented by such Global Security
and will make appropriate entries in its records.
Part III: Administrative Procedures
Relating to Notes in Certificated Form
Denominations: The Company may determine, upon agreement with a purchaser of
Notes, that such Notes will be denominated and payable in a
currency or currency unit to be specified in a Pricing Supplement
as the Specified Currency. Where the Specified Currency is not
U.S. dollars, unless otherwise specified in such supplement, the
authorized minimum denominations of such Notes will be the
foreign currency or currency unit equivalent, as determined by
the noon (New York City time) dollar buying rate for cable
transfers for the Specified Currency as certified for customs
purposes (or, if not so certified, as otherwise determined) by
the Federal Reserve Bank of New York (the "Exchange Rate") on the
Business Day immediately preceding the date of settlement (as
defined below) for such Notes, of U.S. $1,000 (rounded down to an
integral multiple of 1,000 units of the Specified Currency). A
Note may also be issued in any higher denomination which is an
even multiple of U.S. $1,000 or 1,000 units of the Specified
Currency, as the case may be.
Payments of
Principal,
Premium
and Interest: The Trustee will in its capacity as paying agent pay the
principal of (and premium, if any) and interest on each Note at
Stated Maturity or earlier redemption or repayment, as the case
may be, upon presentment of the Note to the Trustee. Such payment
will be made in immediately available funds by the Trustee,
provided the Trustee has timely received (i) from or on behalf of
the Company funds available to the Trustee before such payment
and (ii) appropriate wire transfer instructions from the Holder.
Notes presented to the Trustee at Stated Maturity or earlier
redemption or
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repayment, as the case may be, for payment will be cancelled by
the Trustee; the Trustee will deliver Notes presented to it for
payment at Stated Maturity or earlier redemption or repayment, as
the case may be, to the Company with an appropriate debit advice.
All interest payments (other than interest due at Stated Maturity
or earlier redemption or repayment, as the case may be) will be
made by the Trustee by wire transfer to an account designated by
the Holder or, in the absence of such a designation, by check
drawn on the Trustee and mailed by the Trustee to the Person
entitled thereto, or, in the case of interest payments to be made
in the Specified Currency other than U.S. dollars, by wire
transfer to a bank account designated by the Holder of such Note
in the country of the Specified Currency (see Multi-Currency
Procedures Supplement), as provided in the Indenture and the
Note. Following each Record Date, the Trustee will furnish the
Company with a list of interest payments to be made on the
following Interest Payment Date, each stated in the currency in
which payment is to be made for each Note theretofore issued. The
Trustee will provide monthly to the Company's Treasurer's
Department a list of the principal (and premium, if any) and
interest to be paid on Notes maturing in the next succeeding
month. The Trustee will assume responsibility for U.S.
withholding taxes on interest paid to non-residents of the United
States.
Settlement
Procedures: Settlement Procedures with regard to each Note purchased by an
Agent, as principal, or through an Agent, as agent, shall be as
follows:
A. The Agent will advise the Company of the following settlement
information:
1. Exact name in which Note is to be registered ("Registered
Owner");
2. Exact address of the Registered Owner and address for payment
of principal (premium, if any) and interest;
3. Taxpayer identification number of the Registered Owner (if
applicable);
4. Principal amount(s) (and denomination(s)) of the Note(s);
5. (a) Fixed Rate Notes:
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(i) Interest Rate,
(ii) Interest Payment Dates;
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multiplier, if any,
(iv) Interest Reset Date or Dates,
(v) Interest Reset Period,
(vi) Interest Payment Dates,
(vii) Record Dates,
(viii) Index Maturity,
(ix) Maximum and Minimum Interest Rates, if any,
(x) Calculation Agent;
6. Stated Maturity;
7. Specified Currency of the Notes;
8. If the Note is to be denominated in a Specified Currency
other than U.S. dollars, the applicable Exchange Rate and the
denomination of the Note (including the minimum
denomination);
9. Original Issue Date;
10. Commission due to Agent;
11. Net proceeds to the Company;
12. Settlement date;
13. Date of delivery of the Note to the Agent if different from
the settlement date;
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14. (a) If the Note is redeemable by the Company, such of the
following as are applicable:
(i) Initial Redemption Date,
(ii) Initial Redemption Percentage (% of par),
(iii) Annual Redemption Percentage Reduction,
(iv) Limitation Date, and
(v) Refunding Rate;
(b) If the Note is repayable by the Company at the option of
the Holder:
(i) Repayment Date(s), and
(ii) Repayment Rates(s);
15. Current interest rate of U.S. Treasury security with
comparable maturity;
16. Wire transfer information, if any (including overseas bank
account in the country of the Specified Currency, if any);
17. Price, including currency;
18. Whether Agent is acting as agent or principal; and
19. Any other information needed to complete the Transaction or
the applicable form of Note.
B. The Company will advise the Trustee of the above settlement
information received from such Agent. The Company shall promptly
confirm such advice in writing to the Trustee.
C. The Trustee will complete the preprinted multi-ply Note packet
containing the following documents in forms approved by the
Company, the Agent and the Trustee:
1. Note with Agent's customer confirmation;
2. Stub 1 - for the Agent;
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3. Stub 2 - for the Trustee;
4. Stub 3 - for the Company; and
5. Stub 4 (if any) - not designated.
D. The Trustee will authenticate the Note and deliver the Note (with
the confirmation) and Stub 1 to the Agent or to a representative
designated in writing by the Agent (the "Representative"), and
the Agent or its Representative will acknowledge receipt of the
Note by stamping the delivery receipt with the date and time
received and returning it to the Trustee. Such delivery will be
made only against such time stamp. Upon receipt the Agent or its
Representative shall verify that the Notes delivered have been
correctly completed and shall as promptly as possible notify the
Trustee of any discrepancies which shall as promptly as possible
be remedied by the delivery to the Agent or its Representative of
a corrected Note by the Trustee. Promptly following such
delivery, the Agent or its Representative shall wire to the
Company, in accordance with the standing instructions of the
Company theretofore delivered to the Agent, in funds available
for immediate use, an amount equal to the principal amount of the
Note in the Specified Currency, less the applicable commission in
U.S. dollars or discount determined as provided in paragraph 3 of
the Distribution Agreement. In the event that the instructions
given by the Agent for payment to the account of the Company are
revoked and such payment is received by the Company, the Company
will as promptly as possible remit such payment to the Agent in
an amount of immediately available funds equal to the amount of
such payment. The Agent will return to the Trustee any Notes
previously delivered in connection with such revoked payment.
E. The Agent or its Representative will deliver the Note (with
confirmation) to the customer against payment in immediately
available funds. In all cases, receipt by the customer of the
Prospectus must accompany or precede any written offer of the
Note, delivery of the Note, and confirmation and payment by the
customer for the Note.
If instructed by its customer to deliver the Note and
confirmation to different locations, the Note and the
confirmation will each be accompanied or preceded by the
Prospectus then in effect.
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<PAGE>
F. The Agent or its Representative will obtain the acknowledgement
of receipt of the Note by the customer through a time-stamped
delivery receipt of the Agent.
G. The Trustee will retain Stub 2 and will send Stub 3 to the
Company's Treasurer by first class mail. Periodically, the
Trustee will also send to the Company's Treasurer a statement to
the Company setting forth the principal amount of the Notes
outstanding as of that date after giving effect to such
transaction and all other orders of which the Company has advised
the Trustee but which have not yet been settled.
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Settlement
Procedures
Timetable: For offers accepted by the Company, Settlement Procedures "A"
through "G" set forth above shall be completed on or before the
respective times set forth below.
Settlement
Procedure Time
--------- ----
A 3:00 p.m. on Business Day
prior to settlement or delivery
B 4:00 p.m. on Business Day
prior to settlement or delivery
C-D 2:15 p.m. on day of settlement
or delivery
E-F 3:00 p.m. on settlement date
G 5:00 p.m. on settlement date
Failures: In the event that a purchaser of a Note shall fail to either
accept delivery of or make payment for any Note on the date fixed
by the Company for settlement, the Agent or its Representative
will forthwith notify the Trustee and the Company's Treasurer by
telephone, confirmed in writing, of such failure. If the Note has
been delivered to the Agent or its Representative on behalf of
the purchaser, the Agent or its Representative will immediately
return the Note to the Trustee. If funds have been advanced to
the Company for the purchase of the Note, the Company will as
promptly as practicable following such notification wire to the
account of the Agent an amount of immediately available funds
equal to the amount previously advanced by the Agent or its
Representative in respect of the Note. Such wire transfer will be
made on the day of settlement, if possible, and in any event not
later than the Business Day following the day of settlement. If
such failure shall have occurred for any reason other than
default by the Agent in the performance of its obligations
hereunder and under the Distribution Agreement, the Company will
reimburse the Agent on an equitable basis for its loss of the use
of the funds during the period when they were credited to the
account of the Company. Immediately upon receipt of the Note in
respect of which the failure occurred, the Trustee will mark the
Note "cancelled", and will make appropriate entries in its
records and deliver to the Company an appropriate certificate of
disposition.
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Multi-Currency Procedures Supplement
The principal of and interest on Notes denominated in a foreign
currency or currency unit specified on the Note and in an
applicable Pricing Supplement setting forth the terms of each
issuance of Notes ("Pricing Supplement") will be payable by the
Company in such Specified Currency.
Payments in
Specified
Currency other
than
U.S. Dollars: If so designated on the Note and in the applicable Pricing
Supplement, payments of principal and interest on such Note will
be made in such Specified Currency by wire transfer to a bank
account maintained by the Holder of such Note in the country of
the Specified Currency ("overseas account"). Such Holder may
elect to receive payments of principal and interest on such Note
in U.S. dollars by transmitting a written request for such
payment to the Trustee at its Corporate Trust Office in the City
of New York on or prior to the Record Date relating to such
payment of interest or at least 16 days prior to Stated Maturity,
as the case may be. Such request may be in writing (mailed or
hand delivered) or by cable, telex or other form of facsimile
transmission. Such Holder may elect to receive payments in U.S.
dollars for any or all principal and interest payments and need
not file a separate election for each such payment. Such election
shall remain in effect until the Note is transferred or until
such election is changed by written notice to the Trustee, but
written notice of any such change must be received by the Trustee
on or prior to such Record Date or at least 16 days prior to
Stated Maturity, as the case may be. In the event of such an
election, Chase in its capacity as exchange rate agent, or such
other person appointed by the Company ("Exchange Rate Agent"),
will convert all payments of principal and interest on such Note
to U.S. dollars. The U.S. dollar amount to be received by a
Holder of such Note electing to receive payments in U.S. dollars
will be based on the highest bid quotation in New York City
received by the Exchange Rate Agent at approximately 11:00 A.M.,
New York City time, on the second Business Day preceding the
applicable payment date from three recognized foreign exchange
dealers (one of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all Holders of Notes
denominated in such Specified Currency electing to receive U.S.
dollar payments and at which the
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applicable dealer commits to execute a contract. If such bid
quotations are not available, payments will be made in the
Specified Currency. All currency exchange costs will be borne by
the Holders of such Notes, pro rata, by deductions from such
payments. Payments of principal and interest made in a Specified
Currency other than U.S. dollars will be made by wire transfer to
a Holder's overseas account as designated by the Holder by filing
the appropriate information with the Trustee at its Corporate
Trust Office in The City of New York on or prior to the Record
Date relating to such payment of interest or at least 16 days
prior to Stated Maturity, as the case may be, or in connection
with any transfer after such 16th day. The Trustee will, subject
to applicable laws and regulations, and until it receives notice
to the contrary or until such Note is transferred, make such
payment and all succeeding payments to such Holder by wire
transfer to the designated overseas account. The Company will pay
any administrative costs imposed by banks in connection with
making payments by wire transfer, but any tax, Assessment or
government charge imposed upon payments will be borne by the
Holders of such Notes in respect of which payments are made.
