<PAGE>
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(5)
(To prospectus dated January 6, 2000) Registration No. 333-93187
$700,000,000
[LOGO OF DOMINION RESOURCES INC.]
Dominion Resources, Inc.
$200,000,000 7.40% Series D Remarketable Notes Due 2012
(Remarketing Date September 16, 2002)
$250,000,000 7.82% Series E Remarketable Notes Due 2014
(Remarketing Date September 15, 2004)
$250,000,000 Floating Rate Series F Remarketable Notes Due 2012
(Remarketing Date September 16, 2002)
--------------
The Series D Remarketable Notes will bear interest at 7.40% per year from the
date of issuance to but excluding September 16, 2002, which is the first
Series D Remarketing Date, and then at a fixed or floating rate described
under "Description of the Remarketable Notes." The Series E Remarketable Notes
will bear interest at 7.82% per year from the date of issuance to but
excluding September 15, 2004, which is the first Series E Remarketing Date,
and then at a fixed or floating rate described under "Description of the
Remarketable Notes." The Series F Remarketable Notes will bear interest at a
floating rate from the date of issuance to but excluding September 16, 2002,
which is the first Series F Remarketing Date, equal to the Three Month LIBOR
Rate, reset quarterly, plus 65 basis points, and then at a fixed or floating
rate described under "Description of the Remarketable Notes." We will pay
interest on the Series D and Series E Remarketable Notes on March 15 and
September 15 of each year, beginning March 15, 2001 and continuing through the
first Remarketing Date for that series, and then at intervals described under
"Description of the Remarketable Notes." Interest on the Series F Remarketable
Notes is payable on March 15, June 15, September 15 and December 15 of each
year, beginning on December 15, 2000 and continuing through the first Series F
Remarketing Date, and then at intervals described under "Description of the
Remarketable Notes." On the applicable Remarketing Date, the Remarketable
Notes will either be mandatorily tendered to and purchased by Banc of America
Securities LLC (the Remarketing Dealer for the Series D Remarketable Notes and
Series F Remarketable Notes) or Morgan Stanley & Co. Incorporated (the
Remarketing Dealer for the Series E Remarketable Notes), as the case may be,
as Remarketing Dealer, or mandatorily redeemed by us, in each case at the
prices described under "Description of the Remarketable Notes." The Series D
Remarketable Notes will mature on September 16, 2012, the Series E
Remarketable Notes will mature on September 15, 2014 and the Series F
Remarketable Notes will mature on September 16, 2012, unless, in each case,
extended until the tenth anniversary of the Series D, Series E or Series F
Fixed Rate Remarketing Date, as applicable; however, we have the option to
redeem all or any of the Series D, Series E or Series F Remarketable Notes at
the prices and under circumstances described under "Description of the
Remarketable Notes."
We will not make application to list the Series D, Series E and Series F
Remarketable Notes on any securities exchange or to include them in any
automated quotation system.
--------------
<TABLE>
<CAPTION>
Public Offering Underwriting Proceeds to Company
Price(1) Discount Before Expenses(2)
--------------- ------------ -------------------
<S> <C> <C> <C>
Per Series D Remarketable Note.... 99.901% 0.250% 103.091%
Series D Remarketable Note
Total............................ $199,802,000 $ 500,000 $206,182,000
Per Series E Remarketable Note.... 99.968% 0.500% 103.708%
Series E Remarketable Note
Total............................ $249,920,000 $1,250,000 $259,270,000
Per Series F Remarketable Note.... 100.000% 0.250% 103.190%
Series F Remarketable Note
Total............................ $250,000,000 $ 625,000 $257,975,000
Total............................. $699,722,000 $2,375,000 $723,427,000
</TABLE>
-------
(1) Plus accrued interest from September 11, 2000, if settlement occurs
after that date.
(2) Includes consideration payable by the Remarketing Dealers for the
right to serve as Remarketing Dealers.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The Remarketable Notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about September 11, 2000.
--------------
Joint Book-Running Managers
Banc of America Securities LLC Morgan Stanley Dean Witter
--------------
Co-Managers
Credit Suisse First Boston Lehman Brothers
The date of this prospectus supplement is September 6, 2000.
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information....................................... S-3
Forward-Looking Information............................................... S-3
Summary................................................................... S-4
Dominion.................................................................. S-7
Recent Developments....................................................... S-7
Use of Proceeds........................................................... S-8
Capitalization............................................................ S-8
Ratio of Earnings to Fixed Charges........................................ S-9
Selected Historical and Pro Forma Consolidated Financial Information...... S-10
Description of the Remarketable Notes..................................... S-13
Certain United States Federal Income Tax Considerations................... S-33
Underwriting.............................................................. S-37
Legal Opinions............................................................ S-39
Experts................................................................... S-39
Prospectus
About This Prospectus..................................................... 2
Where You Can Find More Information....................................... 2
The Company............................................................... 3
The Trusts................................................................ 3
Use of Proceeds........................................................... 3
Ratio of Earnings to Fixed Charges........................................ 4
Description of Debt Securities............................................ 4
Additional Terms of Senior Debt Securities................................ 12
Additional Terms of Junior Subordinated Debentures........................ 13
Description of the Trust Preferred Securities............................. 15
Description of the Guarantees............................................. 25
Relationship Among the Trust Preferred Securities, the Guarantee and the
Junior Subordinated Debentures Held by the Trust......................... 29
Accounting Treatment...................................................... 29
Description of Capital Stock.............................................. 30
Description of Stock Purchase Contracts and Stock Purchase Units.......... 31
Virginia Stock Corporation Act and the Articles and the Bylaws............ 31
Plan of Distribution...................................................... 34
Legal Opinions............................................................ 35
Experts................................................................... 35
</TABLE>
This document is in two parts. The first part is the prospectus supplement,
which describes the specific terms of the Remarketable Notes we are offering
and certain other matters relating to us and our financial condition. The
second part, the base prospectus, gives more general information about
securities we may offer from time to time, some of which does not apply to the
Remarketable Notes we are offering. Generally, when we refer to the prospectus,
we are referring to both parts of this document combined. If the description of
the Remarketable Notes in the prospectus supplement differs from the
description of Debt Securities (including Senior Debt Securities) in the
accompanying base prospectus, you should rely on the information in the
prospectus supplement.
You should rely only on the information contained in this document or to
which this document refers you. We have not, and the underwriters have not,
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate as of the date of this
document. Our business, financial condition, results of operations and
prospects may have changed since that date.
S-2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, and Chicago. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. You may also read and copy 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 supplement have been sold:
. Annual Report on Form 10-K and Form 10-K/A for the year ended December 31,
1999;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000 and June
30, 2000; and
. Current Reports on Form 8-K and Form 8-K/A, filed January 3, 2000, February
1, 2000, March 23, 2000, June 21, 2000, June 22, 2000 and July 11, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at: Corporate Secretary, Dominion Resources, Inc., 120 Tredegar
Street, Richmond, Virginia 23219 Telephone (804) 819-2000.
FORWARD-LOOKING INFORMATION
We have included certain information in this document which is "forward
looking information" as defined by the Private Securities Litigation Reform Act
of 1995. Examples include discussions as to our expectations, beliefs, plans,
goals, objectives and future financial or other performance or assumptions
concerning matters discussed in this document. This information, by its nature,
involves estimates, projections, forecasts and uncertainties that could cause
actual results or outcomes to differ substantially from those expressed.
Our business is influenced by many factors that are difficult to predict,
involve uncertainties that may materially affect actual results and are often
beyond our ability to control. We have identified a number of these factors in
our filings with the SEC, including our most recent Quarterly Report on Form
10-Q which is incorporated by reference in this prospectus and we refer you to
those reports for further information. They include fluctuations in energy-
related commodities prices, weather conditions, capital market conditions, the
risks of operating businesses in regulated industries that are in the process
of becoming deregulated, completing the integration of Consolidated Natural Gas
Company (CNG) with the remainder of our business and completing the
divestitures required of us in connection with the CNG transaction as well as
those we have determined to make in order to focus our attention on the
northeast quadrant of the United States.
S-3
<PAGE>
SUMMARY
In this prospectus supplement, the words "Dominion," "Company," "we," "our"
and "us" refer to Dominion Resources, Inc., a Virginia corporation, and its
subsidiaries and predecessors, unless the context otherwise indicates. The
following summary contains basic information about this offering. It may not
contain all the information that is important to you. The DESCRIPTION OF THE
REMARKETABLE NOTES section of this prospectus supplement contains more detailed
information regarding the terms and conditions of the Remarketable Notes. The
following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this prospectus supplement and in the
accompanying base prospectus.
Dominion
Dominion is a fully integrated gas and electric energy holding company
headquartered in Richmond, Virginia. Our principal subsidiaries are Virginia
Electric and Power Company, a regulated public utility engaged in the
generation, transmission, distribution and sale of electric energy in Virginia
and northeastern North Carolina, and Consolidated Natural Gas Company, a
producer, transporter, distributor and retail marketer of natural gas serving
customers in Pennsylvania, Ohio, Virginia, West Virginia, New York and various
cities focused in the Northeast and Mid-Atlantic. Our other principal
subsidiaries include Dominion Energy, Inc., an independent power and natural
gas subsidiary, and Dominion Capital, Inc., our financial services subsidiary.
Our address and telephone number are:
Dominion Resources, Inc.
120 Tredegar Street
Richmond, Virginia 23219
Telephone (804) 819-2000
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Six
Months Twelve Months
Ended Ended December 31,
June 30, ------------------------
2000 1999 1998 1997 1996 1995
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1.08 2.02 2.36 1.97 2.71 2.55
</TABLE>
The Offering
The following are the terms of the Series D, Series E and Series F
Remarketable Notes. The terms of the Remarketable Notes will change depending
on our elections and the Remarketing Dealers' elections at the respective
Remarketing Dates. Please see DESCRIPTION OF THE REMARKETABLE NOTES for an
explanation of the changes.
Remarketable Notes
We will issue $200,000,000 aggregate principal amount of 7.40% Series D
Remarketable Notes. The Series D Remarketable Notes will mature on September
16, 2012, unless extended until the tenth anniversary of the Series D Fixed
Rate Remarketing Date. We will issue $250,000,000 aggregate principal amount of
7.82% Series E Remarketable Notes. The Series E Remarketable Notes will mature
on September 15, 2014, unless extended until the tenth anniversary of the
Series E Fixed Rate Remarketing Date. We will issue $250,000,000 aggregate
principal amount of the Floating Rate Series F Remarketable Notes. The Series F
S-4
<PAGE>
Remarketable Notes will mature on September 16, 2012, unless extended until the
tenth anniversary of the Series F Fixed Rate Remarketing Date. However we may
redeem, or be required to redeem, all of the Series D, Series E and Series F
Remarketable Notes before their maturity dates but not prior to their
respective first Remarketing Dates.
Interest Rates
The Series D Remarketable Notes will bear interest at the rate of 7.40% per
year, from the date of issuance to but excluding September 16, 2002, which is
the first Series D Remarketing Date, and then at a rate discussed under
DESCRIPTION OF THE REMARKETABLE NOTES. The Series E Remarketable Notes will
bear interest at the rate of 7.82% per year from the date of issuance to but
excluding September 15, 2004, which is the first Series E Remarketing Date, and
then at a rate discussed under DESCRIPTION OF THE REMARKETABLE NOTES. The
Series F Remarketable Notes will bear interest at a floating rate equal to the
Three Month LIBOR Rate, reset quarterly, plus 65 basis points from the date of
issuance to but excluding September 16, 2002, which is the first Series F
Remarketing Date, and then at a rate discussed under DESCRIPTION OF THE
REMARKETABLE NOTES.
Interest Payment Dates
We will pay interest on the Series D Remarketable Notes on March 15 and
September 15, beginning on March 15, 2001 and continuing through the first
Series D Remarketing Date, and then at intervals discussed under DESCRIPTION OF
THE REMARKETABLE NOTES. We will pay interest on the Series E Remarketable Notes
on March 15 and September 15, beginning on March 15, 2001 and continuing
through the first Series E Remarketing Date, and then at intervals discussed
under DESCRIPTION OF THE REMARKETABLE NOTES. We will pay interest on the Series
F Remarketable Notes on March 15, June 15, September 15 and December 15,
beginning on December 15, 2000 and continuing through the first Series F
Remarketing Date, and then at intervals discussed under DESCRIPTION OF THE
REMARKETABLE NOTES.
Interest Accrual
The Series D Remarketable Notes will accrue interest at a fixed rate of 7.40%
per year, from the date of issuance to but excluding September 16, 2002,
computed on the basis of a 360-day year consisting of twelve 30-day months. The
Series E Remarketable Notes will accrue interest at a fixed rate of 7.82% per
year from the date of issuance to but excluding September 15, 2004, computed on
the basis of a 360-day year consisting of twelve 30-day months. The Series F
Remarketable Notes will accrue interest at a floating rate from the date of
issuance to but excluding September 16, 2002. The floating rate will be reset
on the 15th day of the months of March, June, September and December of each
year and will be computed on the basis of the actual number of days in each
applicable three-month period over a 360-day year. From their respective first
Remarketing Dates, the Series D, Series E and Series F Remarketable Notes will
accrue interest at a fixed rate or at a floating rate, depending on our
decision. If the rate is fixed, interest will be computed on the basis of a
360-day year consisting of twelve 30-day months. If the rate is floating,
interest will be computed on the basis of the actual number
S-5
<PAGE>
of days in the applicable Floating Rate Reset Period over a 360-day year.
Ranking
The Remarketable Notes will rank equally with all of our other senior
unsecured indebtedness, and will be senior in right of payment to all of our
subordinated indebtedness. The Indenture contains no restrictions on the amount
of additional indebtedness that we may incur.
Mandatory Tender
We have entered into Remarketing Agreements with Banc of America Securities
LLC, with respect to each of the Series D and Series F Remarketable Notes, and
a Remarketing Agreement with Morgan Stanley & Co. Incorporated, with respect to
the Series E Remarketable Notes. Each agreement gives the applicable
Remarketing Dealer the option to purchase (and imposes on the holders the
obligation to tender) all of the applicable series of Remarketable Notes. The
Series D Remarketing Dealer may repurchase the Series D Remarketable Notes on
September 16, 2002 or on the subsequent Series D Remarketing Date, if any. The
Series E Remarketing Dealer may repurchase the Series E Remarketable Notes on
September 15, 2004 or on the subsequent Series E Remarketing Date, if any. The
Series F Remarketing Dealer may repurchase the Series F Remarketable Notes on
September 16, 2002 or on the subsequent Series F Remarketing Date, if any. The
purchase price for the Remarketable Notes will be equal to 100% of the
aggregate principal amount outstanding on the first Series D, Series E or
Series F Remarketing Date, as applicable, or the Dollar Price on the subsequent
applicable Remarketing Date, if any.
Mandatory Redemption
If a Remarketing Dealer does not purchase the applicable series of
Remarketable Notes on a Remarketing Date for that series, the Trustee, on
behalf of the beneficial owners, must require us to redeem all of the
Remarketable Notes of that series for 100% of the aggregate principal amount
outstanding on the first Remarketing Date or the Dollar Price plus all accrued
and unpaid interest, if any, on any subsequent Remarketing Date.
Optional Redemption
If a Remarketing Dealer elects to purchase the applicable series of
Remarketable Notes on any Remarketing Date, then we will have the option of
redeeming all of such series of Remarketable Notes from the Remarketing Dealer
on the Remarketing Date at the Dollar Price plus all accrued and unpaid
interest, if any.
Post-Remarketing Optional Redemption
We may redeem some or all of the Series D, Series E or Series F Remarketable
Notes at any time after the Fixed Rate Remarketing Date for that series at, in
each case, the redemption price plus accrued interest to the date of
redemption, if any, as described in the section of this prospectus supplement
under the heading "Post-Remarketing Optional Redemption," in the DESCRIPTION OF
THE REMARKETABLE NOTES.
Use of Proceeds
We will use the net proceeds from the sale of the Remarketable Notes to
refinance a portion of our outstanding short-term debt issued in connection
with our acquisition of CNG, including commercial paper.
S-6
<PAGE>
DOMINION
Dominion is a fully integrated gas and electric energy holding company
headquartered in Richmond, Virginia. Our principal subsidiaries are Virginia
Electric and Power Company (Virginia Power), a regulated public utility engaged
in the generation, transmission, distribution and sale of electric energy in
Virginia and northeastern North Carolina, and Consolidated Natural Gas Company
(CNG), a producer, transporter, distributor and retail marketer of natural gas
serving customers in Pennsylvania, Ohio, Virginia, West Virginia, New York and
various cities focused in the Northeast and Mid-Atlantic. Our other principal
subsidiaries include Dominion Energy, Inc., an independent power and natural
gas subsidiary, and Dominion Capital, Inc., our financial services subsidiary.
Our primary operating segments are:
Dominion Energy--Dominion Energy manages our 20,000 megawatt generation
portfolio. This segment includes the generation assets of Virginia Power and
Dominion Energy, Inc. Dominion Energy also manages the gas pipeline and
storage assets of CNG, including 7,600 miles of gas transmission pipeline
and is responsible for our generation growth strategy, trading, marketing,
hedging and energy arbitrage activities.
Dominion Delivery--Dominion Delivery manages and directs all local electric
and gas distribution systems, customer service and 6,000 miles of electric
transmission lines. Dominion Delivery is responsible for the customers of
Virginia Power, North Carolina Power, Peoples Gas, Hope Gas and East Ohio
Gas. Dominion Delivery also includes Dominion Telecom, our
telecommunications business, with its fiber optic network and related
telecommunications and advanced data services.
Dominion Exploration & Production--Dominion Exploration & Production manages
our onshore and offshore oil and gas exploration and production activities.
With nearly 3 trillion cubic feet of natural gas equivalent reserves and 325
billion cubic feet of annual production, Dominion Exploration & Production
is one of the nation's largest independent oil and gas operations. We
operate on the outer continental shelf and deep water areas of the Gulf of
Mexico, the Appalachian Basin and other selected regions in the lower 48
states and western Canada.
In addition, we treat Dominion Capital, Inc. as a separate operating segment.
Under the requirements of the Public Utility Holding Company Act of 1935, the
SEC has ordered us to divest Dominion Capital, Inc. by early 2002.
RECENT DEVELOPMENTS
On August 7, 2000, Dominion reached an agreement to buy Millstone Nuclear
Power Station in Waterford, Connecticut for approximately $1.3 billion. We are
acquiring the station from subsidiaries of Northeast Utilities and other
owners. The acquisition will add a total of 1,954 megawatts of generating
capacity to our portfolio. The purchase price includes approximately $1.19
billion for plant assets and $105 million for fuel. The acquisition is expected
to close by the end of April 2001, subject to regulatory approvals, including
approvals from the Nuclear Regulatory Commission, the Federal
S-7
<PAGE>
Energy Regulatory Commission and the Connecticut Department of Public Utility
Control.
Dominion Telecom (formerly VPS Communications) was transferred from Virginia
Power to Dominion on August 1, 2000. We have recently announced plans to expand
Dominion Telecom, initially through acquisitions of existing fiber capacity and
through joint development projects with third parties and, in the future, by
leveraging off existing natural gas pipeline rights of way.
USE OF PROCEEDS
The net proceeds from the sale of the Remarketable Notes offered hereby will
be used to refinance a portion of our outstanding short-term debt issued in
connection with our acquisition of CNG, including commercial paper. At July 31,
2000 the weighted average maturity date of our approximately $2.5 billion of
outstanding commercial paper was approximately 21.76 days and the weighted
average interest rate was approximately 6.90%.
CAPITALIZATION
The table below shows our capitalization on a consolidated basis as of June
30, 2000. The "As Adjusted" column reflects our capitalization after giving
effect to this offering of the Series D, Series E and Series F Remarketable
Notes and our July 10, 2000 offerings of $700,000,000 Series B 7.625% Senior
Notes due 2005 and $400,000,000 Series C 7.600% Senior Notes due 2003, and the
use of the net proceeds from these offerings. You should read this table along
with our financial statements contained in our most recent Quarterly Report on
Form 10-Q and Annual Report on Form 10-K. See WHERE YOU CAN FIND MORE
INFORMATION on page S-3 of this prospectus supplement.
<TABLE>
<CAPTION>
June 30, 2000
-------------------
Actual As Adjusted
------- -----------
(in millions)
<S> <C> <C>
Short-term debt/1/ ....................................... $ 5,961 $ 4,145
Long-term debt and capital lease obligations.............. 9,258 11,058
Obligated mandatorily redeemable preferred securities of
subsidiary trusts........................................ 385 385
Preferred stock........................................... 509 509
Common shareholders' equity............................... 6,487 6,487
------- -------
Total capitalization...................................... $22,600 $22,584
======= =======
</TABLE>
--------
/1/ Includes securities due within one year.
S-8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
These computations reflect our consolidated earnings and consolidated fixed
charges including proportionate interests in the earnings and fixed charges of
certain other companies in which we hold an equity interest. For this ratio,
earnings is determined by adding total fixed charges (excluding interest
capitalized), income taxes, minority common stockholders equity in net income
and amortization of interest capitalized to income from continuing operations
after eliminating equity in undistributed earnings and adding back losses of
companies of which at least 20% but less than 50% of total equity is owned by
us. For this purpose, total fixed charges consists of (1) interest on all
indebtedness and amortization of debt discount and expense, (2) interest
capitalized and (3) an interest factor attributable to rentals.
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
Six
Months Twelve Months Ended
Ended December 31,
June 30, ------------------------------
2000/1/ 1999/2/ 1998 1997/3/ 1996 1995
-------- ------- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C>
1.08 2.02 2.36 1.97 2.71 2.55
</TABLE>
--------
/1/If we had completed the CNG acquisition as of January 1, 2000, the pro forma
ratio of earnings to fixed charges for the six months ended June 30, 2000
would be 1.18x.
/2/Net income for the twelve months ended December 31, 1999 includes the one-
time after-tax charge of $255 million resulting from the discontinued
application by Virginia Power of Statement of Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of Regulation, to its
generation operations. Excluding this charge from the calculation above
results in a ratio of earnings to fixed charges for the twelve months ended
December 31, 1999 of 2.48x.
/3/Net income for the twelve months ended December 31, 1997 includes the one-
time charge of $157 million for the windfall profits tax levied by the U.K.
government. Excluding this charge from the calculation above results in a
ratio of earnings to fixed charges for the twelve months ended December 31,
1997 of 2.22x.
S-9
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
We are providing or incorporating by reference in this prospectus supplement
selected financial information for Dominion and CNG. We derived this
information from audited and unaudited financial statements of Dominion and
audited financial statements of CNG for the periods presented. The information
is only a summary and you should read it together with the financial
information included or incorporated by reference in this prospectus
supplement. See WHERE YOU CAN FIND MORE INFORMATION on page S-3 of this
prospectus supplement.
Dominion--Historical Information
In the table below, we provide you with our selected historical consolidated
financial information. We prepared this information using our consolidated
financial statements as of the dates and for the periods indicated. We derived
the consolidated income statement data below for each of the three years ended
December 31, 1999, and the consolidated balance sheet data at December 31, 1999
and 1998, from financial statements audited by Deloitte & Touche LLP,
independent auditors. The remaining data is derived from financial statements
that have not been audited, but which, in the opinion of our management,
contain all adjustments, including normal recurring accruals, necessary to
present fairly our financial position and results of operations and cash flows
for the applicable periods.
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
-------------- -------------------------
2000/1/ 1999 1999 1998 1997
------- ------ ------- ------- ------
(in millions)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION, for
period ended
Total revenues.................... $ 4,128 $2,608 $ 5,520 $ 6,081 $7,263
Income before income taxes,
minority interests and
extraordinary item............... 35 389 828 869 679
Net income........................ 35 3/2/ 296/2/ 536 399
BALANCE SHEET INFORMATION, at
period end
Cash and cash equivalents......... 306 280 426
Total assets...................... 29,098 17,747 17,517
Short-term debt/3/ ............... 5,961 1,406 744
Long-term debt.................... 9,258 6,936 6,252
Obligated mandatorily redeemable
preferred securities of
subsidiary trusts................ 385 385 385
Preferred stock................... 509 509 689
Common shareholders' equity....... 6,487 4,752 5,316
</TABLE>
--------
/1/The income statement information and balance sheet information reflect the
acquisition of CNG which was consummated effective January 28, 2000.
/2/As discussed in our Form 8-K, filed March 29, 1999, Virginia Power
discontinued the application of Statement of Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of Regulation, to its
generation operations. This resulted in a one-time after-tax charge of $255
million. Excluding this charge, net income for the six months ended June 30,
1999 was $258 million and for the year ended December 31, 1999 was $551
million.
/3/Includes securities due within one year.
S-10
<PAGE>
CNG--Historical Information
In the table below, we provide you with CNG's selected historical
consolidated financial information. We prepared this information using CNG's
consolidated financial statements as of the dates and for the periods
indicated. We derived the consolidated income statement data below for each of
the three years ended December 31, 1999, and the consolidated balance sheet
data at December 31, 1999 and 1998, from audited financial statements
incorporated by reference in this prospectus supplement.
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------
1999 1998 1997
------ ------ ------
(in millions)
<S> <C> <C> <C>
INCOME STATEMENT INFORMATION, for period ended
Total operating revenues and income....................... $3,074 $2,760 $3,177
Income from operations.................................... 533 497 567
Net income................................................ 137 239 304
BALANCE SHEET INFORMATION, at period end
Cash and cash equivalents................................. 94 135
Total assets.............................................. 6,535 6,362
Short-term debt/1/ ....................................... 686 670
Long-term debt............................................ 1,764 1,380
Common shareholders' equity............................... 2,376 2,400
</TABLE>
--------
/1/ Includes current maturities of long-term debt and commercial paper.
S-11
<PAGE>
Dominion--Selected Pro Forma Condensed Financial Information
In the table below, we provide you with unaudited selected pro forma
condensed financial information for Dominion for the year ended December 31,
1999 as if we had completed the CNG acquisition on January 1, 1999 and for the
six months ended June 30, 2000 as if we had completed the acquisition on
January 1, 2000. The pro forma financial information was prepared using the
purchase method of accounting, with Dominion treated as the acquiring company.
This unaudited selected pro forma condensed financial information should be
read in conjunction with the separate historical financial statements and
accompanying notes of Dominion and CNG, and Dominion's pro forma financial
information, all of which are incorporated by reference in this prospectus
supplement. You should not rely on the unaudited selected pro forma financial
information as an indication of the results of operations or financial position
that would have been achieved if the CNG acquisition had taken place earlier;
nor should you rely on it as an indicator of the results of operations or
financial position of Dominion after the completion of these transactions.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000/1/ December 31, 1999
---------------- -----------------
(in millions)
<S> <C> <C>
INCOME STATEMENT INFORMATION, for period
ended
Total revenues............................. $4,495 $8,594
Income before income taxes, minority
interests and extraordinary items......... 65 901
Net income................................. 65 232/2/
BALANCE SHEET INFORMATION, at period end
Cash and cash equivalents.................. 306 374
Total assets............................... 29,098 28,867
Short-term debt/3/ ........................ 5,961 6,352
Long-term debt............................. 9,258 8,680
Obligated mandatorily redeemable preferred
securities of subsidiary trusts........... 385 385
Preferred stock............................ 509 509
Common shareholders' equity................ 6,487 6,885
</TABLE>
--------
/1/There are no pro forma adjustments for the balance sheet information for the
six months ended June 30, 2000 since the acquisition of CNG had been
completed before that date.