If a Specified Currency is not available for the payment of
principal or interest with respect to a Note due to the
imposition of exchange controls or other circumstances beyond the
control of the Company, the Company will be entitled to satisfy
its obligations to Holders of such Notes by making such payment
in U.S. dollars on the basis of the Exchange Rate two days prior
to such payment, or if such rate is not then available, as of the
most recent date prior thereto on which an Exchange Rate was
available. Notwithstanding the foregoing, if a payment cannot be
made by wire transfer because the required information has not
been received by the Trustee on or before the requisite date, a
notice will be mailed to the Holder of a Note at its registered
address requesting such information.
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EXHIBIT C
PROPOSED FORM OF OPINION OF
MAYS & VALENTINE, L.L.P.
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $400,000,000 Medium-Term Notes, Series G
_________, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Lehman Brothers Inc.
Three World Financial Center
200 Vesey Street
New York, NY 10285
Dear 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. $400,000,000 aggregate principal amount of its Medium-Term Notes, Series G
due 9 months or more from the Date of Issue (the "Notes") under and pursuant to
an Indenture, dated as of April 1, 1988, as supplemented by the First
Supplemental Indenture, dated as of August 1, 1989, and the Second Supplemental
Indenture, dated as of May 1, 1999, (the Indenture, as amended and supplemented,
hereafter referred to as the "Indenture") between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), as trustee (the "Trustee"),
and the offering of the Notes by you pursuant to a Distribution Agreement dated
________, 1999 by and between you and the Company
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<PAGE>
(the "Distribution Agreement"). All terms not otherwise defined herein shall
have the meanings set forth in the Distribution 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 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 Distribution Agreement have been satisfactory to us.
In addition, we attended the closing held today at the offices of
McGuire, Woods, Battle & Boothe LLP, 901 E. Cary Street, Richmond, Virginia, at
which the Company satisfied the conditions contained in Section 7 of the
Distribution Agreement which are required to be satisfied as of the Closing
Date.
Based upon the foregoing, and having regard to legal considerations
which 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 Distribution Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by the
Company.
C. The 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), and except further as enforcement thereof may be limited by requirements
that a claim with respect to any debt securities issued under the Indenture that
are payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S. dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law or
by governmental authority to limit, delay or prohibit the making of payments
outside the United States.
D. The 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 Indenture and delivered and paid for as provided in the
Distribution Agreement, will have been duly issued under the Indenture and will
constitute valid and binding obligations of the Company entitled to the benefits
provided by the 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), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a foreign or
composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
E. The Registration Statement with respect to the Notes filed
pursuant to the Securities Act (Reg. No. 333-_______), has become effective and
remains in effect at this
55
<PAGE>
date, and the Prospectus in the form filed as part of the Registration
Statement, including all 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 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 under DESCRIPTION OF THE NOTES, subject to the
concluding paragraph of this opinion, 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 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 have, however, participated in conferences with counsel for and
representatives of the Company in connection with the preparation of the
Registration Statement and the Prospectus, and we have reviewed all Incorporated
Documents and such of the corporate records of the Company as we deemed
advisable. None of the foregoing disclosed to us any information which gives us
reason to believe that the Registration Statement or the Prospectus contained
(except the financial statements incorporated by reference therein, as to which
we express no opinion) on the date the Registration Statement became effective
or now contains any untrue statement of a material fact or omitted on such 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 Notes on the terms and conditions set forth in the Distribution
Agreement has been issued, and such order remains in effect at this date and
constitutes valid and sufficient authorization for the sale of the Notes as
contemplated by the Distribution Agreement. We understand such order does not
contain any provision unacceptable to you under the Distribution Agreement. No
approval or consent by any public regulatory body, other than such order and
notification of effectiveness by the Commission, is legally required in
connection with the sale of the Notes as contemplated by the Distribution
Agreement (except compliance with the provisions of securities or blue-sky laws
of certain states in
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<PAGE>
connection with the sale of the Notes in such states) and the carrying out of
the provisions of the Distribution Agreement.
G. The Notes conform to their description in the Distribution
Agreement and to the statements with respect thereto contained in the
Registration Statement and the Prospectus.
To the extent that the foregoing opinions involve matters governed by
the laws of North Carolina and West Virginia, we have relied upon the opinion of
McGuire, Woods, Battle & Boothe LLP concurrently delivered to you and we believe
that you are justified in relying thereon.
Very truly yours.
MAYS & VALENTINE, L.L.P.
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EXHIBIT D
PROPOSED FORM OF OPINION
OF McGUIRE, WOODS, BATTLE & BOOTHE LLP
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $400,000,000 Medium-Term Notes, Series G
________, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Lehman Brothers Inc.
Three World Financial Center
200 Vesey Street
New York, NY 10285
Virginia Electric and Power Company
Richmond, Virginia 23261
Dear Ladies and Gentlemen:
The arrangements for issuance of up to U.S. $400,000,000 aggregate
principal amount of Medium-Term Notes, Series G due 9 months or more from the
date of issue (the "Notes") of Virginia Electric and Power Company (the
"Company") under an Indenture, dated as of April 1, 1988, as amended and
supplemented by the First Supplemental Indenture, dated as of August 1, 1989,
and the Second Supplemental Indenture, dated as of May 1, 1999, (the Indenture,
as amended and supplemented, hereafter referred to as the "Indenture") between
the Company and The Chase Manhattan
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Bank (formerly known as Chemical Bank), as trustee (the "Trustee"), pursuant to
a Distribution Agreement dated ________, 1999, by and between you and the
Company (the "Distribution Agreement"), have been taken under our supervision as
counsel for the Company. Terms not otherwise defined herein have the meanings
set forth in the Distribution 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
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 Distribution 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, 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 (other than
where the failure to so qualify could not reasonably be expected to 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 Notes.
2. All requisite corporate and governmental authorizations have been
given for the issuance of the Notes under the Indenture.
3. The Distribution Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by the
Company.
4. The 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), and except further as enforcement thereof may be limited by requirements
that a claim with respect to any debt securities issued under the Indenture that
are payable in foreign or composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or by
governmental authority to limit, delay or prohibit the making of payments
outside the United States.
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5. The 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 Indenture and issued, delivered and paid for in accordance
with the Distribution Agreement, will have been duly issued under the Indenture
and will constitute valid and binding obligations of the Company entitled to the
benefits provided by the 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), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a foreign or
composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
6. The Registration Statement with respect to the Notes filed
pursuant to the Securities Act (Reg. No. 333-______), 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 Notes in the manner therein specified.
The statements in regard to our firm made under the caption EXPERTS in
the Prospectus relating to the 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 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 Indenture and the terms of the
Notes contained in the Prospectus under DESCRIPTION OF THE NOTES 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 and facilitated the
assembly of relevant data. 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 Paragraph 7
of the Distribution 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 such 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.
60
<PAGE>
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.
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 operations, 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
61
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
TO THE CHASE MANHATTAN BANK
(FORMERLY KNOWN AS CHEMICAL BANK),
as Trustee
------------------------------------
SECOND SUPPLEMENTAL
INDENTURE
Dated as of May 1, 1999
Supplementing the Indenture dated as of April 1, 1988,
as amended by a First Supplemental
Indenture dated as of August 1, 1989
------------------------------------
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 1, 1999 between
Virginia Electric and Power Company, a corporation duly organized and existing
under the laws of the Commonwealth of Virginia (herein called the "Company"),
having its principal office at 701 East Cary Street, Richmond, Virginia 23219-
3932, and The Chase Manhattan Bank, (formerly known as Chemical Bank), as
Trustee, a New York banking corporation having its principal corporate trust
office at 450 West 33rd Street, New York, New York 10001 (hereinafter called the
"Trustee").
RECITALS
The Company and the Trustee are parties to an Indenture, dated as of
April 1, 1988, as amended by a First Supplemental Indenture dated as of August
1, 1989 (the "Indenture"), relating to the issuance from time to time by the
Company of its unsecured debentures, notes or other evidences of indebtedness
(the "Securities") on terms to be specified at the time of issuance.
Capitalized terms used herein, not otherwise defined, shall have the same
meanings given them in the Indenture.
The Company has requested the Trustee to join with it in the execution
and delivery of this second supplemental indenture (the "Second Supplemental
Indenture") in order to supplement and amend the Indenture, by adding certain
provisions thereof, to permit the Company to require, if it shall so elect, that
Securities of any series created after the date hereof be subject to repayment,
in whole or in part, prior to their Stated Maturity, at the option of Holders
thereof.
Section 901 of the Indenture provides that a supplemental indenture
may be entered into by the Company and the Trustee, without the consent of any
Holders of the Securities or coupons, to make any provisions with respect to
matters or questions arising under the Indenture, so long as such action does
not adversely affect the interests of the Holders of Securities of any series or
any related coupons in any material respect.
The Company has determined that this Second Supplemental Indenture
complies with said Section 901 and does not require the consent of any Holders
of Securities or coupons.
At the request of the Trustee, the Company has furnished the Trustee
with an Opinion of Counsel complying with the requirements of Section 903 of the
Indenture, stating, among other things, that the execution of this Second
Supplemental Indenture is authorized or permitted by the Indenture, and an
Officers' Certificate and Opinion of Counsel complying with the requirements of
Section 102 of the Indenture, and has delivered to the Trustee a Board
Resolution as required by Section 901 of the Indenture authorizing the execution
by the Company of this Second Supplemental Indenture and its delivery by the
Company to the Trustee.
<PAGE>
2
All things necessary to make this Second Supplemental Indenture a
valid agreement of the Company and the Trustee, in accordance with the terms of
the Indenture, and a valid amendment of, and supplement to the Indenture have
been done.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of Securities
or coupons, as follows:
I. AMENDMENTS TO THE INDENTURE
A. Section 101 of the Indenture is amended to add a new definition
thereto, in the appropriate alphabetical sequence, as follows:
"Repayment Date" shall mean, when used with respect to any
--------------
Security to be repaid at the option of the Holder, the date fixed for such
repayment by or pursuant to such Security.
"Repayment Price" shall mean, when used with respect to any
---------------
Security to be repaid at the option of the Holder, the price at which it is
to be repaid pursuant to this Indenture.
B. Section 114 of the Indenture is hereby deleted and replaced in
its entirety as follows:
SECTION 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity of any Security shall not be a Business
Day at any Place of payment, then (notwithstanding any other provision of
this Indenture or of the Securities or coupons) payment of interest or
principal (and premium, if any) need not be made at such Place of Payment
on such date, but may be made on the next succeeding Business Day at such
Place of Payment with the same force and effect as if made on the Interest
Payment Date, Redemption Date or Repayment Date or at the Stated Maturity,
provided that no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity, as the case may be.
C. Article Two of the Indenture is amended and supplemented to add a
new Section 206, which reads in its entirety as follows:
Section 206. Securities Repayable at the Option of Holders.