/2/As discussed in our Form 8-K, filed March 29, 1999, Virginia Power
discontinued the application of Statement of Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of Regulation, to its
generation operations. This resulted in a one-time after-tax charge of $255
million. Excluding this charge, pro forma net income for the year ended
December 31, 1999 was $487 million.
/3/Includes securities due within one year.
S-12
<PAGE>
DESCRIPTION OF THE REMARKETABLE NOTES
Set forth below is a description of the specific terms of the Remarketable
Notes. The term "Remarketable Notes" includes the Series D Remarketable Notes,
the Series E Remarketable Notes and the Series F Remarketable Notes. This
description supplements, and should be read together with, the description of
the Senior Debt Securities set forth in the accompanying base prospectus under
the caption "Description of Debt Securities." We will issue the Remarketable
Notes under a Senior Indenture dated as of June 1, 2000 between us and The
Chase Manhattan Bank, as trustee, as supplemented (the "Indenture"). We have
summarized select portions of the Indenture below and in the base prospectus.
The summary is not complete and is qualified by reference to the Indenture
relating to the Remarketable Notes. Capitalized terms used but not defined
herein have the meanings set forth in the Indenture. Capitalized terms used
generically herein, without reference to a particular series shall be
applicable to the Series D, Series E and Series F Remarketable Notes.
General
The Series D Remarketable Notes, the Series E Remarketable Notes and the
Series F Remarketable Notes will each be issued as a series of Senior Debt
Securities under the Indenture. The Series D Remarketable Notes will initially
be limited to $200,000,000 aggregate principal amount and will mature on
September 16, 2012, unless extended until the tenth anniversary of the Series D
Fixed Rate Remarketing Date. The Series E Remarketable Notes will initially be
limited to $250,000,000 aggregate principal amount and will mature on September
15, 2014, unless extended until the tenth anniversary of the Series E Fixed
Rate Remarketing Date. The Series F Remarketable Notes will initially be
limited to $250,000,000 aggregate principal amount and will mature on September
16, 2012, unless extended until the tenth anniversary of the Series F Fixed
Rate Remarketing Date. We may redeem, or be required to redeem, the Series D,
Series E or Series F Remarketable Notes before their respective maturity dates
but not prior to their first Remarketing Dates.
The Remarketable Notes will not be subject to any sinking fund.
The Remarketable Notes will initially be issued only in registered, book-
entry form, in denominations of $1,000 and multiples thereof as described in
"Book-Entry Only Issuance--The Depository Trust Company." We will issue global
securities in denominations equal to the total principal amount of each series
of the Remarketable Notes.
If any interest, principal or other payment date of the Remarketable Notes
(including any payment in connection with the mandatory tender or any mandatory
redemption as described below) with respect to a series of Remarketable Notes
that then accrues interest at a fixed rate does not fall on a Business Day, a
payment otherwise payable on that day will be made on the next succeeding
Business Day. Such payment will have the same effect as if made on the
orginally scheduled payment date, and no interest will accrue for the period
from and after such payment date. In the case of any payment with respect to a
series of Remarketable Notes that then accrues interest at a floating rate of
interest, interest will accrue from such originally scheduled payment date to
but excluding such next succeeding Business Day (except in the case of an
interest payment at maturity, in which case no interest will accrue from and
after the maturity date).
S-13
<PAGE>
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York City or Richmond, Virginia are
authorized or obligated by law or executive order to close.
"London Business Day" means any day on which dealings in U.S. dollars are
transacted in the London Inter-Bank Market.
"LIBOR Business Day" means a day that is a Business Day and a London Business
Day.
We have agreed with each Remarketing Dealer that we will not cause or permit
the terms or provisions of the Remarketable Notes (or the Indenture, as it
relates to the Remarketable Notes) to be modified in any way, and may not make
open market or other purchases of the Series D, Series E or Series F
Remarketable Notes prior to the applicable first Remarketing Date (as defined
in "Interest and Interest Payment Dates" below) except to fulfill the mandatory
redemption obligations, or in other limited circumstances, without the prior
written consent of the applicable Remarketing Dealer.
Ranking
The Remarketable Notes will be our direct, unsecured and unsubordinated
obligations, will rank equally with all of our other senior unsecured
indebtedness and will rank senior in right of payment to all our subordinated
indebtedness. The Remarketable Notes will be effectively subordinated to our
secured debt, if any.
Because we are a holding company and conduct all of our operations through
our subsidiaries, our ability to meet our obligations under the Remarketable
Notes is dependent on the earnings and cash flows of those subsidiaries and the
ability of those subsidiaries to pay dividends or to advance or repay funds to
us. Holders of Remarketable Notes will generally have a junior position to
claims of creditors of our subsidiaries, including trade creditors,
debtholders, secured creditors, taxing authorities, guarantee holders and any
preferred stockholders. As of June 30, 2000, Virginia Power had approximately
6.5 million issued and outstanding shares of preferred stock. In addition to
trade debt, most of our operating subsidiaries have ongoing corporate debt
programs used to finance their business activities. As of June 30, 2000, our
subsidiaries had approximately $8.5 billion of outstanding long-term debt
(including securities due within one year).
The Indenture contains no restrictions on the amount of additional
indebtedness that we may incur.
Interest and Interest Payment Dates
The Series D Remarketable Notes will bear interest at 7.40% per year, from
the date of issuance to but excluding September 16, 2002, which is the first
Series D Remarketing Date. We will pay interest semi-annually on March 15 and
September 15, beginning on March 15, 2001, until the first Series D Remarketing
Date.
The Series E Remarketable Notes will bear interest at 7.82% per year, from
the date of issuance to but excluding September 15, 2004, which is the first
Series E Remarketing Date. We will pay interest semi-annually on March 15 and
September 15, beginning on March 15, 2001, until the first Series E Remarketing
Date.
S-14
<PAGE>
The Series F Remarketable Notes will bear interest at a floating rate of
interest, from the date of issuance to but excluding September 16, 2002, which
is the first Series F Remarketing Date. We will pay interest quarterly on
March 15, June 15, September 15 and December 15, beginning on December 15,
2000, until the first Series F Remarketing Date.
The per annum interest rate on the Series F Remarketable Notes in effect
for each day up to but excluding September 16, 2002 will be equal to the Three
Month LIBOR Rate plus 65 basis points (0.65%). Such interest rate will be
reset on the 15th day of the months of March, June, September and December of
each year (each a "LIBOR Rate Reset Date").
The "Three Month LIBOR Rate" shall mean the rate determined in accordance
with the following provisions:
(1) On the LIBOR Interest Determination Date, the Series F Remarketing Dealer
or its affiliate will determine the Three Month LIBOR Rate which shall be
the rate for deposits in U.S. Dollars having a three-month maturity which
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the
LIBOR Interest Determination Date.
(2) If no rate appears on Telerate Page 3750 on the LIBOR Interest
Determination Date, the Series F Remarketing Dealer or its affiliate will
request the principal London offices of four major reference banks in the
London Inter-Bank Market, to provide it with their offered quotations for
deposits in U.S. Dollars for the period of three months, commencing on the
applicable LIBOR Rate Reset Date, to prime banks in the London Inter-Bank
Market at approximately 11:00 a.m., London time, on that LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in U.S. Dollars in that market at that time. If at
least two quotations are provided, then the Three Month LIBOR Rate will be
the average of those quotations. If fewer than two quotations are
provided, then the Three Month LIBOR Rate will be the average (rounded, if
necessary, to the nearest one hundredth (0.01) of a percent) of the rates
quoted at approximately 11:00 a.m., New York City time, on the LIBOR
Interest Determination Date by three major banks in New York City selected
by the Series F Remarketing Dealer or its affiliate for loans in U.S.
Dollars to leading European banks, having a three-month maturity and in a
principal amount that is representative for a single transaction in U.S.
Dollars in that market at that time. If the banks selected by the Series F
Remarketing Dealer or its affiliate are not providing quotations in the
manner described by this paragraph, the rate for the period following the
LIBOR Interest Determination Date will be the rate in effect on that LIBOR
Interest Determination Date.
"Telerate Page 3750" means the display designated as "Telerate page 3750" on
Dow Jones Markets (or such other page as may replace "Telerate page 3750" on
such service) or such other service displaying the offer prices, as may
replace Dow Jones Markets.
"LIBOR Interest Determination Date" shall mean the second LIBOR Business Day
preceding each LIBOR Rate Reset Date.
S-15
<PAGE>
"Series D Remarketing Date(s)" means September 16, 2002, or the 15th day of
each month thereafter until September 15, 2003 assuming the Series D
Remarketing Dealer elects to purchase the Series D Remarketable Notes and we
have elected to exercise our Series D Floating Period Option (as defined under
the heading "Floating Rate Period" below).
"Series E Remarketing Date(s)" means September 15, 2004, or the 15th day of
each month thereafter until September 15, 2005 assuming the Series E
Remarketing Dealer elects to purchase the Series E Remarketable Notes and we
have elected to exercise our Series E Floating Period Option (as defined under
the heading "Floating Rate Period" below).
"Series F Remarketing Date(s)" means September 16, 2002, or the 15th day of
each month thereafter until September 15, 2003 assuming the Series F
Remarketing Dealer elects to purchase the Series F Remarketable Notes and we
have elected to exercise our Series F Floating Period Option (as defined under
the heading "Floating Rate Period" below).
"Series D Fixed Rate Remarketing Date" means (a) the first Series D
Remarketing Date, assuming the Series D Remarketing Dealer has elected to
purchase the Series D Remarketable Notes and we have not elected to exercise
our Series D Floating Period Option, or (b) the subsequent Series D Remarketing
Date on which the Series D Remarketing Dealer is obligated to remarket the
Series D Remarketable Notes in the event that we have elected to exercise our
Series D Floating Period Option.
"Series E Fixed Rate Remarketing Date" means (a) the first Series E
Remarketing Date, assuming the Series E Remarketing Dealer has elected to
purchase the Series E Remarketable Notes and we have not elected to exercise
our Series E Floating Period Option, or (b) the subsequent Series E Remarketing
Date on which the Series E Remarketing Dealer is obligated to remarket the
Series E Remarketable Notes in the event that we have elected to exercise our
Series E Floating Period Option.
"Series F Fixed Rate Remarketing Date" means (a) the first Series F
Remarketing Date, assuming the Series F Remarketing Dealer has elected to
purchase the Series F Remarketable Notes and we have not elected to exercise
our Series F Floating Period Option, or (b) the subsequent Series F Remarketing
Date on which the Series F Remarketing Dealer is obligated to remarket the
Series F Remarketable Notes in the event that we have elected to exercise our
Series F Floating Period Option.
From and after the Series D, Series E or Series F Fixed Rate Remarketing
Date, as applicable, until the maturity date of that series, interest will
accrue on that series of Remarketable Notes at a fixed rate equal to the
Interest Rate to Maturity. During this period, we will pay interest on such
Remarketable Notes semi-annually on each six-month anniversary of the Fixed
Rate Remarketing Date. Interest on such Remarketable Notes during this period
will be computed on the basis of a 360-day year consisting of twelve 30-day
months.
From and after the first Series D, Series E or Series F Remarketing Date, if
we elect to exercise the applicable Series D, Series E or Series F Floating
Period Option, interest on such Remarketable Notes accruing during any
applicable Floating Rate Reset Period (as defined under the heading "Floating
Rate Period" below) will be payable on the next following applicable Reference
Rate Reset Date. Interest on such Remarketable Notes during such Floating Rate
Reset Period will be computed on the
S-16
<PAGE>
basis of the actual number of days in such Floating Rate Reset Period over a
360-day year. See "Floating Rate Period" below.
Interest payable on any interest payment date for a series will be payable to
the persons in whose names the Remarketable Notes of that series are registered
on the 15th calendar day (whether or not a Business Day) immediately preceding
the related interest payment date.
Interest payments will be in the amount of interest accrued from and including
the next preceding interest payment date (or from and including the date of
issuance if no interest has been paid or duly provided with respect to the
Remarketable Notes) to but excluding the relevant interest payment date,
Remarketing Date or stated maturity date, as the case may be.
Interest Rate to Maturity
If a Remarketing Dealer elects to purchase the Remarketable Notes of the
applicable series, then by 3:30 p.m., New York City time, on the Floating Rate
Spread Determination Date or the Fixed Rate Determination Date (each a
"Determination Date"), as the case may be, that Remarketing Dealer will
determine either (a) the Floating Rate Spread (as defined in "Floating Rate
Period" below), in the event we have elected to exercise our Floating Period
Option for that series, or (b) the Interest Rate to Maturity to the nearest one
hundredth (0.01) of one percent per annum, unless we have elected to redeem, or
are required to redeem, the Remarketable Notes of that series. The Floating
Period Interest Rate for a series of Remarketable Notes will equal the sum of
the Reference Rate (as defined in "Floating Rate Period" below) and the
Floating Rate Spread for that series. The Interest Rate to Maturity for a
series of Remarketable Notes shall be equal to the sum of 5.72% with respect to
the Series D and Series F Remarketable Notes and 5.85% with respect to the
Series E Remarketable Notes (in each case, the "Base Rate") and the Applicable
Spread (as defined below), which will be based on the Dollar Price of the
Remarketable Notes of that series. The Interest Rate to Maturity for a series
of Remarketable Notes announced by the applicable Remarketing Dealer, absent
manifest error, shall be binding and conclusive upon the beneficial owners of
such Remarketable Notes, Dominion and the Trustee.
For this purpose, the following terms have the following meanings:
"Applicable Spread" shall be the lowest Fixed Rate Bid, expressed as a spread
(in the form of a percentage or in basis points) above the Base Rate for the
Remarketable Notes of a series, obtained by the Remarketing Dealer by 3:30
p.m., New York City time, on the Fixed Rate Determination Date for that series
from the Fixed Rate Bids quoted to that Remarketing Dealer by up to five
Reference Corporate Dealers.
A "Fixed Rate Bid" will be an irrevocable offer to purchase the aggregate
outstanding principal amount of a series of Remarketable Notes at the Dollar
Price, but assuming:
(1) a settlement date that is the Fixed Rate Remarketing Date applicable to
such series, without accrued interest,
(2) a maturity date that is the 10th anniversary of the Fixed Rate
Remarketing Date for that series, and
(3) a stated annual interest rate equal to the Base Rate plus the spread bid
by the Reference Corporate Dealer.
"Comparable Treasury Issue" for any of the Series D, Series E or Series F
Remarketable Notes means the U.S. Treasury
S-17
<PAGE>
Security selected by the applicable Remarketing Dealer, as of the first
Determination Date for that series, as being the then current on-the-run ten-
year U.S. Treasury Security (meaning the then most recently issued ten-year
U.S. Treasury Security), unless, in the reasonable judgment of the Remarketing
Dealer for that series, the then on-the-run ten-year U.S. Treasury Security is
not then being used as the "pricing bond" for comparable corporate issues, in
which case, the Comparable Treasury Issue will mean the "pricing bond" used at
the time for comparable corporate issues or, if, in the reasonable judgment of
the Remarketing Dealer for the series, there is no such "pricing bond", then
the Comparable Treasury Issue will mean the U.S. Treasury Security or
Securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of that
series of Remarketable Notes.
"Comparable Treasury Price" means, with respect to the first Remarketing Date
of a series of Remarketable Notes:
(1) the offer prices for the Comparable Treasury Issue (expressed in each
case as a percentage of their principal amount) at 12:00 noon, New York
City time, on the first Determination Date, as set forth on "Telerate
Page 500" (or such other page as may replace "Telerate Page 500"), or
(2) if such page (or any successor page) is not displayed or does not
contain such offer prices on such first Determination Date, (1) the
average of up to five Reference Treasury Dealer Quotations for such
Remarketing Date, after excluding the highest and lowest Reference
Treasury Dealer Quotations, or (2) if fewer than five such Reference
Treasury Dealer Quotations are obtained, the average of all such
quotations.
"Telerate Page 500" means the display designated as "Telerate page 500" on
Dow Jones Markets (or such other page as may replace "Telerate page 500" on
such service) or such other service displaying the offer prices, as may replace
Dow Jones Markets.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer, the offer prices for the Comparable Treasury Issue (expressed
in each case as a percentage of their principal amount) quoted in writing to
the applicable Remarketing Dealer by such Reference Treasury Dealer, by 3:30
p.m., New York City time, on the applicable Determination Date.
"Dollar Price" means, with respect to a series of Remarketable Notes (1) the
principal amount of such Remarketable Notes, plus, (2) the premium equal to the
excess, if any, of (A) the present value, as of the first Remarketing Date for
that series, of the Remaining Scheduled Payments (as defined below) for such
Remarketable Notes, discounted to such first Remarketing Date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate, over (B) the principal amount of such Remarketable Notes.
"Fixed Rate Determination Date" means the third Business Day prior to the
Fixed Rate Remarketing Date of a series of Remarketable Notes.
"Reference Corporate Dealer" means each of up to five leading dealers of
publicly traded debt securities, including our debt securities, which shall be
selected
S-18
<PAGE>
by us. We will advise the applicable Remarketing Dealer of our selection of
Reference Corporate Dealers no later than five Business Days prior to the
applicable Series D, Series E or Series F Fixed Rate Remarketing Date. If
either Banc of America Securities LLC ("Banc of America Securities") or Morgan
Stanley & Co. Incorporated ("Morgan Stanley") is then acting as the Remarketing
Dealer for the series, or if either or both are acting as an underwriter for
that series, then either or both will be among the Reference Corporate Dealers
we will select.
"Reference Treasury Dealer" means each of up to five Primary U.S. Government
Securities dealers (each a "Primary Treasury Dealer") to be selected by us, and
their respective successors; provided that if any of the foregoing ceases to be
a Primary Treasury Dealer, we will substitute another Primary Treasury Dealer.
We will advise the applicable Remarketing Dealer of our selection of Reference
Treasury Dealers no later than five Business Days prior to the applicable
Series D, Series E or Series F Fixed Rate Remarketing Date. If either Banc of
America Securities or Morgan Stanley is then acting as the Remarketing Dealer
for the series, or if either or both are acting as an underwriter for that
series, then either or both will be among the Reference Treasury Dealers we
will select.
"Remaining Scheduled Payments" means, with respect to a series of
Remarketable Notes, the remaining scheduled payments of the principal of
and interest on such Remarketable Notes, calculated at the Base Rate applicable
to such series, that would be due after the first Remarketing Date, for such
series, to and including the stated maturity date for such series; provided
that if such first Remarketing Date is not an interest payment date, the amount
of the next succeeding scheduled interest payment will be reduced by the amount
of interest accrued to such first Remarketing Date.
"Treasury Rate" for a series of Remarketable Notes means, with respect to a
Remarketing Date the rate per annum equal to the semi-annual equivalent yield
to maturity of the Comparable Treasury Issue for such series of Remarketable
Notes, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price
for such Remarketing Date.
The Treasury Rate will be calculated on the third Business Day preceding the
applicable Remarketing Date.
Notification of Interest Rate to Maturity
Subject to a Remarketing Dealer's election to remarket the Series D, Series E
or Series F Remarketable Notes, as applicable, the applicable Remarketing
Dealer shall notify us, the Trustee and The Depository Trust Company by
telephone, confirmed in writing (which may include facsimile or other
electronic transmission), by 4:00 p.m., New York City time, on the Series D,
Series E or Series F Fixed Rate Determination Date of the Interest Rate to
Maturity effective from and including the Series D, Series E or Series F Fixed
Rate Remarketing Date.
Floating Rate Period
Following a Remarketing Dealer's election to purchase the applicable series
of Remarketable Notes, but prior to the fourth Business Day immediately
preceding the first Remarketing Date for that series (the
S-19
<PAGE>
"Floating Period Notification Date"), we may elect to exercise our Floating
Period Option for that series. If we exercise this Floating Period Option, the
Remarketable Notes of that series will be remarketed at a floating rate equal
to the Floating Period Interest Rate for a period of one year, or for the
period ending on a date which otherwise would be a Reference Rate Reset Date
for that series following the date on which we elect to terminate such Floating
Rate Period (the "Floating Rate Period Termination Notification Date"),
whichever is shorter (the last day of such period being the "Floating Period
Termination Date"). In the event that we exercise our Floating Period Option
for a series, the maturity of the Remarketable Notes for that series will be
extended to the tenth anniversary of the Fixed Rate Remarketing Date for that
series, not to exceed September 16, 2013, in the case of the Series D
Remarketable Notes, September 15, 2015, in the case of the Series E
Remarketable Notes or September 16, 2013, in the case of the Series F
Remarketable Notes.
The amount of interest for each day that the Remarketable Notes of a series
are outstanding during the Floating Rate
Period for that series will be calculated by dividing the Floating Period
Interest Rate in effect for that day by 360 and multiplying the result by the
Dollar Price. The amount of interest to be paid for a Floating Rate Reset
Period will be calculated by adding the daily interest amounts for each day in
that Floating Rate Reset Period. The Floating Period Interest Rate for a series
of Remarketable Notes announced by the Remarketing Dealer for that series,
absent manifest error, will be binding and conclusive upon the beneficial
owners of such Remarketable Notes, Dominion and the Trustee.
For this purpose, the following terms have the following meanings:
"Floating Period Interest Rate" for a series of Remarketable Notes means the
sum of the Reference Rate and the Floating Rate Spread for such series.
"Floating Rate Spread Determination Date" for a series of Remarketable Notes
means the third Business Day prior to the Floating Rate Remarketing Date for
such series.
"Floating Rate Remarketing Date" means September 16, 2002 in the event that
we have elected to exercise our Series D Floating Period Option, September 15,
2004 in the event that we have elected to exercise our Series E Floating Period
Option or September 16, 2002, in the event that we have elected to exercise our
Series F Floating Period Option.
"Series D Floating Period Option" means our right, on any date subsequent to
the Series D Remarketing Dealer's election to purchase the Series D
Remarketable Notes, but prior to the fourth Business Day immediately preceding
the first Series D Remarketing Date, to require the Series D Remarketing Dealer
to remarket the Series D Remarketable Notes at the Floating Period Interest
Rate.
"Series E Floating Period Option" means our right, on any date subsequent to
the Series E Remarketing Dealer's election to purchase the Series E
Remarketable Notes, but prior to the fourth Business Day immediately preceding
the first Series E Remarketing Date, to require the Series E Remarketing Dealer
to remarket the Series E Remarketable Notes at the Floating Period Interest
Rate.
S-20
<PAGE>
"Series F Floating Period Option" means our right, on any date subsequent to
the Series F Remarketing Dealer's election to purchase the Series F
Remarketable Notes, but prior to the fourth Business Day immediately preceding
the first Series F Remarketing Date, to require the Series F Remarketing
Dealer to remarket the Series F Remarketable Notes at the Floating Period
Interest Rate.
"Floating Rate Period" with respect to a series of Remarketable Notes, means
the period from (and including) the Floating Rate Remarketing Date for that
series to (but excluding) the applicable Floating Period Termination Date for
that series.
"Floating Rate Spread" shall be the lowest applicable Floating Rate Bid
expressed as a spread (in the form of a percentage or in basis points) above
the Reference Rate for a series of Remarketable Notes obtained by the
Remarketing Dealer for that series by 3:30 p.m., New York City time, on the
third Business Day prior to the Floating Rate Remarketing Date for that
series, from the Floating Rate Bids quoted to that Remarketing Dealer by up to
five Reference Money Market Dealers.
A "Floating Rate Bid" will be an irrevocable offer to purchase the aggregate
outstanding principal amount of a series of Remarketable Notes at the Dollar
Price for that series, but assuming:
(1) a settlement date that is the Floating Rate Remarketing Date for that
series without accrued interest,
(2) a maturity date equal to the Floating Period Termination Date for that
series,
(3) a stated annual interest rate equal to the Reference Rate plus the
Floating Rate Spread for that series,
(4) that such Remarketable Notes are callable for repurchase by the
Remarketing Dealer for that series at the Dollar Price on the Floating
Period Termination Date for that series and
(5) that we will redeem such Remarketable Notes at the Dollar Price on the
Floating Period Termination Date for that series if not previously
repurchased by a Remarketing Dealer for that series.
"Floating Rate Reset Period" with respect to a series of Remarketable Notes,
means the period from (and including) the first Reference Rate Reset Date for
that series to (but excluding) the next following Reference Rate Reset Date,
and thereafter the period from (and including) a Reference Rate Reset Date for
that series to (but excluding) the next following Reference Rate Reset Date;
provided that the final Floating Rate Reset Period during the Floating Rate
Period for such series will run to (but exclude) the Floating Period
Termination Date for such series.
"Reference Money Market Dealer" means each of up to five dealers of publicly
traded debt securities, including our debt securities, selected by us, who are
also leading dealers in money market instruments. We will advise the
applicable Remarketing Dealer of our selection of Reference Money Market
Dealers no later than five Business Days prior to the applicable Floating Rate
Remarketing Date. If Banc of America Securities or Morgan Stanley is then a
Series D, Series E or Series F Remarketing Dealer for that series, or if
either or both are acting as an underwriter for that series, then either or
both will be among the Reference Money Market Dealers we will select.
S-21
<PAGE>
"Reference Rate" means:
(1) The rate for each Floating Rate Reset Period which will be the rate for
deposits in U.S. Dollars for a period of one month which appears on the
Telerate Page 3750 (or any successor page) as of 11:00 a.m., London
time, on the applicable Reference Rate Determination Date.
(2) If no rate appears on Telerate Page 3750 on the Reference Rate
Determination Date, the applicable Remarketing Dealer will request the
principal London offices of four major reference banks in the London
Inter-Bank Market to provide it with their offered quotations for
deposits in U.S. Dollars for the period of one month, commencing on the
first day of the Floating Rate Reset Period, to prime banks in the
London Inter-Bank Market at approximately 11:00 a.m., London time, on
the Reference Rate Determination Date and in a principal amount that is
representative for a single transaction in U.S. Dollars in that market
at that time. If at least two quotations are provided, then the
Reference Rate will be the average of those quotations. If fewer than
two quotations are provided, then the Reference Rate will be the average
(rounded, if necessary, to the nearest one hundredth (0.01) of one
percent) of the rates quoted at approximately 11:00 a.m., New York City
time, on the Reference Rate Determination Date by three major banks in
New York City selected by the applicable Remarketing Dealer for loans in
U.S. dollars to leading European banks, having a one-month maturity and
in a principal amount that is representative for a single transaction in
U.S. dollars in that market at that time. If the banks selected by the
Remarketing Dealer are not providing quotations in the manner described
by this paragraph, the rate for the Floating Rate Reset Period following
the Reference Rate Determination Date will be the rate in effect on that
Reference Rate Determination Date.