<PAGE>
3
If the Company shall establish pursuant to Section 301 that the
Securities of a particular series constituting a medium term note program
are to be repaid before their Stated Maturity at the option of Holders
thereof, then the face of such Securities may indicate the applicable
Repayment Date(s) and Repayment Price(s), and such Securities may include
the following provisions:
[If so indicated on the face of this Security, the Company may be
required to repurchase this Security at the option of the Holder, in
whole or in part, on the Repayment Date(s) and at the applicable
Repayment Price(s) so indicated on the face hereof, plus accrued
interest, if any, to the applicable Repayment Date. On or before the
applicable Repayment Date, the Company shall deposit with the Trustee
money sufficient to pay the applicable Repayment Price and any
interest accrued on the portion of this Security to be tendered for
repayment. On and after such Repayment Date, interest will cease to
accrue on this Security or any portion hereof tendered for repayment.
The repayment option may be exercised by the Holder of this
Security for less than the entire principal amount hereof, but in that
event, the principal amount hereof remaining outstanding after
repayment must be in an authorized denomination. In the event of
repurchase of this Security in part only, a new Security or Securities
of this series and of like tenor for the unpurchased portion hereof
will be issued in the name of the Holder hereof upon the cancellation
hereof.
In order for this Security to be repaid, the Trustee must receive
at least 30 days but not more than 60 days prior to the Repayment Date
(i) this Security with the form entitled "Option to Elect Repayment"
attached to this Security duly completed or (ii) a facsimile
transmission or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth
the name of the Holder of this Security, the principal amount of this
Security, the principal amount of this Security to be repaid, the
certificate number or a description of the tenor and terms of this
Security, a statement that the option to elect repayment is being
exercised thereby, and a guarantee that this Security to be repaid,
together with the duly completed form entitled "Option to Elect
Repayment" attached to this Security, will be received by the Trustee
not later than the fifth Business Day after the date of such facsimile
transmission or letter; however, such facsimile transmission or letter
shall only be effective if this Security and duly completed form are
received by the Trustee by such fifth Business Day. Such notice, once
given, will be irrevocable unless waived by the Company.
<PAGE>
4
Unless otherwise indicated on the face hereof, this Security will
not be subject to repayment at the option of the Holder.]
D. Section 508 of the Indenture is hereby deleted and replaced in
its entirety as follows:
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security or coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 307) interest on such Security or payment of such
coupon on the Stated Maturity or Maturities expressed in such Security or
coupon (or, in the case of redemption, on the Redemption Date or, in the
case of repayment on the Repayment Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
E. SECTION 902(1) of the Indenture is hereby amended (i) to add the
following after the word "redemption" on the fourth line thereof: "or repayment"
and (ii) to add the following after the words "Redemption Date" in the last line
thereof: "or, in the case of repayment, on or after the Repayment Date."
F. The Indenture is amended and supplemented by adding the following
Article Fourteen:
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1401. Applicability of Article.
Repayment of Securities of any series before their Stated Maturity at
the option of Holders thereof shall be made in accordance with the terms of such
Securities and (except as otherwise specified by the terms of such series
established pursuant to Section 301) in accordance with this Article.
Section 1402. Repayment of Securities.
Securities of any series subject to repayment in whole or in part at
the option of the Holders thereof will, unless otherwise provided in the terms
of such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company
<PAGE>
5
covenants that on or before the Repayment Date it will deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the principal (or, if so provided by the terms of the
Securities of any series, a percentage of the principal) of, and (except if the
Repayment Date shall be an Interest Payment Date) accrued interest on, all the
Securities or portions thereof, as the case may be, to be repaid on such date.
Section 1403. Exercise of Option.
Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on such
Securities. In order for any Security to be repaid at the option of the Holder,
the Trustee must receive at the Place of Payment therefor specified in the terms
of such Security (or at such other place or places of which the Company shall
from time to time notify the Holders of such Securities) not earlier than 60
days nor later than 30 days prior to the Repayment Date (1) the Security so
providing for such repayment together with the "Option to Elect Repayment" form
duly completed by the Holder (or by the Holder's attorney duly authorized in
writing) or (2) a facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"), or a commercial bank or trust company in the United States setting
forth the name of the Holder of Security, the principal amount of the Security,
the amount of the Security to be repaid, the certificate number or a description
of the tenor and terms of the Security, a statement that the option to elect
repayment is being exercised thereby and a guarantee that the Security to be
repaid, together with the duly completed form entitled "Option to Elect
Repayment", will be received by the Trustee not later than the fifth Business
Day after the date of such facsimile transmission or letter; provided, however,
that such facsimile transmission or letter shall only be effective if such
Security and form duly completed are received by the Trustee by such fifth
Business Day. If less than the entire principal amount of such Security is to
be repaid in accordance with the terms of such Security, the principal amount of
such Security to be repaid, in increments of the minimum denomination for
Securities of such series, and the denomination or denominations of the Security
or Securities to be issued to the Holder for the portion of the principal amount
of such Security surrendered that is not to be repaid, must be specified. The
principal amount of any Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security to be
repaid is a part. Except as otherwise may be provided by the terms of any
Security providing for repayment at the option of the Holder thereof, exercise
of the repayment option by the Holder shall be irrevocable unless waived by the
Company.
Section 1404. When Securities Presented for Repayment Become Due and
Payable.
If the Securities of any series providing for repayment at the option
of the Holders thereof shall have been surrendered as provided in this Article
and as provided by or pursuant to
<PAGE>
6
the terms of such Securities, such Securities or the portions thereof, as the
case may be, to be repaid shall become due and payable and shall be paid by the
Company on the Repayment Date therein specified, and on and after such Repayment
Date (unless the Company shall default in the payment of such Securities on such
Repayment Date) such Securities so to be repaid shall cease to bear interest.
Upon surrender of any such Security for repayment in accordance with such
provisions, the principal amount of such Security so to be repaid shall be paid
by the Company, together with accrued interest, if any, to the Repayment Date;
provided that, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable (but without interest thereon,
unless the Company shall default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If the principal amount of any Security surrendered for repayment
shall not be so repaid upon surrender thereof, such principal amount (together
with interest, if any, thereon accrued to such Repayment Date) shall, until
paid, bear interest from the Repayment Date at the rate of interest set forth in
such Security.
Section 1405. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid in
part only (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge and at the
expense of the Company, a new Registered Security or Securities of the same
series, Stated Maturity and original issue date of any authorized denomination
specified by the Holder, in an aggregate principal amount equal to and in
exchange for the portion of the principal of such Security so surrendered which
is not to be repaid.
Section 1406. Compliance with Exchange Act.
In connection with any repayment of Securities pursuant to this
Article, the Company will comply with the provisions of Rule 13e-4, Rule 14e-1
and any other tender offer rules under the Securities Exchange Act of 1934, if
required, and will file Schedule 13E-4 or any other schedule, if required.
II. GENERAL PROVISIONS
A. The recitals contained herein shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for the correctness of
same. The Trustee makes no representation as to the validity of this Second
Supplemental Indenture. The Indenture, as supplemented and amended by this
Second Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.
<PAGE>
7
B. This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
C. This Second Supplemental Indenture shall be deemed to be a
contract under the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of that State.
D. Although this Second Supplemental Indenture is dated for
convenience and for the purpose of reference _____, 1999, the actual dates of
execution by the Company and by the Trustee are indicated by their respective
acknowledgments hereto annexed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
8
IN WITNESS WHEREOF, VIRGINIA ELECTRIC AND POWER COMPANY and THE CHASE
MANHATTAN BANK have caused this Second Supplemental Indenture to be duly
executed, and their corporate seals to be hereunto affixed and attested 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
<PAGE>
State of ____________
City/County of _________________ss.:
On the ____ day of ______, 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.
My commission expires:_______________.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
____day of __________, 1999.
(Notarial Seal) ________________
Notary Public
State of ____________
City/County of _________________ss.:
On the ____ day of ______, 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.
My commission expires:_______________.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
____day of __________, 1999.
(Notarial Seal) ________________
Notary Public
<PAGE>
REGISTERED NO.
CUSIP NO.
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTE, SERIES G
(Fixed Rate)
[Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by The
Depository Trust Company (the Depositary) (55 Water Street, New York, New York)
to a nominee of the Depositary or by a nominee of the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such Depositary. Unless (i) this
certificate is presented by an authorized representative of the Depositary to
the issuer or its agent for registration of transfer, exchange or payment, (ii)
any certificate issued is registered in the name of Cede & Co. or in such other
names as requested by an authorized representative of the Depositary and (iii)
any payment is made to Cede & Co. or such other name, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof has an interest herein.]*
<TABLE>
<S> <C> <C>
Principal Amount: Interest Rate: Stated Maturity Date:
Original Issue Date: Initial Redemption Percentage: Annual Redemption Percentage
Reduction:
Initial Redemption Date: Limitation Date: Authorized Denomination (if other
than U.S. $1,000 and integral
multiples thereof):
Refunding Rate: Specified Currency: Additional Terms (if any):
Interest Payment Date(s): Regular Record Date(s): Exchange Rate Agent:
Repayment Date(s)
Repayment Price(s):
</TABLE>
- --------------------------
* The bracketed language would apply to and appear on only a Book-Entry Note.
<PAGE>
Virginia Electric and Power Company, a corporation duly organized and
existing under the laws of the Commonwealth of Virginia (the Company, which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to ______________ or
registered assigns, the principal sum of ______________ on the Stated Maturity
Date shown above (or upon earlier redemption or repayment) (such Stated Maturity
Date or earlier date of redemption or repayment referred to herein as the
"Maturity Date"), and to pay interest thereon from the Original Issue Date shown
above, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually in arrears on each Interest Payment Date
as specified above in each year, commencing on the Interest Payment Date next
succeeding the Original Issue Date shown above and on the Maturity Date at the
rate per annum shown above until the principal hereof is paid or made available
for payment and (to the extent that the payment of such interest shall be
legally enforceable) on any overdue principal and on any overdue installment of
interest. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date (other than an Interest Payment Date that is the
Maturity Date) will, as provided in such Indenture, be paid to the Person in
whose name this Medium-Term Note, Series G (the Note), or one or more
predecessor Notes, is registered at the close of business on the Regular Record
Date for such interest, which shall be the Regular Record Date as specified
above (whether or not a Business Day, as hereinafter defined), as the case may
be, next preceding such Interest Payment Date, provided, however, that, if the
Original Issue Date shown above is between a Regular Record Date and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date next succeeding the Original Issue Date to the holder of
this Note on the Regular Record Date with respect to such second Interest
Payment Date; and provided, further, that interest payable on an Interest
Payment Date that is the Maturity Date will be paid to the Person to whom
principal is payable. Except as otherwise provided in the Indenture (hereinafter
defined), 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 Note (or one or more predecessor
Notes) 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 Notes 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, if any, on which
the Notes of this series shall be listed, and upon such notice as may be
required by any such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this Note will
be made in immediately available funds (upon surrender of the Note, in the case
of payment due at the Maturity Date, at the corporate trust office of the
Trustee, maintained for that purpose in the Borough of Manhattan, New York City
currently located at 55 Water Street, New York, New York 10041; provided,
however, that if such payment of principal or interest is to be made in a
Specified Currency other than U.S. dollars, as provided on the reverse hereof,
by wire transfer to an account maintained by the Holder hereof in the country of
said Specified Currency shown above (the Holder's Overseas Account), as
designated by the Holder of this Note by written notice to the Trustee on or
prior to the Regular Record Date or at least 16 days prior to the Maturity Date
or in connection with any transfer after such 16th day. In the absence of such
designation or if such wire transfer cannot be made for any other reason, the
Trustee will mail a notice to the address of the Person entitled thereto as such
address shall appear on the Security Register on the Regular Record Date for any
payment of interest or on the date of such notice in connection with payment of
principal, as the case may be, requesting a designation pursuant to which such
wire transfer can be made and no such payment shall be made until such
designation is made. As more fully provided on the reverse hereof, if payment of
principal of (and premium, if any) and interest on this Note is to be made in
U.S. dollars, payment will be made (upon surrender of the Note, in the case of
payment due at the Maturity Date, at the foregoing corporate trust office) by
wire transfer to an account designated by the Holder (the Holder's U.S. Account)
by written notice to the Trustee on or prior to the Regular Record Date or at
least 16 days prior to the Maturity Date, or, in the absence of such
designation, by check mailed to the address of the Person entitled thereto as
such address shall appear on the Security Register on the Regular Record Date
for any payment of interest or the Maturity Date shown above for payment of
principal, as the case may be. As more fully provided on the reverse hereof,
payment of the principal of (and premium, if any) and interest on this Note will
be made 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 based on then
prevailing exchange rates with respect to the Specified Currency and the U.S.
dollar or, if payment of the principal of and interest on this Note is to be
made in a Specified
<PAGE>
Currency other than U.S. dollars, subject to applicable laws and regulations, in
the Specified Currency shown above.