"Telerate Page 3750" means the display designated as "Telerate page 3750" on
Dow Jones Markets (or such other page as may replace "Telerate page 3750" on
such service) or such other service displaying the offer prices, as may
replace Dow Jones Markets.
"Reference Rate Reset Date" means the first Series D Remarketing Date, the
first Series E Remarketing Date or the first Series F Remarketing Date, as
applicable, or, in each case, the 15th day of each month thereafter until (but
excluding) the Floating Period Termination Date applicable to such series.
"Reference Rate Determination Date" will be the second LIBOR Business Day
preceding each Reference Rate Reset Date.
Mandatory Tender
On a Business Day not earlier than 15 Business Days prior to the first
Series D, Series E or Series F Remarketing Date, as applicable, and not later
than 4:00 p.m., New York City time, on the tenth Business Day prior to the
first Series D, Series E or Series F Remarketing Date, the applicable
Remarketing Dealer will notify us and the Trustee as to whether it elects to
purchase the Series D, Series E or Series F Remarketable Notes on such Series
D, Series E or Series F Remarketing Date (the "Notification Date").
S-22
<PAGE>
If, and only if, the Series D, Series E or Series F Remarketing Dealer, as
applicable, so elects at the first Remarketing Date, or upon the subsequent
Remarketing Date, if any, such Series D, Series E or Series F Remarketable
Notes will be subject to mandatory tender to the Series D, Series E or Series F
Remarketing Dealer for purchase and remarketing on such Series D, Series E or
Series F Remarketing Date, in accordance with the terms and subject to the
conditions described in this prospectus supplement.
Each series of Remarketable Notes will be remarketed at a fixed rate of
interest equal to the Interest Rate to Maturity, unless we have elected to
exercise our applicable Series D, Series E or Series F Floating Period Option,
prior to the fourth Business Day prior to the first Remarketing Date. Under
these circumstances, the Series D, Series E or Series F Remarketable Notes will
be remarketed at a floating rate for up to one year until the Floating Period
Termination Date for each series, at which time they will be remarketed at a
fixed rate of interest equal to the Interest Rate to Maturity unless we have
chosen to redeem, or are required to redeem, such Remarketable Notes.
The purchase price payable to the holders of tendered Remarketable Notes will
be equal to 100% of the aggregate principal amount thereof on the first Series
D, Series E or Series F Remarketing Date, as applicable, or the Dollar Price on
the subsequent Series D, Series E or Series F Remarketing Date.
Subject to a Remarketing Dealer's election to purchase and remarket the
Series D, Series E or Series F Remarketable Notes, on the first Series D,
Series E or Series F Remarketing Date, as applicable, the Remarketing Dealer
will then sell the aggregate principal amount of the Series D, Series E or
Series F Remarketable Notes at the Dollar Price to the Reference Money Market
Dealer, or to the Reference Corporate Dealer, whichever is applicable,
providing the lowest applicable Fixed Rate Bid or applicable Floating Rate Bid.
If the lowest applicable Fixed Rate Bid or applicable Floating Rate Bid is
submitted by two or more of the applicable Reference Dealers, the Remarketing
Dealer may sell such Series D, Series E or Series F Remarketable Notes to one
or more of such Reference Dealers, as it will determine in its sole discretion.
At the subsequent Remarketing Date for a series of Remarketable Notes, if
any, following the applicable Remarketing Dealer's purchase of the Remarketable
Notes, the Remarketing Dealer will then sell the aggregate principal amount of
the Series D, Series E or Series F Remarketable Notes at the Dollar Price to
the Reference Corporate Dealer providing the lowest applicable Fixed Rate Bid.
If the lowest applicable Fixed Rate Bid is submitted by two or more of the
Reference Corporate Dealers, the Remarketing Dealer may sell such Series D,
Series E or Series F Remarketable Notes to one or more of such Reference
Corporate Dealers, as it will determine in its sole discretion.
If a Remarketing Dealer elects to remarket the Series D, Series E or Series F
Remarketable Notes, the obligation of such Remarketing Dealer to purchase the
Series D, Series E or Series F Remarketable Notes on any Remarketing Date, as
applicable, is subject to certain conditions set forth in the applicable
Remarketing Agreement.
If for any reason the applicable Remarketing Dealer does not purchase all
S-23
<PAGE>
of the Series D, Series E or Series F Remarketable Notes on any applicable
Remarketing Date, we will be required to redeem all of the Series D, Series E
or Series F Remarketable Notes as discussed under "Mandatory Redemption".
Mandatory Redemption
We will be required to redeem the Series D, Series E or Series F
Remarketable Notes in whole on the applicable Remarketing Date at a price
equal to 100% of the aggregate principal amount of the Series D, Series E or
Series F Remarketable Notes, as applicable, if such Series D, Series E or
Series F Remarketing Date is the first Series D, Series E or Series F
Remarketing Date, or at the Dollar Price on the subsequent applicable
Remarketing Date, plus all accrued and unpaid interest, if any, to the
applicable Series D, Series E or Series F Remarketing Date in the event that:
(1) the applicable Remarketing Dealer for any reason does not elect, by
notice to us and the Trustee not later than the Notification Date, to
purchase all of the outstanding applicable Series D, Series E or Series
F Remarketable Notes for remarketing on the first Series D, Series E or
Series F Remarketing Date, as applicable,
(2) prior to any Series D, Series E or Series F Remarketing Date, the Series
D, Series E or Series F Remarketing Dealer resigns and no successor has
been appointed on or before the applicable Determination Date,
(3) at any time after a Remarketing Dealer elects on the Notification Date
to remarket the Series D, Series E or Series F Remarketable Notes, the
Remarketing Dealer elects to terminate its Remarketing Agreement in
accordance with its terms,
(4) a Remarketing Dealer for any reason does not notify us of the Series D,
Series E or Series F Floating Period Interest Rate or of the Series D,
Series E or Series F Interest Rate to Maturity by 4:00 p.m. New York
City time, on the applicable Determination Date,
(5) a Remarketing Dealer for any reason does not deliver the purchase price
of the Series D, Series E or Series F Remarketable Notes to the Trustee
on the Series D, Series E or Series F Remarketing Date, or does not
purchase all tendered Series D, Series E or Series F Remarketable Notes
on such Series D, Series E or Series F Remarketing Date, or
(6) we for any reason fail to redeem the Series D, Series E or Series F
Remarketable Notes from a Remarketing Dealer following our election to
effect such redemption.
Optional Redemption
If a Remarketing Dealer elects to purchase and remarket the Series D, Series
E or Series F Remarketable Notes, we have the option to redeem all of such
series of Remarketable Notes. To exercise this redemption option we must
notify the Remarketing Dealer and the Trustee, not later than 4:00 p.m., New
York City time, on the Business Day immediately preceding any applicable
Determination Date that we irrevocably elect to exercise our right to redeem
the Series D, Series E or Series F Remarketable Notes in whole from the
S-24
<PAGE>
applicable Remarketing Dealer on the first Series D, Series E or Series F
Remarketing Date or on the Series D, Series E or Series F Floating Period
Termination Date immediately following the applicable Determination Date.
If we so elect to redeem the Series D, Series E or Series F Remarketable
Notes, we will redeem the Series D, Series E or Series F Remarketable Notes
from the Remarketing Dealer on the date specified at the Dollar Price, plus
all accrued and unpaid interest, if any, to such date.
Post-Remarketing Optional Redemption
After the Series D Fixed Rate Remarketing Date, in the case of the Series D
Remarketable Notes, after the Series E Fixed Rate Remarketing Date, in the
case of the Series E Remarketable Notes, and after the Series F Fixed Rate
Remarketing Date, in the case of the Series F Remarketable Notes, the
Remarketable Notes are redeemable, in whole or in part, at any time, and at
our option, at a redemption price equal to the greater of:
--100% of the principal amount of the Series D, Series E or Series F
Remarketable Notes then outstanding to be redeemed, or
--the sum of the present values of the remaining scheduled payments of
principal and interest thereon (not including any portion of such payments
of interest accrued as of the Redemption Date) discounted to such
applicable Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 15
basis points in the case of the Series D Remarketable Notes, plus 20 basis
points in the case of the Series E Remarketable Notes, or 15 basis points
in the case of the Series F Remarketable Notes, as calculated by an
Independent Investment Banker,
plus, in either of the above cases, accrued and unpaid interest thereon to the
applicable Redemption Date.
"Adjusted Treasury Rate" means, with respect to any Redemption Date:
--the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities", for the maturity corresponding to the
Post- Remarketing Comparable Treasury Issue (if no maturity is within
three months before or after the remaining term of the applicable series
of Remarketable Notes, yields for the two published maturities most
closely corresponding to the Post-Remarketing Comparable Treasury Issue
will be determined and the Adjusted Treasury Rate will be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month); or
--if such release (or any successor release) is not published during the
week preceding the calculation date or
S-25
<PAGE>
does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Post-Remarketing Comparable Treasury
Issue, calculated using a price for the Post-Remarketing Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal
to the Post-Remarketing Comparable Treasury Price for such Redemption
Date.
The Adjusted Treasury Rate will be calculated on the third Business Day
preceding the applicable Redemption Date.
"Post-Remarketing Comparable Treasury Issue" for any of the Series D, Series
E or Series F Remarketable Notes means the U.S. Treasury Security selected by
an Independent Investment Banker as having a maturity comparable to the
remaining term of the Remarketable Notes to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of such Remarketable Notes or, if, in the reasonable
judgment of the Independent Investment Banker for the series, there is no such
security, then the Post-Remarketing Comparable Treasury Issue will mean the
U.S. Treasury Security or Securities selected by an Independent Investment
Banker as having an actual or interpolated maturity or maturities comparable to
the remaining term of that series of Remarketable Notes.
"Post-Remarketing Comparable Treasury Price" means (1) the average of five
Post-Remarketing Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest Post-Remarketing Reference Treasury
Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer
than five such Post Remarketing Reference Treasury Dealer Quotations, the
average of all such quotations.
"Independent Investment Banker" means either Banc of America Securities or
Morgan Stanley and their respective successors as selected by us, or if all of
these firms are unwilling or unable to serve as such, an independent investment
and banking institution of national standing appointed by us.
"Post-Remarketing Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Independent Investment Banker, of the bid and asked prices
for the Post-Remarketing Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Independent
Investment Banker at 5:00 p.m., New York City time, on the third Business Day
preceding such Redemption Date.
We will mail a notice of redemption at least 20 days but not more than 60
days before a Redemption Date to each holder of Series D, Series E or Series F
Remarketable Notes to be redeemed. If we elect to partially redeem the Series
D, Series E or Series F Remarketable Notes, the Trustee will select in a fair
and appropriate manner the Series D, Series E or Series F Remarketable Notes to
be redeemed.
Unless we default in payment of the redemption price, on and after a
Redemption Date, interest will cease to accrue on the Series D, Series E or
Series F
S-26
<PAGE>
Remarketable Notes or portions thereof called for redemption.
Limitation on Liens
While any of the Remarketable Notes are outstanding, we are not permitted to
create liens upon any Principal Property (as defined below) or upon any shares
of stock of any Material Subsidiary (as defined below), which we now own or own
in the future, to secure any of our debt, unless at the same time we provide
that any outstanding Remarketable Notes will also be secured by that lien on an
equal and ratable basis. However, we are generally permitted to create the
following types of liens:
(1) purchase money liens on future property acquired by us; liens of any
kind existing on property or shares of stock at the time they are
acquired by us; conditional sales agreements and other title retention
agreements on future property acquired by us (as
long as none of those liens cover any of our other properties);
(2) liens on our property or any shares of stock of any Material Subsidiary
that exist as of the date the Remarketable Notes are first issued; liens
on the shares of stock of any corporation, which liens existed at the
time that corporation became a Material Subsidiary; certain liens
typically incurred in the ordinary course of business;
(3) liens in favor of the United States (or any State), any foreign country
or any department, agency or instrumentality or political subdivision of
those jurisdictions, to secure payments pursuant to any contract or
statute or to secure any debt incurred for the purpose of financing the
purchase price or the cost of constructing or improving the property
subject to those liens, including, for example, liens to secure debt of
the pollution control or industrial revenue bond type;
(4) debt that we may issue in connection with a consolidation or merger of
Dominion or any Material Subsidiary with or into any other company
(including any of our affiliates or Material Subsidiaries) in exchange
for secured debt of that company (Third Party Debt) as long as that debt
(i) is secured by a mortgage on all or a portion of the property of that
company, (ii) prohibits secured debt from being incurred by that
company, unless the Third Party Debt is secured on an equal and ratable
basis or (iii) prohibits secured debt from being incurred by that
company;
(5) debt of another company that we must assume in connection with a
consolidation or merger of that company, with respect to which any of
our property is subjected to a lien;
(6) liens on any property that we acquire, construct, develop or improve
after the date the Remarketable Notes are first issued that are created
before or within 18 months after the acquisition, construction,
development or improvement of the property and secure the payment of the
purchase price or related costs;
(7) liens in favor of Dominion, our Material Subsidiaries or our wholly-
owned subsidiaries;
S-27
<PAGE>
(8) the replacement, extension or renewal of any lien referred to above in
clauses (1) through (7) as long as the amount secured by the liens or
the property subject to the liens is not increased; and
(9) any other lien not covered by clauses (1) through (8) above as long as
immediately after the creation of the lien the aggregate principal
amount of debt secured by all liens created or assumed under this clause
(9) does not exceed 10% of our common shareholders' equity.
When we use the term "lien" in this section, we mean any mortgage, lien,
pledge, security interest or other encumbrance of any kind; "Material
Subsidiary" means each of our subsidiaries (excluding Dominion Capital, Inc.)
whose total assets (as determined in accordance with GAAP) represent at least
20% of Dominion's total assets on a consolidated basis; and "Principal
Property" means any of Dominion's plants or facilities located in the United
States that in the opinion of our Board of Directors or management is of
material importance to the business conducted by Dominion and our consolidated
subsidiaries taken as whole.
Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company (DTC) will act as the initial securities
depositary for the Remarketable Notes. The Remarketable Notes will be issued
only as fully registered securities registered in the name of Cede & Co., DTC's
nominee. One or more fully registered global certificates for each series of
Remarketable Notes will be issued, representing in the aggregate the total
principal amount of Remarketable Notes, and will be deposited with DTC or its
custodian.
The following is based on information furnished to us by DTC:
DTC 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. DTC 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. DTC's
Participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own DTC.
Persons who are not Participants may beneficially own securities held by DTC
only through Participants.
DTC 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 DTC'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
S-28
<PAGE>
Participants). The rules applicable to DTC and its Participants are on file
with the SEC.
Purchases of Remarketable Notes within the DTC system must be made by or
through Direct Participants, which will receive a credit for the
Remarketable Notes on DTC's records. The ownership interest of each actual
purchaser of Remarketable Notes (Beneficial Owner) is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of
the transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners
purchased Remarketable Notes. Transfers of ownership interests in the
Remarketable Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in
Remarketable Notes, except in the event that use of the book-entry system
for the Remarketable Notes is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Remarketable
Notes. DTC's records reflect only the identity of the Direct Participants to
whose accounts the Remarketable 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 DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Although voting with respect to the Remarketable Notes is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Remarketable Notes. Under its usual
procedures, DTC would mail an Omnibus Proxy to us as soon as possible after
the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Remarketable Notes
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Payments on the Remarketable Notes will be made to DTC in immediately
available funds. DTC's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payments on the relevant payment 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 account of customers
in bearer form or registered in "street name", and will be the
responsibility of the Participant and not of DTC or Dominion, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment to DTC is our responsibility, disbursement of the payments to Direct
S-29
<PAGE>
Participants is the responsibility of DTC, and disbursement of the payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Except as provided in this prospectus supplement, a Beneficial Owner of
Remarketable Notes will not be entitled to receive physical delivery of
Remarketable Notes. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Remarketable Notes. The
laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may
impair the ability to transfer beneficial interests in a global Remarketable
Note.
DTC may discontinue providing its services as securities depositary with
respect to the Remarketable Notes at any time by giving reasonable notice to
us. Under those circumstances, in the event that a successor securities
depositary is not obtained, Remarketable Notes certificates will be printed
and delivered to the holders of record. Additionally, we may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Remarketable Notes. In that event,
certificates for the Remarketable Notes will be printed and delivered to the
holders of record.
We have no responsibility for the performance by DTC or its Participants of
their respective obligations as described in this prospectus supplement or
under the rules and procedures governing their respective operations.
Settlement
In the event that any of the Series D, Series E or Series F Remarketable
Notes are remarketed, the Series D, Series E or Series F Remarketing Dealer, as
applicable, will pay to the Trustee, not later than 12:00 noon, New York City
time, on the first Series D, Series E or Series F Remarketing Date, as
applicable, an amount equal to 100% of the aggregate principal amount of the
Series D, Series E or Series F Remarketable Notes or on the subsequent Series
D, Series E or Series F Remarketing Date, an amount equal to the Dollar Price.
On any such Series D, Series E or Series F Remarketing Date, the applicable
Remarketing Dealer will cause the Trustee to make payment to DTC for payment to
the DTC Participant of each tendering Beneficial Owner of Series D, Series E or
Series F Remarketable Notes, subject to remarketing, by book-entry through DTC
by the close of business on such Series D, Series E or Series F Remarketing
Date, against delivery through DTC of such Beneficial Owner's tendered Series
D, Series E or Series F Remarketable Notes, of the purchase price for tendered
Series D, Series E or Series F Remarketable Notes that have been purchased for
remarketing by a Remarketing Dealer.
The purchase price of such tendered Remarketable Notes shall be equal to 100%
of the aggregate principal amount thereof on the first Series D, Series E or
Series F Remarketing Date or the Dollar Price on the subsequent Series D,
Series E or Series F Remarketing Date. We will make, or cause the Trustee to
make, payment to DTC for payment of interest to each Beneficial Owner of
Remarketable Notes, due on a Remarketing Date by book-entry through
S-30
<PAGE>
DTC, by the close of business on such Remarketing Date.
The transactions described above will be executed on each Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective Participants will be debited and credited, and the Remarketable
Notes delivered by book-entry as necessary to effect the purchases and sales
thereof.
Settlement for the Remarketable Notes on the date of issuance will be made by
the underwriters in immediately available funds. All payments of principal and
interest in respect of the Remarketable Notes in book-entry form will be made
in immediately available funds. The Remarketable Notes will trade in DTC's
Same-Day Funds Settlement System until the Maturity Date or Remarketing Date,
as the case may be, or until the Remarketable Notes are issued in definitive
form, and secondary market trading activity in the Remarketable Notes will be
required by DTC to settle in immediately available funds.
The tender and settlement procedures described above, including the
provisions for payment to selling Beneficial Owners of tendered Remarketable
Notes, or for payment by the purchasers of Remarketable Notes, in a
remarketing, may be modified to the extent required by DTC or, if the book-
entry system is no longer available for the Remarketable Notes at the time of a
remarketing, to the extent required to facilitate the tendering and remarketing
of Remarketable Notes in certificated form. In addition, a Remarketing Dealer
may modify the settlement procedures set forth above in order to facilitate the
settlement process.
As long as DTC or its nominee holds a certificate representing the
Remarketable Notes in the book-entry system of DTC, no certificates for such
Remarketable Notes will be delivered to any Beneficial Owner. In addition,
under the terms of the Remarketable Notes and the applicable Remarketing
Agreement, we have agreed that (1) we will use our best efforts to maintain the
Remarketable Notes in book-entry form with DTC or any successor thereto, and to
appoint a successor depository to the extent necessary to maintain the
Remarketable Notes in book-entry form and (2) we will waive any discretionary
right we otherwise have under the Senior Indenture to cause the Remarketable
Notes to be issued in certificated form.
Remarketing Dealers
On or prior to the date of original issuance of the Remarketable Notes, we
will enter into Remarketing Agreements with Banc of America Securities as
Remarketing Dealer for the Series D and Series F Remarketable Notes and Morgan
Stanley as Remarketing Dealer for Series E Remarketable Notes. The Remarketing
Dealers will not receive any fees or reimbursement of expenses from us in
connection with the remarketing, except under certain circumstances. The
aggregate price paid to us by the underwriters for the purchase of the
Remarketable Notes will include an amount paid by each Remarketing Dealer for
its right to remarket the Series D, Series E or Series F Remarketable Notes.
We will agree to indemnify each Remarketing Dealer against certain
liabilities, including liabilities under the Securities Act, arising out of or
in
S-31
<PAGE>
connection with its duties under each Remarketing Agreement.
If a Remarketing Dealer elects to remarket the Series D, Series E or Series F
Remarketable Notes, the obligation of the Remarketing Dealer to purchase such
Remarketable Notes will be subject to several conditions set forth in the
applicable Remarketing Agreement. In addition, upon the occurrence of certain
events after the Remarketing Dealer elects to remarket the Series D, Series E
or Series F Remarketable Notes, as applicable, a Remarketing Dealer will have
the right to terminate its Remarketing Agreement or terminate its obligation to
purchase the Series D, Series E or Series F Remarketable Notes, as applicable,
or, until 3:30 p.m., New York City time, on the Business Day immediately
preceding the applicable Remarketing Date, to redetermine the applicable
interest rate.
No Beneficial Owner of the Series D, Series E or Series F Remarketable Notes
will have any rights or claims under the Series D, Series E or Series F
Remarketing Agreement or against us or the Series D, Series E or Series F
Remarketing Dealer, as a result of the Series D, Series E or Series F
Remarketing Dealer not purchasing the Remarketable Notes, as applicable.
Each Remarketing Agreement will provide that a Remarketing Dealer may resign
at any time as a Remarketing Dealer, such resignation to be effective ten
Business Days after the delivery to us and the Trustee of notice of such
resignation. In such case, we have no obligation to appoint a successor
Remarketing Dealer. A Remarketing Dealer may exercise any vote or join in any
action that any Beneficial Owner of Remarketable Notes may be entitled to
exercise, or take, as if it did not act in any capacity under the Remarketing
Agreement. A Remarketing Dealer, in its individual capacity, either as
principal or agent, may engage in or have an interest in any financial or other
transaction with us, as freely as if it did not act in any capacity under a
Remarketing Agreement.
As long as the Series D, Series E or Series F Remarketing Agreement is in
effect, we will not acquire any of the Series D, Series E or Series F
Remarketable Notes, as applicable, prior to any remarketing by the respective
Remarketing Dealer, other than in connection with the fulfillment of our
obligation to redeem the Remarketable Notes, or the exercise of our right to
redeem the Remarketable Notes, on a Remarketing Date. After all Remarketing
Dates or termination of a Remarketing Agreement prior thereto, we may at any
time purchase any Series D, Series E or Series F Remarketable Notes, as
applicable, at any price in the open market or otherwise. The Series D, Series
E or Series F Remarketable Notes so purchased by us may, at our discretion, be
held, resold or surrendered to the Trustee for cancellation.
The Trustee
The trustee under the Indenture is The Chase Manhattan Bank. The Chase
Manhattan Bank is also the property and guarantee trustee for Dominion
Resources Capital Trust I and the trustee under the indenture related to our
Junior Subordinated Debentures.
Recent Accounting Developments
For purposes of financial accounting and reporting for publicly held
companies, the
S-32
<PAGE>
SEC may require prospective investors to separately account for a Remarketing
Dealer's option to purchase and to remarket the Remarketable Notes on the first
Remarketing Date. Persons considering investing in the Remarketable Notes, who
are required to file financial reports with the SEC pursuant to the Exchange
Act, should consult their own accounting advisors concerning potential
reporting requirements.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Remarketable
Notes is based upon the Internal Revenue Code of 1986, as amended (the Code),
Treasury regulations, IRS rulings and pronouncements and administrative and
judicial decisions currently in effect, all of which are subject to change
(possibly with retroactive effect) or possible differing interpretations. This
summary deals only with Remarketable Notes held as capital assets (within the
meaning of section 1221 of the Code) and does not purport to deal with persons
in special tax situations, such as financial institutions, insurance companies,
regulated investment companies, real estate investment trusts, dealers in
securities or currencies, persons holding Remarketable Notes as a hedge against
currency risk or as a position in a "straddle," or as part of a conversion
transaction, or persons whose functional currency is not the U.S. dollar. This
summary does not address the tax laws of any state, local or foreign government
that may be applicable.
PROSPECTIVE INVESTORS CONSIDERING THE PURCHASE OF THE REMARKETABLE 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 REMARKETABLE
NOTES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
As used herein, the term "U.S. Holder" means a beneficial owner of
Remarketable Notes that is for United States Federal income tax purposes (1) a
citizen or resident of the United States, (2) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof (other than a partnership that is not
treated as a United States person under any applicable Treasury regulations),
(3) an estate whose income is subject to United States Federal income tax
regardless of its source, or (4) 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. Notwithstanding the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as United States persons prior to such date, that elect to
continue to be treated as United States persons also will be U.S. Holders. As
used herein, the term "non-U.S. Holder" means a beneficial owner of
Remarketable Notes that is not a U.S. Holder.
The United States Federal income tax treatment of debt obligations such as
the Remarketable Notes is not entirely certain.
S-33
<PAGE>
Because the Series D, Series E or Series F Remarketable Notes are subject to
mandatory tender on the applicable Series D, Series E or Series F Remarketing
Date, Dominion intends to treat the Remarketable Notes as maturing on the
applicable Remarketing Date for United States Federal income tax purposes. By
purchasing the Remarketable Notes, the U.S. Holder agrees to follow such
treatment for United States Federal income tax purposes. Based on such
treatment, interest on the Remarketable Notes should constitute "qualified
stated interest" and generally should be taxable to a U.S. Holder as ordinary
interest income at the time such payments are accrued or received (in
accordance with the U.S. Holder's regular method of accounting). If, under the
foregoing treatment, the excess of the Remarketable Notes' "stated redemption
price at maturity" over their "issue price" does not equal or exceed the
statutory de minimis amount (generally 1/4 of 1% of the Series D, Series E or
Series F Remarketable Notes' stated redemption price at the Series D, Series E
or Series F Remarketing Date, as applicable, multiplied by the number of
complete years to the applicable Remarketing Date from its issue date), the
Remarketable Notes will not be treated as having original issue discount.
If the excess of the Remarketable Notes' stated redemption price at maturity
over their issue price is equal to or greater than the statutory de minimis
amount, a U.S. Holder must include original issue discount in ordinary interest
income for United States Federal income tax purposes as it accrues under a
"constant yield to maturity" method in advance of receipt of the cash payments
attributable to such income, regardless of the U.S. Holder's regular method of
accounting. In such event, a U.S. Holder:
. will be required to accrue an amount of original issue discount in income
each year under such method as determined under Section 1272 of the
Internal Revenue Code (under these rules, U.S. Holders generally will have
to include in income increasingly greater amounts of original issue
discount in successive accrual periods),
. will not separately report the actual cash payments of interest on the
Remarketable Notes as taxable income,
. will increase its tax basis in the Remarketable Notes by the amount of
original issue discount included in its gross income, and
. will decrease its tax basis in the Remarketable Notes by the amount of cash
payments in respect of the accrued original issue discount.