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 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.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK, VIRGINIA ELECTRIC AND POWER COMPANY
as Trustee
By By
------------------------- ---------------------------------
Authorized Officer President
By
---------------------------------
Vice President
Attest:
Assistant Corporate Secretary
[SEAL OF VIRGINIA ELECTRIC AND POWER COMPANY APPEARS HERE]
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTE, SERIES G
This Note is one of a duly authorized issue of Securities of the Company,
issued and issuable in one or more series under an indenture, dated as of April
1, 1988, as supplemented, (the Indenture) between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), as Trustee (the Trustee, which
term includes any successor trustee under the Indenture), to which the Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities issued
thereunder and of the terms upon which said Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof as Medium-Term Notes, Series G (the Notes) in aggregate
principal amount of up to U.S. $400 million or its equivalent in foreign
currencies or composite currencies, based upon the applicable exchange rate at
the time of issuance.
The Notes are identical except for Specified Currency, denomination,
interest rate, issue date, Stated Maturity Date and redemption or repayment
terms, if any.
The principal of (and premium, if any) and interest on this Note are
payable by the Company in the Specified Currency shown on the face hereof. If
this Note is denominated in a Specified Currency other than U.S. dollars and if
the Holder hereof shall have elected to receive payments in U.S. dollars, The
Chase Manhattan Bank, in its capacity as exchange rate agent, or such other
Person as shall be appointed by the Company (the Exchange Rate Agent), will
convert payments of principal of and interest on this Note to U.S. dollars. The
amount to be received by a Holder of this Note electing to receive payments in
U.S. dollars will be based on the highest bid quotation in New York City
received by the Exchange Rate Agent at approximately 11:00 A.M. New York City
time on the second Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to all Holders of Notes electing to receive payment
in U.S. dollars and at which the applicable dealer commits to execute a
contract. If such bid quotations are not available, payments will be made in the
Specified Currency. All currency exchange costs will be borne pro rata by the
Holders electing payment in U.S. dollars by deductions from such payments in
U.S. dollars.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which commercial banking
institutions are authorized or required by law, regulation or executive order to
close in New York City provided, however, that, with respect to Notes the
payment of which is to be made in a Specified Currency other than U.S. dollars,
that day is also not a day on which commercial banking institutions are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center of the country issuing the Specified Currency (or, in
the case of the euro, is also a day on which the Trans-European Automated Real-
Time Gross Settlement Express Transfer (TARGET) System is open). "Principal
Financial Center" means the capital city of the country issuing the Specified
Currency, except that with respect to U.S. dollars, Deutsche marks, Dutch
guilders, Italian lire, Portuguese escudos, Swiss francs, Australian dollars,
Canadian dollars, South African rand and the euro, the "Principal Financial
Center" shall be New York City, Frankfurt, Amsterdam, Milan, London (solely in
the case of the Index Currency), Zurich, Melbourne, Toronto, Johannesburg and
Frankfurt, respectively.
If this Note is denominated in a Specified Currency other than U.S.
dollars, the Holder of this Note may elect to receive payment of the principal
of and interest on this Note in U.S. dollars by transmitting a written request
for such payment to the Trustee at its corporate trust office in New York City
on or prior to the Regular Record Date or at least 16 days prior to the Maturity
Date, as the case may be. Such request may be in writing (mailed or hand
delivered) or may be by cable, telex or other form of facsimile transmission.
The Holder of this Note need not file a separate election for each such payment.
Such election, once properly made, will remain in effect until this Note is
transferred or until changed by
<PAGE>
written notice to the Trustee, but written notice of any such change must be
received by the Trustee on or prior to the Regular Record Date or at least 16
days prior to the Maturity Date, as the case may be.
In order for the Holder of this Note to receive payments by wire transfer,
such Holder shall designate an appropriate account (being either the Holder's
Overseas Account or the Holder's U.S. Account, as the case may be). Such
designation shall be made by filing the appropriate information with the Trustee
at its corporate trust office in New York City on or prior to the Regular Record
Date for an Interest Payment Date or at least 16 days prior to the Maturity
Date, except as provided on the face hereof. The Trustee will, subject to
applicable laws and regulations (in the case of a Specified Currency other than
U.S. dollars) and until it receives notice to the contrary or until this Note is
transferred, make such payment and all succeeding payments to such Holders by
wire transfer to the designated Holder's Overseas Account or Holder's U.S.
Account, as the case may be. The Company will pay any administrative costs
imposed by banks in connection with making wire transfer of payments, but any
tax, assessment, governmental or other charge imposed upon such payments will be
borne by the Holder of this Note and deducted therefrom.
If the Specified Currency other than U.S. dollars is not available for the
payment of principal or interest with respect to this Note due to the imposition
of exchange controls or other circumstances beyond the control of the Company,
the Company will be entitled to satisfy its obligations to the Holder of this
Note by making such payment in U.S. dollars on the basis of the applicable
Exchange Rate (defined as the noon buying rate in New York City for cable
transfers for such Specified Currency, as certified for customs purposes by the
Federal Reserve Bank of New York) as of the most recent date on which an
Exchange Rate was available. The Exchange Rate determined as provided above as
certified by the Company to the Trustee shall be conclusive absent manifest
error. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture. A good faith determination
by the Company that the Specified Currency is unavailable shall be binding upon
the Trustee and the Holder of this Note.
In the case where the Interest Payment Date or the Maturity Date does not
fall on a Business Day, payment of principal (and premium, if any) or interest
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date or the Maturity Date and no interest shall accrue for
the period from and after the Interest Payment Date or the Maturity Date.
Payments of interest on this Note will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this
Note shall be computed and paid on the basis of a 360-day year of twelve 30-day
months.
If so provided on the face of this Note, this Note may be redeemed by the
Company on and after the Initial Redemption Date, if any, indicated on the face
hereof. If no Initial Redemption Date is set forth hereof, this Note may not be
redeemed prior to the Maturity Date. On and after the Initial Redemption Date,
if any, this Note may be redeemed at any time in whole or in part (provided that
any remaining principal amount of this Note shall be equal to an authorized
denomination) at the option of the Company, at the applicable Redemption Price
(as defined below), together with interest thereon payable to the Redemption
Date, on notice given not more than 60 nor less than 30 days prior to the
Redemption Date. In the event of redemption of this Note in part only, a new
Note for the unredeemed portion hereof shall be issued in the name of the Holder
hereof upon the surrender hereof. The Notes will not have a sinking fund. The
"Redemption Price" shall initially be the Initial Redemption Percentage, shown
on the face hereof, of the principal amount of this Note to be redeemed and
shall decline at each anniversary of the Initial Redemption Date, shown on the
face hereof, by the Annual Redemption Percentage Reduction, if any, shown on the
face hereof, of the principal amount to be redeemed until the Redemption Price
is 100% of such principal amount.
Notwithstanding the foregoing, the Company may not, prior to the Limitation
Date specified on the face hereof, if any, redeem this Note as contemplated by
the next preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of monies borrowed
<PAGE>
having an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than the Refunding Rate specified on the
face hereof, if any.
If so indicated on the face of this Note, the Company may be required to
repurchase this Note at the option of the Holder, in whole or in part, on the
Repayment Date(s) and at the applicable Repayment Price(s) so indicated on the
face of this Note, plus accrued interest, if any, to the applicable Repayment
Date. On or before the applicable Repayment Date, the Company shall deposit
with the Trustee money sufficient to pay the applicable Repayment Price and any
interest accrued on the portion of this Note to be tendered for repayment. On
and after such Repayment Date, interest will cease to accrue on this Note or any
portion hereof tendered for repayment.
The repayment option may be exercised by the Holder of this Note for less
than the entire principal amount hereof, but in that event, the principal amount
hereof remaining outstanding after repayment must be in an authorized
denomination. In the event of repurchase of this Note in part only, a new Note
or Notes of this series and of like tenor for the unpurchased portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
In order for this Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the Repayment Date (i) this Note with
the form entitled "Option to Elect Repayment" attached to this Note duly
completed or (ii) a facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States setting forth
the name of the Holder of this Note, the principal amount of this Note, the
principal amount of this Note to be repaid, the registered number or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby, and a guarantee that this Note to be
repaid, together with the duly completed form entitled "Option to Elect
Repayment" attached to this Security, will be received by the Trustee not later
than the fifth Business Day after the date of such facsimile transmission or
letter; however, such facsimile transmission or letter shall only be effective
if this Note and duly completed form are received by the Trustee by such fifth
Business Day. Such notice, once given, will be irrevocable unless waived by the
Company.
Unless otherwise indicated on the face hereof, this Note will not be
subject to repayment at the option of the Holder.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes 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 Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, in the coin or currency, and
to the manner, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registerable in the Security Register, upon
surrender of this Note, for registration of transfer at the office or agency of
the Company in any place where the principal of (and premium, if any) and
interest on
<PAGE>
this Note are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes having the same Stated Maturity Date and
Original Issue Date, of authorized denominations and of like tenor and for the
same aggregate principal amount in the same Specified Currency, will be issued
to the designated transferee or transferees.
The Notes are issuable in registered form only, without coupons, and unless
otherwise specified on the face hereof, in denominations of U.S. $1,000 and in
integral multiples of U.S. $1,000 in excess thereof or the approximate
equivalent of U.S. $1,000 in the Specified Currency in which this Note is
denominated (if not U.S. dollars) at the Exchange Rate on the Business Day
immediately preceding the trade date, rounded down to the nearest integral
multiple of 1,000 units of said Specified Currency and in any amount in excess
thereof that is an integral multiple of 1,000 units of such Specified Currency.
As provided in the Indenture and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes
having the same Specified Currency, Stated Maturity Date and Original Issue Date
of any authorized denominations as requested by the Holder surrendering the
same, upon surrender of the Note or Notes 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 Note for registration of transfer, the
Company, the Trustee and any agent of the Company, or the Trustee may treat the
Person in whose name this Note is registered as the absolute owner hereof for
all purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse for the payment of the principal of (and premium, if any) or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, official or director, as such,
past, present or future, of the Company or of any successor entity, either
directly or through the Company or any successor company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
Reference in this Note to "U.S.$" or "U.S. dollars", is to the currency of
the United States of America. Reference in this Note to the "Specified
Currency" is to the Specified Currency shown on the face hereof. All terms used
in this Note and not otherwise defined herein which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription above in this
instrument shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT _____Custodian ______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of survivorship Under Uniform Gifts to Minors Act
and not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
- --------------------------------------------------------------------------------
Insert Taxpayer Identification No.
- ----------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
the within permanent global Security and all rights thereunder, hereby
irrevocably constituting and appointing ________________________________________
attorney to transfer said permanent global 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
elsewhere upon the within instrument
in every particular, without
alteration or enlargement or any
change whatever.
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Note (or portion thereof specified below) pursuant to its terms
at the applicable Repayment Price set forth on the face thereof, together with
the interest to the Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the Holder elects to have repaid:
______________; and specify the denomination or denominations (which shall not
be less than the minimum authorized denomination) of the Notes to be issued to
the Holder for the portion of the within Note not being repaid (in the absence
of any such specification, one such Note will be issued for the portion not
being repaid): _________________.
Dated:
----------------- -------------------------------
NOTE: The signature on this Option to Elect
Repayment must correspond with the name as written
upon the face of the within instrument in every
particular without alteration or enlargement.
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTE, SERIES G
(Floating Rate)
REGISTERED NO.
CUSIP NO.
[FACE OF NOTE]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TRUST
COMPANY (THE DEPOSITARY) (55 WATER STREET, NEW YORK, NEW YORK) TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TO THE ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY 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.]*
<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT:
BASE RATE: ORIGINAL ISSUE DATE: STATED MATURITY DATE:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate Page:
[ ] LIBOR Telerate Designated CMT Maturity Index:
INDEX CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: INITIAL INTEREST RESET DATE(S):
SPREAD: MINIMUM INTEREST RATE: INTEREST PAYMENT DATE(S):
SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATE(S)
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION PERCENTAGE REDUCTION
DATE: PERCENTAGE:
DAY COUNT CONVENTION
[ ] Actual/360 for the period from To
[ ] Actual/Actual for the period
from To
SPECIFIED CURRENCY: LIMITATION DATE:
EXCHANGE RATE AGENT: REFUNDING RATE:
REPAYMENT DATE(S): REPAYMENT PRICE(S):
OTHER/ADDITIONAL PROVISIONS DEFAULT RATE:
</TABLE>
- -----------------------------
*The bracketed language would apply to and appear on only a Book-Entry Note.
<PAGE>
Virginia Electric and Power Company (the Company, which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________________, or registered assigns,
the principal sum of ___________________, on the Stated Maturity Date specified
above (or upon earlier redemption or repayment, as the case may be) (such Stated
Maturity Date, or earlier date of redemption or repayment referred to herein as
the "Maturity Date" with respect to the principal repayable on such date) and to
pay interest thereon, at a rate per annum equal to the Initial Interest Rate
specified above until the Initial Interest Reset Date specified above and
thereafter at a rate determined in accordance with the provisions specified
above and on the reverse hereof with respect to the Base Rate specified above
until the principal hereof is paid or duly made available for payment, and (to
the extent that the payment of such interest shall be legally enforceable) at
the Default Rate per annum specified above on any overdue principal, premium
and/or interest. The Company will pay interest in arrears on each Interest
Payment Date, if any, specified above (each, an Interest Payment Date),
commencing with the first Interest Payment Date next succeeding the Original
Issue Date specified above, and on the Maturity Date; provided, however, that if
the Original Issue Date occurs between a Record Date (as defined below) and the
next succeeding Interest Payment Date, interest payments will commence on the
second Interest Payment Date next succeeding the Original Issue Date to the
holder of this Note on the Record Date with respect to such second Interest
Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for with respect to this Note) to, but excluding, the
applicable Interest Payment Date or the Maturity Date, as the case may be (each,
an Interest Period). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined on the reverse hereof)
immediately preceding such Interest Payment Date (the Record Date); provided,
however, that interest payable on the Maturity Date will be payable to the
person to whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly provided for
(Defaulted Interest) will forthwith cease to be payable to the holder on any
Record Date, and may either be paid to the person in whose name this Note is
registered at the close of business on a special record date (the Special Record
Date) for the payment of such Defaulted Interest to be fixed by the Trustee
hereinafter referred to, notice whereof shall be given to the holder of this
Note by the Trustee not less than 10 calendar 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 Notes of this
series shall be listed, and upon such notice as may be required by any such
exchange, all as more fully provided in the Indenture.
Payment of principal of (and premium, if any) and interest on this Note
will be made in immediately available funds (upon surrender of the Note, in the
case of payment due at the Maturity Date at the corporate trust office of the
Trustee, maintained for that purpose in the Borough of Manhattan, New York City,
currently located at 55 Water Street, New York, New York 10041); provided,
however, that if such payment of principal or interest is to be made in a
Specified Currency other than U.S. dollars, as provided on the reverse hereof,
by wire transfer to an account maintained by the Holder hereof in the country of
said Specified Currency shown above (the Holder's Overseas Account), as
designated by the Holder of this Note by written notice to the Trustee on or
prior to the Record Date or at least 16 days prior to the Maturity Date or in
connection with any transfer after such 16th day. In the absence of such
designation or if such wire transfer cannot be made for any other reason, the
Trustee will mail a notice to the address of the Person entitled thereto, as
such address shall appear on the Security Register on the Record Date for any
payment of interest or on the date of such notice in connection with payment of
principal, as the case may be, requesting a designation pursuant to which such
wire transfer can be made and no such payment shall be made until such
designation is made. As more fully provided on the reverse hereof, if payment of
principal of (and premium, if any) and interest on this Note is to be made in
U.S. dollars, payment will be made (upon surrender of the Note, in the case of
payment due at the Maturity Date at the foregoing corporate trust office) by
wire transfer to an account designated by the Holder (the Holder's U.S. Account)
by written notice to the Trustee on or prior to the Record Date or at least 16
days
<PAGE>
prior to the Maturity Date, or, in the absence of such designation, by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Security Register on the Record Date for any payment of interest
or the Maturity Date for payment of principal, as the case may be. As more fully
provided on the reverse hereof, payment of the principal of (and premium, if
any) and interest on this Note will be made 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 based on then prevailing exchange rates with respect
to the Specified Currency and the U.S. dollar or, if payment of the principal of
and interest on this Note is to be made in a Specified Currency other than U.S.
dollars, subject to applicable laws and regulations, in the Specified Currency
shown above.
If any Interest Payment Date other than the Maturity Date would otherwise
be a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Base Rate and such Business Day falls in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day. If the Maturity Date falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and/or interest shall be made on
the next succeeding Business Day with the same force and effect as if made on
the date such payment was due, and no interest shall accrue with respect to such
payment for the period from and after the Maturity Date to the date of such
payment on the next succeeding Business Day.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL HAVE THE SAME FORCE AND
EFFECT AS IF SET FORTH ON THE FACE HEREOF.
Unless the Certificate of Authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
Dated: __________________ VIRGINIA ELECTRIC AND
POWER COMPANY
By: _____________________
President
By: ____________________
Vice President
Attest:______________________
Assistant Corporate Secretary
[Seal of Virginia Electric and Power Company appears here]
TRUSTEE'S 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>
[REVERSE OF NOTE]
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTE, SERIES G
(FLOATING RATE)
This Note is one of a duly authorized issue of Securities of the Company,
issued and issuable in one or more series under an indenture, dated as of April
1, 1988, as supplemented, (the Indenture) between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), as Trustee (the Trustee, which
term includes any successor trustee under the Indenture), to which the Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities issued
thereunder and of the terms upon which said Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof as Medium-Term Notes, Series G (the Notes) in aggregate
principal amount of up to U.S. $400 million or its equivalent in foreign
currencies or composite currencies, based upon the applicable exchange rate at
the time of issuance.
The Notes are identical except for Specified Currency, denomination,
interest rate, issue date, Stated Maturity Date and redemption or repayment
terms, if any.
The principal of (and premium, if any) and interest on this Note are
payable by the Company in the Specified Currency shown on the face hereof. If
this Note is denominated in a Specified Currency other than U.S. dollars and if
the Holder hereof shall have elected to receive payments in U.S. dollars, The
Chase Manhattan Bank, in its capacity as exchange rate agent, or such other
Person as shall be appointed by the Company (the Exchange Rate Agent), will
convert payments of principal of and interest on this Note to U.S. dollars. The
amount to be received by a Holder of this Note electing to receive payments in
U.S. dollars will be based on the highest bid quotation in New York City
received by the Exchange Rate Agent at approximately 11:00 A.M. New York City
time on the second Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to all Holders of Notes electing to receive payment
in U.S. dollars and at which the applicable dealer commits to execute a
contract. If such bid quotations are not available, payments will be made in the
Specified Currency. All currency exchange costs will be borne pro rata by the
Holders electing payment in U.S. dollars by deductions from such payments in
U.S. dollars. If this Note is denominated in a Specified Currency other than
U.S. dollars, the Holder of this Note may elect to receive payment of the
principal of and interest on this Note in U.S. dollars by transmitting a written
request for such payment to the Trustee at its corporate trust office in New
York City on or prior to the Record Date or at least 16 days prior to the
Maturity Date, as the case may be. Such request may be in writing (mailed or
hand delivered) or may be by cable, telex or other form of facsimile
transmission. The Holder of this Note need not file a separate election for each
such payment. Such election, once properly made, will remain in effect until
this Note is transferred or until changed by written notice to the Trustee, but
written notice of any such change must be received by the Trustee on or prior to
the Record Date or at least 16 days prior to the Maturity Date, as the case may
be.
In order for the Holder of this Note to receive payments by wire transfer,
such Holder shall designate an appropriate account (being either the Holder's
Overseas Account or the Holder's U.S. Account, as the case may be). Such
designation shall be made by filing the appropriate information with the Trustee
at its corporate trust office in New York City on or prior to the Record Date
for the next succeeding Interest Payment Date or at least 16 days prior to the
Maturity Date, except as provided on the face hereof. The Trustee will, subject
to applicable laws and regulations (in the case of a Specified Currency other
than U.S. dollars) and until it receives notice to the contrary or until this
Note is transferred, make such payment and all succeeding payments to such
Holders by wire transfer to the designated Holder's Overseas Account or Holder's
U.S. Account, as the case may be. The Company will pay any administrative costs
imposed by banks in connection with making wire transfer of payments, but any
tax,
<PAGE>
assessment, governmental or other charge imposed upon such payments will be
borne by the Holder of this Note and deducted therefrom.
If the Specified Currency other than U.S. dollars is not available for the
payment of principal or interest with respect to this Note due to the imposition
of exchange controls or other circumstances beyond the control of the Company,
the Company will be entitled to satisfy its obligations to the Holder of this
Note by making such payment in U.S. dollars on the basis of the applicable
Exchange Rate (defined as the noon buying rate in New York City for cable
transfers for such Specified Currency, as certified for customs purposes by the
Federal Reserve Bank of New York) as of the most recent date on which an
Exchange Rate was available. The Exchange Rate determined as provided above as
certified by the Company to the Trustee shall be conclusive absent manifest
error. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture. A good faith determination
by the Company that the Specified Currency is unavailable shall be binding upon
the Trustee and the Holder of this Note.