Under the foregoing treatment, upon the sale, exchange or retirement of the
Remarketable Notes, a U.S. Holder generally will recognize taxable gain or loss
equal to the difference between the amount realized on the sale, exchange or
retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Remarketable Notes. A U.S.
Holder's adjusted tax basis in the Remarketable Notes generally will equal such
U.S. Holder's initial investment in the Remarketable Notes increased by
original issue discount included in income and decreased by the amount of any
payments, other than qualified stated interest payments, received and
amortizable
S-34
<PAGE>
bond premium taken with respect to such Remarketable Notes.
The highest marginal individual Federal income tax rate (which applies to
ordinary income and gain from sales or exchanges of capital assets held for one
year or less) is 39.6%. In the case of a U.S. Holder who is an invidual
taxpayer, taxable gain recognized from the sale or exchange of Remarketable
Notes held as capital assets for longer than one year is subject to tax at a
maximum capital gain tax rate of 20%. The use of capital losses is subject to
certain limitations. With limited exceptions, net capital gains of a corporate
taxpayer are subject to tax at ordinary corporate income tax rates of up to
35%.
There can be no assurance that the IRS will agree with Dominion's treatment
of the Remarketable Notes, and it is possible that the IRS could assert another
treatment. For instance, it is possible that the IRS could seek to treat the
Remarketable Notes as maturing on their stated maturity date.
The Treasury regulations do not address debt instruments involving a reset
mechanism identical to the reset mechanism in the Remarketable Notes. Thus it
is possible that the IRS could treat the Remarketable Notes as "contingent
payment debt instruments." In such event, under Treasury regulations governing
debt instruments that provide for contingent payments (the "Contingent Payment
Regulations"), Dominion would be required to construct a projected payment
schedule for the Remarketable Notes, based upon Dominion's current borrowing
costs for comparable debt instruments of Dominion, from which an estimated
yield on the Remarketable Notes would be calculated. A U.S. Holder would be
required to include in income original issue discount in an amount equal to the
product of the adjusted issue price of the Remarketable Notes at the beginning
of each interest accrual period and the estimated yield of the Remarketable
Notes. In general, for these purposes, a series of Remarketable Notes' adjusted
issue price would equal the Remarketable Notes' issue price increased by the
interest previously accrued on the Remarketable Notes, and reduced by all
payments made on the Remarketable Notes. As a result of the application of the
Contingent Payment Regulations, it is possible that a U.S. Holder would be
required to include interest in income in excess of actual cash payments
received for certain taxable years.
In addition, the character of any gain or loss, upon the sale or exchange of
the Remarketable Notes (including a sale pursuant to the mandatory tender on
the Remarketing Date) by a U.S. Holder, would likely differ if the Remarketable
Notes were treated as contingent payment obligations. Any such taxable gain
generally would be treated as ordinary income. Any such taxable loss generally
would be ordinary to the extent of previously accrued original issue discount,
and any excess would generally be treated as capital loss.
Non-U.S. Holders
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on the Remarketable Notes, unless such non-U.S. Holder
is a direct or indirect 10% or greater shareholder of Dominion, a controlled
foreign corporation related to Dominion or a bank receiving interest described
in section 881(c)(3)(A) of the Code. To qualify for the exemption from
S-35
<PAGE>
taxation, the last United States payor in the chain of payment prior to payment
to a non-U.S. Holder (the "Withholding Agent") must have received in the year
in which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (1) is signed by the beneficial
owner of the Remarketable Notes under penalties of perjury, (2) certifies that
such owner is not a U.S. Holder and (3) provides the name and address of the
beneficial owner. The statement may be made on an IRS Form W-8 or a
substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If the Remarketable Notes are held through a securities
clearing organization or certain other financial institutions, the organization
or institution may provide a signed statement to the Withholding Agent.
However, in such case, the signed statement must be accompanied by a copy of
the IRS Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes gain upon retirement or
disposition of the Remarketable Notes, provided the gain is not effectively
connected with the conduct of a trade or business in the United States by the
non-U.S. Holder. Certain other exceptions may be applicable, and a non-U.S.
Holder should consult its tax advisor in this regard.
A non-U.S. Holder that is engaged in a trade or business in the United States
will generally be taxed in the same manner as a U.S. Holder on payments on, or
gain from the retirement or disposition of, Remarketable Notes if such payments
or gain is effectively connected with the conduct of such U.S. trade or
business.
Backup Withholding
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Remarketable Notes to registered
owners who are not "exempt recipients" and who fail to provided 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 Remarketable 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 Remarketable Notes 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
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the broker to
S-36
<PAGE>
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 such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
Final Withholding Regulations
The Treasury Department recently issued final Treasury regulations (the Final
Regulations) which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The Final
Regulations attempt to unify certification requirements and modify reliance
standards. The Final Regulations will generally be effective for payments made
after January 1, 2001 subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the Final
Regulations.
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement, dated September 6, 2000 (the Underwriting Agreement), the
underwriters named below have agreed to purchase, and we have agreed to sell to
them, severally, the respective principal amount of the Series D, Series E or
Series F Remarketable Notes set forth opposite their respective names below:
<TABLE>
<CAPTION>
Principal
Amount of
Series D
Remarketable
Name Notes
---- ------------
<S> <C>
Banc of America Securities LLC.................................... $ 70,000,000
Morgan Stanley & Co. Incorporated................................. 70,000,000
Credit Suisse First Boston Corporation ........................... 30,000,000
Lehman Brothers Inc. ............................................. 30,000,000
------------
Total............................................................. $200,000,000
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount of
Series E
Remarketable
Name Notes
---- ------------
<S> <C>
Banc of America Securities LLC.................................... $ 87,500,000
Morgan Stanley & Co. Incorporated................................. 87,500,000
Credit Suisse First Boston Corporation ........................... 37,500,000
Lehman Brothers Inc. ............................................. 37,500,000
------------
Total............................................................. $250,000,000
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount of
Series F
Remarketable
Name Notes
---- ------------
<S> <C>
Banc of America Securities LLC.................................... $ 87,500,000
Morgan Stanley & Co. Incorporated................................. 87,500,000
Credit Suisse First Boston Corporation ........................... 37,500,000
Lehman Brothers Inc. ............................................. 37,500,000
------------
Total............................................................. $250,000,000
============
</TABLE>
Banc of America Securities LLC and Morgan Stanley & Co. Incorporated are
acting as joint book-running managers in connection with the offering of the
Remarketable Notes.
The Underwriting Agreement provides that the obligations of the several
underwriters to purchase and pay for the Remarketable Notes are subject to,
among
S-37
<PAGE>
other things, the approval of certain legal matters by their counsel and
certain other conditions. The underwriters are obligated to take and pay for
all of the Remarketable Notes if any are taken.
The underwriters initially propose to offer some of the Remarketable Notes
directly to the public at the public offering price set forth on the cover page
and some to certain dealers at a price that represents a concession not in
excess of 0.15% of the principal amount of the Series D Remarketable Notes,
0.35% of the principal amount of the Series E Remarketable Notes and 0.15% of
the principal amount of the Series F Remarketable Notes. Any underwriter may
allow, and any such dealers may reallow, a concession to certain other dealers
not to exceed 0.10% of the principal amount of the Series D Remarketable Notes,
0.10% of the principal amount of the Series E Remarketable Notes and 0.10% of
the principal amount of the Series F Remarketable Notes. After the initial
offering of the Remarketable Notes, the offering price and other selling terms
may be changed by the underwriters.
We have agreed to indemnify each of the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
We do not intend to apply for listing of the Remarketable Notes on a national
securities exchange, but have been advised by the underwriters that they intend
to make a market in the Remarketable Notes. The underwriters are not obligated,
however, to do so and may discontinue their market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Remarketable Notes.
In connection with the offering of the Remarketable Notes, the underwriters
may engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size, which creates a
short position for the underwriters. Stabilizing transactions involve bids to
purchase Remarketable Notes in the open market for the purpose of pegging,
fixing or maintaining the prices of the Remarketable Notes. Syndicate covering
transactions involve purchases of Remarketable Notes in the open market after
the distribution has been completed in order to cover short positions.
Stabilizing transactions and syndicate covering transactions may cause the
prices of the Remarketable Notes to be higher than they would otherwise be in
the absence of those transactions. If the underwriters engage in stabilizing or
syndicate covering transactions, they may discontinue them at any time.
The Series D Remarketing Dealer will pay us 3.44% of the aggregate principal
amount of the Series D Remarketable Notes as consideration for the right to
purchase the Series D Remarketable Notes at 100% of their aggregate principal
amount on the first Series D Remarketing Date. The Series E Remarketing Dealer
will pay us 4.24% of the aggregate principal amount of the Series E
Remarketable Notes as consideration for the right to purchase the Series E
Remarketable Notes at 100% of their aggregate principal amount on the first
Series E Remarketing Date. The Series F Remarketing Dealer will pay us 3.44% of
the aggregate principal amount of the Series F Remarketable Notes as
consideration for the right to purchase the Series F
S-38
<PAGE>
Remarketable Notes at 100% of their aggregate principal amount on the first
Series F Remarketing Date.
If the Remarketing Dealers purchase the Remarketable Notes on any of the
first Remarketing Dates and subsequently offer the Remarketable Notes for
resale, the resale of the Remarketable Notes may have to be registered with the
Securities and Exchange Commission under the Securities Act. If the resale of
the Remarketable Notes has to be registered, we have agreed to pay the expenses
incident to such a registration.
Certain of the underwriters or their affiliates engage in various general
financing and banking transactions with Dominion and our affiliates for which
they receive customary fees.
LEGAL OPINIONS
Certain legal matters, including certain United States federal income tax
matters, in connection with the Remarketable Notes will be passed on for us by
McGuireWoods LLP, and for the underwriters by Mays & Valentine, L.L.P., which
also performs certain legal services for us on other matters.
EXPERTS
The financial statements incorporated in this prospectus supplement by
reference from Dominion's Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and has been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The audited historical consolidated financial statements of CNG incorporated
by reference in Dominion's Form 8-K filed with the SEC on February 1, 2000,
incorporated by reference in this prospectus supplement, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
S-39
<PAGE>
Prospectus
[LOGO OF DOMINION RESOURCES INC.]
DOMINION RESOURCES, INC.
120 Tredegar Street
Richmond, Virginia 23219
(804) 819-2000
$4,500,000,000
Senior Debt Securities
Junior Subordinated Debentures
Trust Preferred Securities and Related Guarantee
Common Stock
Preferred Stock
Stock Purchase Contracts
Stock Purchase Units
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
This prospectus is dated January 6, 2000.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a shelf registration process.
Under this shelf process, we may, from time to time, sell any combination of
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $4,500,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. Material United States federal
income tax considerations applicable to the offered securities will also be
discussed in the applicable prospectus supplement. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described under the heading WHERE YOU CAN FIND MORE
INFORMATION.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also 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. You may also
read and copy 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
an important part of this prospectus, and information that we file later with
the SEC will automatically update and 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 until we sell all of the securities.
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June
30, 1999 and September 30, 1999;
. Current Report on Form 8-K filed March 29, 1999; and
. The description of our common stock contained in Form 8-B (Item 4) dated
April 29, 1983.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Dominion Resources, Inc.
120 Tredegar Street
Richmond, Virginia 23219
(804) 819-2000
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on
the front of those documents.
2
<PAGE>
THE COMPANY
Dominion Resources, Inc. is a diversified utility holding company
headquartered in Richmond, Virginia. Our principal operating subsidiaries are
Virginia Electric and Power Company, a regulated public utility, engaged in
the generation, transmission, distribution and sale of electric energy,
Dominion Energy, Inc., an independent power and natural gas subsidiary, and
Dominion Capital, Inc., a financial services subsidiary. We also own an 80%
interest in and operate a 365 megawatt natural gas fired generating facility
in the United Kingdom.
In May 1999, we entered into a merger agreement with Consolidated Natural
Gas Company (CNG), one of the nation's largest producers, transporters,
distributors and retail marketers of natural gas. The merger is scheduled to
close on January 28, 2000. As a result of the merger with CNG, we will become
a registered public utility holding company under the provisions of the Public
Utility Holding Company Act of 1935 (1935 Act). Because of limits the 1935 Act
will impose on our non-utility activities, it will be necessary for us to
divest ourselves of Dominion Capital, Inc. after the merger.
THE TRUSTS
Each of Dominion Resources Capital Trust II and Dominion Resources Capital
Trust III is a statutory business trust newly formed under Delaware law by us,
as sponsor for the Trust, and Chase Manhattan Bank Delaware, who will serve as
trustee in the State of Delaware for the purpose of complying with the
provisions of the Delaware Business Trust Act. The trust agreement for each of
the Trusts will be amended and restated substantially in the form filed as an
exhibit to the registration statement, effective when securities of the Trusts
are initially issued. The amended trust agreement will be qualified as an
indenture under the Trust Indenture Act of 1939.
Each Trust exists for the exclusive purposes of
. issuing two classes of trust securities, trust preferred securities and
trust common securities, which together represent undivided beneficial
interests in the assets of each Trust;
. investing the gross proceeds of the trust securities in our Junior
Subordinated Debentures;
. making distributions; and
. engaging in only those other activities necessary, advisable or incidental
to the purposes listed above.
The Junior Subordinated Debentures will be the sole assets of each Trust,
and our payments under the Junior Subordinated Debentures and the Agreement as
to Expenses and Liabilities will be the sole revenue of each Trust.