Except as set forth below or on the face hereof, this Note shall bear
interest at the rate determined by reference to the applicable Base Rate (a)
plus or minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any, in each case as specified on the face hereof. Commencing on
the Initial Interest Reset Date, the rate at which interest on this Note shall
be payable shall be reset as of each Interest Reset Date specified on the face
hereof; provided, however, that the interest rate in effect for the period, if
any, from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate.
Unless otherwise specified on the face hereof, the rate with respect to
each Base Rate will be determined in accordance with the applicable provisions
below. Except as set forth above, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date. If any Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Base Rate and such Business Day falls in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business Day
as used herein, "Interest Reset Period" means the period of time beginning on an
Interest Reset Date for this Note and ending on the calendar day immediately
preceding the next succeeding Interest Reset Date.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which commercial banking
institutions are authorized or required by law, regulation or executive order to
close in New York City; provided, however, that, with respect to Notes the
payment of which is to be made in a Specified Currency other than U.S. dollars,
such day is also not a day on which commercial banking institutions are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center of the country of such Specified Currency (or, in the
case of the euro, is also a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open); provided, further,
that, with respect to Notes as to which LIBOR is an applicable Base Rate, such
day is also a London Business Day (as defined below). "London Business Day"
means any day (i) if the Index Currency (as defined below) is other than the
euro, on which dealings in such Index Currency are transacted in the London
interbank market or (ii) if the Index Currency is the euro, on which the TARGET
System is open. "Principal Financial Center" means the capital city of the
country issuing the specified Index Currency (as defined below) or the Specified
Currency, as the case may be, except that with respect to U.S. dollars, Deutsche
marks, Dutch guilders, Italian lire, Portuguese escudos, Swiss francs,
Australian dollars, Canadian dollars, South African rand, and the euro, the
"Principal Financial Center" shall be New York City, Frankfurt, Amsterdam,
Milan, London (solely in the case of the Index Currency), Zurich, Melbourne,
Toronto, Johannesburg and Frankfurt, respectively.
The "Interest Determination Date" pertaining to an Interest Reset Date for
CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate
Notes and Prime Rate Notes will be the second Business Day next preceding such
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a LIBOR Note will be the second London Business Day preceding
<PAGE>
such Interest Reset Date, unless the Designated LIBOR Currency is British pounds
sterling, in which case the "Interest Determination Date" will be the applicable
Interest Reset Date. The Interest Determination Date pertaining to an Interest
Reset Date for a Treasury Rate Note will be the day of the week in which such
Interest Reset Date falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week. If an auction falls on a day
that is an Interest Reset Date, such Interest Reset Date will be the next
following Business Day.
Unless otherwise specified on the face hereof, the "Calculation Date,"
where applicable, pertaining to an Interest Determination Date will be the
earlier of (i) the tenth calendar day after such Interest Determination Date,
or, if such day is not a Business Day, the next succeeding Business Day, or (ii)
the Business Day preceding the applicable Interest Payment Date or Maturity
Date, as the case may be.
CD Rate. If the Base Rate for this Note is specified on the face hereof as
the CD Rate, this Note will bear interest at the interest rate, calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
the Minimum Interest Rate and Maximum Interest Rate, if any, specified on the
face hereof. The CD Rate shall be determined as of the applicable Interest
Determination Date (a CD Rate Interest Determination Date) as the rate on such
date for negotiable U.S. dollar certificates of deposit having the Index
Maturity designated on the face hereof as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System (H.15(519)) under the heading "CDs (Secondary Market)," or, if
not so published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated on the face hereof as published in the daily update of
H.15(519), available through the internet site of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any
successor site or publication (the H.15 Daily Update), or such other recognized
electronic source for the purpose of displaying such rate, under the heading
"CDs (Secondary Market)." If such rate is not yet published in H.15(519), the
H.15 Daily Update or another recognized electronic source by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the CD Rate on such Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date for certificates of deposit in an amount that is
representative for a single transaction at that time with a remaining maturity
closest to the Index Maturity designated on the face hereof of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in New York
City (which may include Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, and
Lehman Brothers Inc. (collectively, the Agents) or their affiliates) selected by
the Calculation Agent for negotiable certificates of deposit of major United
States money center banks; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the CD
Rate in effect for the applicable period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on this Note shall be the Initial
Interest Rate).
CMT Rate. If the Base Rate for this Note is specified on the face hereof
as the CMT Rate, this Note will bear interest at the interest rate, calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate, and the Maximum Interest Rate, if any,
specified on the face hereof. The CMT Rate shall be determined as of the
applicable Interest Determination Date (a CMT Rate Interest Determination Date)
as the rate displayed on the Designated CMT Telerate Page (as defined below)
under the caption "...Treasury Constant Maturities...Federal Reserve Board
Release H.15...Mondays Approximately 3:45 P.M.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7051, such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the weekly or monthly average, as
specified on the face hereof, for the week or the month, as applicable, ended
immediately
<PAGE>
preceding the week or the month, as applicable, in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such Interest Determination Date
will be such Treasury Constant Maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is no longer
published, or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such Interest Determination Date will be
such Treasury Constant Maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for
such Interest Determination Date with respect to the Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on the Interest Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers in New York City (which may include the Agents or their affiliates)
(each, a Reference Dealer) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent, after consultation with the
Company, and eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of equality, one
of the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States (Treasury notes) with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury notes quotations, the CMT
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offered rates as of approximately 3:30 P.M., New York City
time, on the Interest Determination Date of three Reference Dealers in New York
City (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least U.S. $100,000,000. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offered rates obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate for such Interest Reset Date will be the same as
the CMT Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable on this Note
shall be the Initial Interest Rate). If two Treasury notes with an original
maturity as described in the second preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the quotes for the
Treasury note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Bridge Telerate,
Inc., or any successor service (the Telerate), on the page designated on the
face hereof (or any other page as may replace such page on such service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519)),
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no such page is specified on the face hereof, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified as such on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof the Designated
CMT Maturity Index shall be two years.
Commercial Paper Rate. If the Base Rate for this Note is specified on the
face hereof as the Commercial Paper Rate, this Note will bear interest at the
interest rate, calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest
Rate and the Maximum Interest Rate, if any, specified on the face hereof. The
Commercial Paper
<PAGE>
Rate shall be determined as of the applicable Interest Determination Date (a
Commercial Paper Rate Interest Determination Date) as the Money Market Yield (as
defined below) of the rate on such date for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519), under the heading "Commercial Paper - Nonfinancial." In the event
that such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate shall be the Money Market Yield of the rate on such
Interest Determination Date for commercial paper of the specified Index Maturity
as published in H.15 Daily Update under the heading "Commercial Paper -
Nonfinancial." If by 3:00 P.M., New York City time, on such Calculation Date
such rate is not yet available in either H.15(519) or H.15 Daily Update, or
another recognized electronic source, then the Commercial Paper Rate shall be
the Money Market Yield of the arithmetic mean of the offered rates as of 11:00
A.M., New York City time, on such Interest Determination Date of three leading
dealers of U.S. dollar commercial paper in New York City (which may include the
Agents or their affiliates) selected by the Calculation Agent for commercial
paper of the specified Index Maturity, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized statistical
rating organization; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the Commercial Paper Rate in effect for the applicable period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the rate
of interest payable on this Note shall be the Initial Interest Rate).
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
Money Market Yield = D x 360 x 100 divided by (360 - (D x M)) where "D"
refers to the applicable per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the Interest Period for which interest is being calculated.
Federal Funds Rate. If the Base Rate for this Note is specified on the
face hereof as the Federal Funds Rate, this Note will bear interest at the
interest rate, calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest
Rate and Maximum Interest Rate, if any, specified on the face hereof. The
Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a Federal Funds Rate Interest Determination Date) as the
rate on such date for U. S. dollar federal funds as published in H.15(519) under
the heading "Federal Funds (Effective)," as such rate is displayed on the
Telerate on page 120 (or any other page as may replace such page on such
service) (Telerate Page 120), or, if such rate does not appear on Telerate Page
120 or is not so published by 3:00 P.M., New York City time, on such Calculation
Date pertaining to such Interest Determination Date, the Federal Funds Rate will
be the rate on such Interest Determination Date as published in the H.15 Daily
Update under the heading "Federal Funds/Effective Rate," or another recognized
electronic source used for the purpose of displaying such rate, under the
caption "Federal Funds (Effective)." If such rate does not appear on Telerate
Page 120, or is not yet published in either H.15(519), the H.15 Daily Update, or
another recognized electronic source by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Federal
Funds Rate for such Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight U. S. dollar federal funds, as of 9:00 A.M., New York
City time, on such Interest Determination Date, arranged by three leading
brokers of federal funds transactions in New York City (which may include the
Agents or their affiliates) selected by the Calculation Agent; provided,
however, that if the brokers selected as aforesaid by the Calculation Agent are
not quoting as set forth above, the Federal Funds Rate in effect for the
applicable period will be the same as the Federal Funds Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable on this Note shall be the Initial Interest Rate).
LIBOR. If the Base Rate for this Note is specified on the face hereof as
LIBOR, this Note will bear interest at the interest rate, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any, specified on
the face hereof. LIBOR shall be determined by the Calculation Agent as of the
applicable
<PAGE>
Interest Determination Date (a LIBOR Interest Determination Date) in accordance
with the following provisions:
(i) As of the Interest Determination Date, LIBOR will be either: (a) if
"LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as defined below) by
its terms provides only for a single rate, in which case such single rate shall
be used) for deposits in the Index Currency having the Index Maturity designated
on the face hereof, commencing on the second London Business Day immediately
following such Interest Determination Date, that appear on the Designated LIBOR
Page as of 11:00 A.M., London time, on such Interest Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a single rate is
required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified
on the face hereof, the rate for deposits in the Index Currency having the Index
Maturity designated on the face hereof, commencing on the second London Business
Day immediately following such Interest Determination Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such Interest
Determination Date. If fewer than two offered rates appear (if "LIBOR Reuters"
is specified on the face hereof) or no rate appears (if, as aforesaid, only a
single rate is required or if "LIBOR Telerate" is specified on the face hereof),
LIBOR in respect of the related Interest Determination Date will be determined
as if the parties had specified the rate described in clause (ii) below.
(ii) With respect to an Interest Determination Date on which fewer than two
offered rates appear (if "LIBOR Reuters" is specified on the face hereof) or on
which no rate appears (if, as aforesaid, only a single rate is required or if
"LIBOR Telerate" is specified on the face hereof), the Calculation Agent will
request the principal London offices of each of four major reference banks
(which may include affiliates of the Agents) in the London interbank market, as
selected by the Calculation Agent, to provide the Calculation Agent with its
offered quotation for deposits in the Index Currency for the period of the Index
Maturity designated on the face hereof, commencing on the second London Business
Day immediately following such Interest Determination Date, to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on such
Interest Determination Date and in a principal amount of not less than
$1,000,000 (or the equivalent in the Index Currency, if the Index Currency is
not the U.S. dollar) that is representative for a single transaction in such
Index Currency in such market at such time. If at least two such quotations are
provided, LIBOR determined on such Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
LIBOR determined on such Interest Determination Date will be the arithmetic mean
of the rates quoted at approximately 11:00 A.M. (or such other time specified on
the face hereof), in the applicable Principal Financial Center for the country
of the Index Currency on such Interest Determination Date, by three major banks
(which may include affiliates of the Agents) in the Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to leading
European banks, having the Index Maturity designated on the face hereof and in a
principal amount of not less than $1,000,000 (or the equivalent in the Index
Currency, if the Index Currency is not the U.S. dollar) that is representative
for a single transaction in such Index Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent are
not quoting as mentioned in this sentence, LIBOR in effect for the applicable
period will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on this Note shall be the Initial Interest Rate).
"Index Currency" means the currency (including composite currencies)
specified on the face hereof as the currency for which LIBOR shall be
calculated. If no such currency is specified on the face hereof, the Index
Currency shall be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated
on the face hereof, the display on the Reuters Monitor Money Rates Service (or
any successor service) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated on the face hereof, the display on the Telerate for the purpose of
displaying the London interbank rates of major banks for the applicable Index
Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified on the face
hereof, LIBOR for the applicable Index Currency will be determined as if LIBOR
Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had been
specified.
<PAGE>
Prime Rate. If the Base Rate for this Note is specified on the face hereof
as the Prime Rate, this Note will bear interest at the interest rate, calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any, specified on the face hereof. The Prime Rate shall be determined as of the
applicable Interest Determination Date (a Prime Rate Interest Determination
Date) as the rate set forth in H.15(519) for such date opposite the caption
"Bank Prime Loan." If such rate is not yet published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Prime Rate for such Interest Determination Date will be the rate on such
Interest Determination Date as published in the H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such rate under
the caption "Bank Prime Loan." If by 3:00 P.M., New York City time, on the
Calculation Date such rate is not yet available in either H.15(519) or H.15
Daily Update or another recognized electronic source, then the Prime Rate for
such Interest Determination Date will be the arithmetic mean of the rates of
interest publicly announced by each bank named on the Reuters Screen US PRIME 1
Page (as defined below) as such bank's prime rate or base lending rate as of
11:00 A.M., New York City time, on such Interest Determination Date as quoted on
the Reuters Screen US PRIME 1 Page on such Interest Determination Date, or, if
fewer than four such rates appear on the Reuters Screen US PRIME 1 Page for such
Interest Determination Rate, the rate shall be the arithmetic mean of the prime
rates or base lending rates quoted on the basis of the actual number of days in
the year divided by 360 as of the close of business on such Interest
Determination Date by at least two of the three major money center banks in New
York City (which may include affiliates of the Agents) selected by the
Calculation Agent from which quotations are requested. If fewer than two
quotations are provided, the Prime Rate shall be calculated by the Calculation
Agent and shall be determined as the arithmetic mean on the basis of the prime
rates in New York City by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States, or
any State thereof, in each case having total equity capital of at least U.S.
$500 million and being subject to supervision or examination by federal or state
authority, selected by the Calculation Agent to quote such rate or rates;
provided, however, that if the banks or trust companies selected as aforesaid by
the Calculation Agent are not quoting as set forth above, the "Prime Rate" in
effect for the applicable period will be the same as the Prime Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on this Note shall be the Initial
Rate).
"Reuters Screen US PRIME 1 Page" means the display designated as Page "US
PRIME 1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the US PRIME 1 Page on such service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Treasury Rate. If the Base Rate for this Note is specified on the face
hereof as the Treasury Rate, this Note will bear interest at the interest rate,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any, specified on the face hereof. The Treasury Rate shall be
determined as of the applicable Interest Determination Date (a Treasury Rate
Interest Determination Date) as the rate for the auction held on such date of
direct obligations of the United States (Treasury Bills) having the Index
Maturity designated on the face hereof, under the heading "INVESTMENT RATE" on
the display on the Telerate on page 56 (or any other page as may replace such
page on such service) (Telerate Page 56) or page 57 (or any other page as may
replace such page on such service) (Telerate Page 57) or, if not published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Treasury Rate for such Interest Determination
Date will be the yield to maturity expressed as a bond equivalent, on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the rate for the applicable Treasury Bills, published in the H.15 Daily Update,
or any other recognized electronic source used for the purpose of displaying
such rate, under the caption "U.S. Government Securities/Treasury Bills/Auction
High" on the Interest Determination Date or, if not so published by 3:00 P.M.,
New York City time, on the Calculation Date, the yield to maturity (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the auction rate of the applicable Treasury Bills
as otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having the Index
Maturity designated on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
<PAGE>
auction is held on such Interest Determination Date, then the Treasury Rate
shall be the yield to maturity (expressed as a bond equivalent, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) of the
rate on such Interest Determination Date of such Treasury Bills having the Index
Maturity designated on the face hereof as published in H.15(519), or such other
recognized electronic source used for the purpose of displaying such rate, under
the caption "U.S. Government Securities/Treasury Bills/Secondary Market". If
the rate above is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to the applicable Interest Determination Date, the
Treasury Rate shall be the yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the rate on the Interest Determination Date of such Treasury Bills as
published in the H.15 Daily Update, or other recognized electronic source used
for the purpose of displaying that rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market." If the rate above is not published
in H.15(519), H.15 Daily Update, or another recognized electronic source, by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) calculated using the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City time, on such
Interest Determination Date, of three leading primary United States government
securities dealers (which may include the Agents or their affiliates) selected
by the Calculation Agent for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity designated on the face hereof; provided,
however, that if the dealers selected by the Calculation Agent are not quoting
bid rates as mentioned in this sentence, the Treasury Rate for such Interest
Reset Date will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the rate
of interest payable on this Note shall be the Initial Interest Rate).
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. The interest rate on this
Note will in no event be higher than the maximum rate permitted by New York law,
as the same may be modified by United States law of general application.
The Calculation Agent shall calculate the interest rate hereon in
accordance with the foregoing on or before each Calculation Date. The
"Calculation Date", if applicable, pertaining to any Interest Determination Date
shall be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
At the request of the Holder hereof, the Calculation Agent will provide to
the Holder hereof the interest rate hereon then in effect and, if determined,
the interest rate which will become effective as a result of a determination
made for the next succeeding Interest Reset Date.
With respect to this Note, accrued interest shall be calculated by
multiplying the principal amount of this Note by an accrued interest factor.
Such accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which interest is being paid. Unless
otherwise specified on the face hereof, the interest factor for each such day is
computed by dividing the interest rate applicable to such day by 360, in the
case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes,
LIBOR Notes and Prime Rate Notes, or by the actual number of days in the year,
in the case of Treasury Rate Notes and CMT Rate Notes. All percentages used in
or resulting from any calculation of the rate of interest on this Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward, and all
dollar amounts used in or resulting from such calculation on this Note will be
rounded to the nearest cent, with one-half cent rounded upward, or in the case
of a foreign currency, to the nearest unit, with one-half unit being rounded
upward. The interest rate in effect on any Interest Reset Date will be the
applicable rate as reset on such date. The interest rate applicable to any other
day is the interest rate from the immediately preceding Interest Reset Date (or,
if none, the Initial Interest Rate).
<PAGE>
If so provided on the face of this Note, this Note may be redeemed by the
Company on and after the Initial Redemption Date, if any, indicated on the face
hereof. If no Initial Redemption Date is set forth hereof, this Note may not be
redeemed prior to the Stated Maturity Date. On and after the Initial Redemption
Date, if any, this Note may be redeemed at any time in whole or in part
(provided that any remaining principal amount of this Note shall be equal to an
authorized denomination) at the option of the Company, at the applicable
Redemption Price (as defined below), together with interest thereon payable to
the "Redemption Date", on notice given not more than 60 nor less than 30 days
prior to the Redemption Date. In the event of redemption of this Note in part
only, a new Note for the unredeemed portion hereof shall be issued in the name
of the Holder hereof upon the surrender hereof. The Notes will not have a
sinking fund. The "Redemption Price" shall initially be the Initial Redemption
Percentage, shown on the face hereof, of the principal amount of this Note to be
redeemed and shall decline at each anniversary of the Initial Redemption Date,
shown on the face hereof, by the Annual Redemption Percentage Reduction, if any,
shown on the face hereof, of the principal amount to be redeemed until the
Redemption Price is 100% of such principal amount.
Notwithstanding the foregoing, the Company may not, prior to the Limitation
Date specified on the face hereof, if any, redeem this Note as contemplated by
the next preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of monies borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than the Refunding Rate specified on the
face hereof, if any.
If so indicated on the face of this Note, the Company may be required to
repurchase this Note at the option of the Holder, in whole or in part, on the
Repayment Date(s) and at the applicable Repayment Price(s) so indicated on the
first page hereof, plus accrued interest, if any, to the applicable Repayment
Date. On or before the applicable Repayment Date, the Company shall deposit
with the Trustee money sufficient to pay the applicable Repayment Price and any
interest accrued on the portion of this Note to be tendered for repayment. On
and after such Repayment Date, interest will cease to accrue on this Note or any
portion hereof tendered for repayment.
The repayment option may be exercised by the Holder of this Note for less
than the entire principal amount hereof, but in that event, the principal amount
hereof remaining outstanding after repayment must be in an authorized
denomination. In the event of repurchase of this Note in part only, a new Note
or Notes of this series and of like tenor for the unpurchased portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
In order for this Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the Repayment Date (i) this Note with
the form entitled "Option to Elect Repayment" attached to this Note duly
completed or (ii) a facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States setting forth
the name of the Holder of this Note, the principal amount of this Note, the
principal amount of this Note to be repaid, the registered number or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby, and a guarantee that this Note to be
repaid, together with the duly completed form entitled "Option to Elect
Repayment" attached to this Security, will be received by the Trustee not later
than the fifth Business Day after the date of such facsimile transmission or
letter; however, such facsimile transmission or letter shall only be effective
if this Note and duly completed form are received by the Trustee by such fifth
Business Day. Such notice, once given, will be irrevocable unless waived by the
Company.
Unless otherwise indicated on the face hereof, this Note will not be
subject to repayment at the option of the Holder.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes 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
<PAGE>
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 Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, in the coin or currency, and
to the manner, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registerable in the Security Register, upon
surrender of this Note, for registration of transfer at the office or agency of
the Company in any place where the principal of (and premium, if any) and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes having the same Stated Maturity
Date and Original Issue Date, of authorized denominations and of like tenor and
for the same aggregate principal amount in the same Specified Currency, will be
issued to the designated transferee or transferees.
The Notes are issuable in registered form only, without coupons, and unless
otherwise specified on the face hereof, in denominations of U.S. $1,000 and in
integral multiples of U.S. $1,000 in excess thereof or the approximate
equivalent of U.S. $1,000 in the Specified Currency in which this Note is
denominated (if not U.S. dollars) at the Exchange Rate on the Business Day
immediately preceding the trade date, rounded down to the nearest integral
multiple of 1,000 units of said Specified Currency and in any amount in excess
thereof that is an integral multiple of 1,000 units of such Specified Currency.
As provided in the Indenture and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes
having the same Specified Currency, Stated Maturity Date and Original Issue Date
of any authorized denominations as requested by the Holder surrendering the
same, upon surrender of the Note or Notes 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 Note for registration of transfer, the
Company, the Trustee and any agent of the Company, or the Trustee may treat the
Person in whose name this Note is registered as the absolute owner hereof for
all purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse for the payment of the principal of (and premium, if any) or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, official or director, as such,
past, present or future, of the Company or of any successor entity, either
directly or through the Company or any successor company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
Reference in this Note to "U.S.$" or "U.S. dollars", is to the currency of
the United States of America. Reference in this Note to the "Specified Currency"
is to the Specified Currency shown on the
<PAGE>
face hereof. All terms used in this Note and not otherwise defined herein which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription above in this
instrument shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT _____Custodian ______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of survivorship Under Uniform Gifts to Minors Act
and not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
- --------------------------------------------------------------------------------
Insert Taxpayer Identification No.
- ----------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
the within permanent global Security and all rights thereunder, hereby
irrevocably constituting and appointing ________________________________________
attorney to transfer said permanent global 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
elsewhere upon the within instrument
in every particular, without alteration
or enlargement or any change whatever.
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Note (or portion thereof specified below) pursuant to its terms
at the applicable Repayment Price set forth on the face thereof, together with
the interest to the Repayment Date, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the Holder elects to have repaid:
______________; and specify the denomination or denominations (which shall not
be less than the minimum authorized denomination) of the Notes to be issued to
the Holder for the portion of the within Note not being repaid (in the absence
of any such specification, one such Note will be issued for the portion not
being repaid): _________________.
Dated:
-------------------------- ---------------------------------------
NOTE: The signature on this Option to Elect
Repayment must correspond with the name as
written upon the face of the within
instrument in every particular without
alteration or enlargement.
<PAGE>
[LETTERHEAD OF MCGUIRE, WOODS, BATTLE & BOOTHE LLP APPEARS HERE]
April 13, 1999
Virginia Electric and Power Company
One James River Plaza
Richmond, Virginia 23219
Virginia Electric and Power Company
Medium-Term Notes, Series G
-------------------------
Ladies and Gentlemen:
We consent that this opinion may be filed as an exhibit to the Registration
Statement of Virginia Electric and Power Company (the Company) with respect to
up to U.S. $400,000,000 aggregate principal amount of its Medium-Term Notes,
Series G, due nine months or more from the date of issue (the Notes) proposed to
be issued under an Indenture dated as of April 1, 1988, as amended and
supplemented by a First Supplemental Indenture dated as of August 1, 1989 and as
to be amended and supplemented by a Second Supplemental Indenture dated as of
May 1, 1999, the form of which is filed as an exhibit to the Registration
Statement (the Indenture), between you and The Chase Manhattan Bank (formerly
known as Chemical Bank).
We are of the opinion that the Company is a corporation duly organized and
existing under the laws of Virginia, is duly qualified as a foreign corporation
in West Virginia and North Carolina and has corporate power to conduct its
business and issue the Notes.
We are further of the opinion that when the steps mentioned in the next
paragraph below shall have been taken, (a) all requisite corporate and
governmental authorizations will have been given for the issuance and sale of
the Notes (except such governmental authorization as may be necessary under the
Blue Sky Laws of the several States), and (b) the Notes will be valid, legal and
binding obligations of the Company (subject, as to enforceability, to applicable
bankruptcy, moratorium and similar laws from time to time in force and except
further as enforcement thereof may be limited by requirements that a claim with
respect to any debt securities issued under the Indenture that are payable in a
foreign or composite currency (or a foreign or composite currency judgment in
respect of such claim) be converted into U.S. dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law or by governmental
authority to limit, delay or prohibit the making of payments outside the United
States).
<PAGE>
The steps to be taken as indicated in the preceding paragraph are:
(1) Authorization, execution and delivery of the Second Supplemental
Indenture by the Company and The Chase Manhattan Bank;
(2) Authorization of the issuance and sale of the Notes by the Board
of Directors and Executive Committee of the Company and by the
State Corporation Commission of Virginia:
(3) Compliance with the Securities Act of 1933, as amended; and
(4) Issuance and sale of the Notes in accordance with such
authorizations.
Insofar as this opinion and consent relate to any matter governed by the
laws of West Virginia, we base it on the opinion of Jackson & Kelly, Charleston,
West Virginia, evidenced by their consents to the statements made in regard to
them under the caption EXPERTS in the Registration Statement. But we express no
opinion with respect to any matter goverened by the laws of West Virginia in
regard to property titles to the lien of the Company's Indenture of Mortgage,
dated November 1, 1935.
We hereby consent to the statements made in regard to our firm under the
captions EXPERTS and LEGAL OPINIONS in the Registration Statement. In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under section 7 of the Securities Act of 1933, as amended,
or the rules and regulations promulgated thereunder by the Securities and
Exchange Commission.
The opinions in this letter are solely for your information and use, and
no other person may rely upon or otherwise use the opinions for any purpose
without our express written consent.
Very Truly yours,
/s/ McGuire, Woods, Battle & Boothe LLP
<PAGE>
[LETTERHEAD OF McGUIRE, WOODS, BATTLE & BOOTHE LLP APPEARS HERE]
April 13, 1999
Virginia Electric and Power Company
One James River Plaza
Richmond, Virginia 23219
Medium-Term Notes, Series G
Federal Income Tax Considerations
-------------------------
Ladies and Gentlemen:
We have acted as your counsel in connection with the offering of U.S.
$400,000,000 maximum aggregate principal amount of your Medium-Term Notes,
Series G (the Notes). The Notes will be offered on a continuing basis pursuant
to an Indenture dated April 1, 1988, amended and supplemented by a First
Supplemental Indenture dated as of August 1, 1989, and a Second Supplemental
Indenture dated as of May 1, 1999 (the Indenture) between you and The Chase
Manhattan Bank (formerly known as Chemical Bank).
We have examined copies of (i) the registration statement on Form S-3 to be
filed on or about April 13, 1999, relating to the Notes (the Registration
Statement), (ii) the prospectus to be included in the Registration Statement
(the Prospectus), and (iii) the Indenture. In addition, we have reviewed such
other documents and made such other factual and legal inquiries as we have
considered necessary for purposes of this opinion.
Based on our review, we are of the opinion that the statements and legal
conclusions contained in the Prospectus under the caption "CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSIDERATIONS" are correct and that the discussion does not
omit any material matter with respect to the topics covered.
<PAGE>
We consent to the references to our firm under the caption "CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS" and to the filing of this opinion as
an exhibit to the Registration Statement. In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
section 7 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
The opinion expressed in this letter are solely for your information and
use. No other person may rely upon or otherwise use those opinions for any
purpose without our express written consent.
Very truly yours,
/s/ McGuire, Woods, Battle & Boothe LLP
<PAGE>
VIRGINIA ELECTRIC AND POWER COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(thousands of dollars)
<TABLE>
<CAPTION>
Dec-98 Dec-97 Dec-96 Dec-95 Dec-94
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Income $ 229,873 $ 469,114 $ 457,304 $ 432,844 $ 447,144
Add: Income Taxes 157,298 249,293 243,993 228,785 225,647
-------------------------------------------------------------------------
Total Pretax Net Income $ 387,171 $ 718,406 $ 701,297 $ 661,629 $ 672,791
=========================================================================
Fixed Charges:
Interest on Long-Term Debt &
Other Interest 308,200 305,553 310,308 322,616 299,415
Pfd Distribution of Affiliate-Gross 10,868 10,868 10,867 3,653 0
Estimated Interest Factor
of Rents Charged to Op-
erating Expenses, Clear-
ing & Other Accounts 6,389 8,595 6,291 6,475 7,132
-------------------------------------------------------------------------
Total Fixed Charges $ 325,457 $ 325,015 $ 327,466 $ 332,744 $ 306,547
=========================================================================
-------------------------------------------------------------------------
Earnings as Defined $ 712,627 $1,043,421 $1,028,764 $ 994,373 $ 979,339
=========================================================================
Ratio of Earnings to
Fixed Charges 2.19 3.21 3.14 2.99 3.19
=========================================================================
</TABLE>
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF JACKSON & KELLY PLLC APPEARS HERE]
April 13, 1999
Virginia Electric and Power Company
Richmond, VA 23261
Re: Virginia Electric and Power Company
Medium-Term Notes - Series G
Dear Sirs:
We hereby consent to the statements made in respect to our firm under
the caption "EXPERTS" appearing in the Registration Statement on Form S-3 (and
the prospectus included therein) of Virginia Electric and Power Company, to be
filed on or about April 13, 1999, with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended, for registration
of $400,000,000 in Medium-Term Notes, Series G.
Very truly yours,
/s/ Jackson & Kelly PLLC
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Virginia Electric and Power Company on Form S-3 of our report dated February 8,
1999, appearing in the Annual Report on Form 10-K of Virginia Electric and Power
Company for the year ended December 31, 1998 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
Richmond, Virginia
April 13, 1999
<PAGE>
-------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Virginia Electric and Power Company
(Exact name of obligor as specified in its charter)
Virginia 54-0418825
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
701 East Cary Street
Richmond, Virginia 23219-3932
(Address of principal executive offices) (Zip Code)
--------------------------------------------
Medium Term Notes
(Title of the indenture securities)
------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 23rd day of March, 1999.
THE CHASE MANHATTAN BANK
By /s/ P. Kelly
------------------------------
P. Kelly
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin............................................. $ 13,915
Interest-bearing balances..................................... 7,805
Securities:.....................................................
Held to maturity securities..................................... 1,429
Available for sale securities................................... 56,327
Federal funds sold and securities purchased under
agreements to resell.......................................... 21,733
Loans and lease financing receivables:
Loans and leases, net of unearned income............. $131,095
Less: Allowance for loan and lease losses............ 2,711
Less: Allocated transfer risk reserve................ 0
Loans and leases, net of unearned income,............ --------
allowance, and reserve........................................ 128,384
Trading Assets.................................................. 48,949
Premises and fixed assets (including capitalized
leases)....................................................... 3,095
Other real estate owned......................................... 239
Investments in unconsolidated subsidiaries and
associated companies.......................................... 199
Customers' liability to this bank on acceptances
outstanding................................................... 1,209
Intangible assets............................................... 2,081
Other assets.................................................... 11,352
--------
TOTAL ASSETS.................................................... $296,717
========
</TABLE>
- 4 -
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C> <C>
In domestic offices............................................. $105,879
Noninterest-bearing..................................... $39,175
Interest-bearing........................................ 66,704
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.......................................... 79,294
Noninterest-bearing .................................... $ 4,082
Interest-bearing ....................................... 75,212
Federal funds purchased and securities sold under agreements
to repurchase..................................................... 32,546
Demand notes issued to the U.S. Treasury.......................... 629
Trading liabilities............................................... 36,807
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less................... 4,478
With a remaining maturity of more than one year.
through three years........................................ 213
With a remaining maturity of more than three years.............. 115
Bank's liability on acceptances executed and outstanding 1,209
Subordinated notes and debentures................................. 5,408
Other liabilities................................................. 10,855
TOTAL LIABILITIES................................................. 277,433
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock....................................................... 1,211
Surplus (exclude all surplus related to preferred stock).......... 11,016
Undivided profits and capital reserves............................. 6,762
Net unrealized holding gains (losses)
on available-for-sale securities................................... 279
Cumulative foreign currency translation adjustments................ 16
TOTAL EQUITY CAPITAL............................................... 19,284
--------
TOTAL LIABILITIES AND EQUITY CAPITAL............................... $296,717
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