No separate financial statements of any Trust are included in this
prospectus. We consider that these financial statements would not be material
to holders of the Trust preferred securities because no Trust has any
independent operations and the purposes of each Trust are as described above.
We do not expect that any of the Trusts will be filing annual, quarterly or
special reports with the SEC.
The principal place of business of each of the Trusts will be c/o Dominion
Resources, Inc., 120 Tredegar Street, Richmond, VA 23219.
USE OF PROCEEDS
The net proceeds from the sale of the offered securities will be used for
financing our merger with CNG, refinancing of our
3
<PAGE>
debt incurred in connection with that merger, and for other general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
Twelve Twelve Months ended Dec. 31,
Months ended -----------------------------
Sep. 30, 1999(/2/) 1994 1995 1996 1997(/1/) 1998
------------------ ---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C>
2.07 2.77 2.55 2.71 1.97 2.36
</TABLE>
These computations include us and our subsidiaries, and certain other
companies in which we hold an equity interest. For these ratios, earnings is
determined by adding total fixed charges (excluding interest capitalized),
income taxes, minority common stockholders equity in net income and
amortization of interest capitalized to income from continuing operations
after eliminating equity in undistributed earnings and adding back losses of
companies in which at least 20% but less than 50% equity is owned. For this
purpose, total fixed charges consists of (1) interest on all indebtedness and
amortization of debt discount and expense, (2) interest capitalized and (3) an
interest factor attributable to rentals.
--------
(1) Net income for the twelve months ended December 31, 1997 includes the one-
time charge of $156.6 million for the windfall profits tax levied by the
U.K. government. Excluding this charge from the calculation above results
in a ratio of earnings to fixed charges for the twelve months ended
December 31, 1997 of 2.22x.
(2) Net income for the twelve months ended September 30, 1999 includes the
one-time charge of $254.8 million for the write-off of regulatory assets.
Excluding this charge from the calculation above results in a ratio of
earnings to fixed charges for the twelve months ended September 30, 1999
of 2.55x.
DESCRIPTION OF DEBT SECURITIES
The term Debt Securities includes the Senior Debt Securities and the Junior
Subordinated Debentures. We will issue the Senior Debt Securities in one or
more series under a Senior Indenture between us and The Chase Manhattan Bank
as Trustee. We will issue the Junior Subordinated Debentures in one or more
series under our Junior Subordinated Indenture dated as of December 1, 1997
between us and The Chase Manhattan Bank as Trustee, as supplemented from time
to time. The Indenture related to the Junior Subordinated Debentures is called
the Subordinated Indenture in this prospectus, and together, the Senior
Indenture and the Subordinated Indenture are called Indentures. We have
summarized selected provisions of the Indentures below. The form of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
registration statement and you should read the Indentures for provisions that
may be important to you. In the summary below, we have included references to
section numbers of the Indentures so that you can easily locate these
provisions. Capitalized terms used in the summary have the meanings specified
in the Indentures.
General
The Senior Debt Securities will be our direct, unsecured obligations and
will rank equally with all of our other senior and unsubordinated debt. The
Junior Subordinated Debentures will be our unsecured obligations and are
junior in
4
<PAGE>
right of payment to our Senior Indebtedness, as described under the caption
ADDITIONAL TERMS OF JUNIOR SUBORDINATED DEBENTURES--SUBORDINATION.
Because we are a holding company that conducts all of our operations through
our subsidiaries, our ability to meet our obligations under the Debt
Securities is dependent on the earnings and cash flows of those subsidiaries
and the ability of those subsidiaries to pay dividends or to advance or repay
funds to us. Holders of Debt Securities will generally have a junior position
to claims of creditors of our subsidiaries, including trade creditors,
debtholders, secured creditors, taxing authorities, guarantee holders and any
preferred stockholders. Virginia Power has 6,890,140 issued and outstanding
shares of preferred stock. In addition to trade debt, all of our operating
subsidiaries have ongoing corporate debt programs used to finance their
business activities. As ofSeptember 30, 1999, our subsidiaries had
approximately $6.9 billion of outstanding debt.
Neither of the Indentures limits the amount of Debt Securites that we may
issue under it. We may issue Debt Securities from time to time under the
Indentures in one or more series by entering into supplemental indentures or
by our Board of Directors or a duly authorized committee authorizing the
issuance. A form of supplemental indenture to each of the Indentures is an
exhibit to the registration statement.
The Indentures do not protect the holders of Debt Securities if we engage in
a highly leveraged transaction.
Provisions of a Particular Series
The Debt Securities of a series need not be issued at the same time, bear
interest at the same rate or mature on the same date. The prospectus
supplement for a particular series of Debt Securities will specify the terms
of that series, including, if applicable, some or all of the following:
. the title and type of the Debt Securities;
. the total principal amount of the Debt Securities;
. the portion of the principal payable upon acceleration of maturity, if other
than the entire principal;
. the date or dates on which principal is payable or the method for
determining the date or dates, and any right that we have to change the date
on which principal is payable;
. the interest rate or rates, if any, or the method for determining the rate
or rates, and the date or dates from which interest will accrue;
. any interest payment dates and the regular record date for the interest
payable on each interest payment date, if any;
. any payments due if the maturity of the Debt Securities is accelerated;
. any optional redemption terms, or, with respect to the Senior Debt
Securities, any repayment terms;
. any provisions that would obligate us to repurchase or otherwise redeem the
Debt Securities, or, with respect to the Senior Debt Securities, any sinking
fund provisions;
. the currency in which payments will be made if other than U.S. dollars, and
the manner of determining the equivalent of those amounts in U.S. dollars;
5
<PAGE>
. if payments may be made, at our election or at the holder's election, in a
currency other than that in which the Debt Securities are stated to be
payable, then the currency in which those payments may be made, the terms
and conditions of the election and the manner of determining those amounts;
. any index or formula used for determining principal, interest, or premium,
if any;
. the percentage of the principal amount at which the Debt Securities will be
issued, if other than 100% of the principal amount;
. whether to be issued in fully registered certificated form or book-entry
form, represented by certificates deposited with, or on behalf of, a
securities depositary and registered in the name of the depositary's nominee
(Book-Entry Debt Securities);
. denominations, if other than $1,000 each or multiples of $1,000;
. any changes to events of defaults or covenants; and
. any other terms of the Debt Securities. (Sections 201 & 301 of the Senior
Indenture & Sections 2.1 & 2.3 of the Subordinated Indenture.)
The prospectus supplement will also indicate any special tax implications of
the Debt Securities and any provisions granting special rights to holders when
a specified event occurs.
Conversion or Redemption
No Debt Security will be subject to conversion, amortization, or redemption,
unless otherwise provided in the applicable prospectus supplement. Any
provisions relating to the conversion or redemption of Debt Securities will be
set forth in the applicable prospectus supplement, including whether
conversion is mandatory or at our option. If no redemption date or redemption
price is indicated with respect to a Debt Security, we may not redeem the Debt
Security prior to Stated Maturity. Debt Securities subject to redemption by us
will be subject to the following terms:
. redeemable on and after the applicable redemption dates;
. redemption dates and redemption prices fixed at the time of sale and set
forth on the Debt Security; and
. redeemable in whole or in part (provided that any remaining principal amount
of the Debt Security will be equal to an authorized denomination) at our
option at the applicable redemption price, together with interest, payable
to the date of redemption, on notice given not more than 60 nor less than 20
days prior to the date of redemption. (Section 1104 of the Senior Indenture
& Section 3.2 of the Subordinated Indenture.)
We will not be required to:
. issue, register the transfer of, or exchange any Debt Securities of a series
during the period beginning 15 days before the date the notice is mailed
identifying the Debt Securities of that series that have been selected for
redemption; or
. register the transfer of, or exchange any Debt Security of that series
selected for redemption except the unredeemed portion of a Debt Security
being partially redeemed. (Section 305 of the Senior Indenture & Section 2.5
of the Subordinated Indenture.)
6
<PAGE>
Payment and Transfer; Paying Agent
The paying agent will pay the principal of any Debt Securities only if those
Debt Securities are surrendered to it. Unless we state otherwise in the
applicable prospectus supplement, the paying agent will pay principal, interest
and premium, if any, on Debt Securities, subject to such surrender, where
applicable, at its office or, at our option:
. by wire transfer to an account at a banking institution in the United States
that is designated in writing to the Trustee prior to the deadline set forth
in the applicable prospectus supplement by the person entitled to that
payment (which in the case of Book-Entry Debt Securities is the securities
depositary or its nominee); or
. by check mailed to the address of the person entitled to that interest as
that address appears in the security register for those Debt Securities.
(Sections 307 & 1001 of the Senior Indenture & Section 4.1 of the
Subordinated Indenture.)
Neither we 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 Debt Security, or for maintaining,
supervising or reviewing any records relating to the beneficial ownership
interests. We expect that the securities depositary, upon receipt of any
payment of principal, interest or premium, if any, in a Book-Entry Debt
Security, 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 Debt Security as shown on the
records of the securities depositary. We also expect that payments by
participants to owners of beneficial interests in a Book-Entry Debt Security
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.
Unless we state otherwise in the applicable prospectus supplement, the
Trustee will act as paying agent for the Debt Securities, and the principal
corporate trust office of the Trustee will be the office through which the
paying agent acts. We may, however, change or add paying agents or approve a
change in the office through which a paying agent acts. (Section 1002 of the
Senior Indenture & Section 4.4 of the Subordinated Indenture.)
Any money that we have paid to a paying agent for principal or interest on
any Debt Securities which remains unclaimed at the end of two years after that
principal or interest has become due will be repaid to us at our request. After
repayment to the Company, holders should look only to us for those payments.
(Section 1003 of the Senior Indenture & Section 12.4 of the Subordinated
Indenture.)
Fully registered securities may be transferred or exchanged at the corporate
trust office of the Trustee or at any other office or agency we maintain for
those purposes, without the payment of any service charge except for any tax or
governmental charge. (Section 1002 of the Senior Indenture & Section 2.5 of the
Subordinated Indenture.)
Global Securities
We may issue some or all of the Debt Securities as Book-Entry Debt
Securities. Book-Entry Debt Securities will be represented by one or more fully
registered
7
<PAGE>
global certificates. Book-Entry Debt Securities of like tenor and terms up to
$200,000,000 aggregate principal amount may be represented by a single global
certificate. Each global certificate will be deposited and registered with the
securities depositary or its nominee or a custodian for the securities
depositary. Unless it is exchanged in whole or in part for Debt Securities in
definitive form, a global certificate may generally be transferred only as a
whole unless it is being transferred to certain nominees of the depositary.
(Section 305 of the Senior Indenture & Section 2.5 of the Subordinated
Indenture.)
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company will act as the securities depositary. Beneficial interests in global
certificates will be shown on, and transfers of global certificates will be
effected only through, records maintained by the securities depositary and its
participants. If there are any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Debt Securities, we will describe
them in the applicable prospectus supplement.
Holders of beneficial interests in Book-Entry Debt Securities represented by
a global certificate are referred to as beneficial owners. Beneficial owners
will be limited to institutions having accounts with the securities depositary
or its nominee, which are called participants in this discussion, and to
persons that hold beneficial interests through participants. When a global
certificate representing Book-Entry Debt Securities is issued, the securities
depositary will credit on its book-entry, registration and transfer system the
principal amounts of Book-Entry Debt Securities the global certificate
represents to the accounts of its participants. Ownership of beneficial
interests in a global certificate will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained
by:
. the securities depositary, with respect to participants' interests; and
. any participant, with respect to interests the participant holds on behalf
of other persons.
As long as the securities depositary or its nominee is the registered holder
of a global certificate representing Book-Entry Debt Securities, that person
will be considered the sole owner and holder of the global certificate and the
Book-Entry Debt Securities it represents for all purposes. Except in limited
circumstances, beneficial owners:
. may not have the global certificate or any Book-Entry Debt Securities it
represents registered in their names;
. may not receive or be entitled to receive physical delivery of certificated
Book-Entry Debt Securities in exchange for the global certificate; and
. will not be considered the owners or holders of the global certificate or
any Book-Entry Debt Securities it represents for any purposes under the Debt
Securities or the Indentures. (Section 2.2 of the Subordinated Indenture.)
We will make all payments of principal, interest and premium, if any, on a
Book-Entry Debt Security to the securities depositary or its nominee as the
holder of the global certificate. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of securities in
definitive form. These laws
8
<PAGE>
may impair the ability to transfer beneficial interests in a global
certificate.
Payments participants make to beneficial owners holding interests through
those participants will be the responsibility of those participants. The
securities depositary may from time to time adopt various policies and
procedures governing payments, transfers, exchanges and other matters relating
to beneficial interests in a global certificate. None of the following will
have any responsibility or liability for any aspect of the securities
depositary's or any participant's records relating to beneficial interests in
a global certificate representing Book-Entry Debt Securities, for payments
made on account of those beneficial interests or for maintaining, supervising
or reviewing any records relating to those beneficial interests:
. the Company;
. the Trustee;
. the Trust (only with respect to the Junior Subordinated Debentures if the
Junior Subordinated Debentures are issued to a Trust); or
. any agent of any of the above.
Covenants
Under the Indentures we will:
. pay the principal, interest and premium, if any, on the Debt Securities when
due;
. maintain a place of payment;
. deliver an officer's certificate to the Trustee at the end of each fiscal
year confirming our compliance with our obligations under each of the
Indentures; and
. deposit sufficient funds with any paying agent on or before the due date for
any principal, interest or premium, if any. (Sections 1001, 1002, 1003 &
1006 of the Senior Indenture & Sections 4.1, 4.2 4.4 & 4.6 of the
Subordinated Indenture.)
Consolidation, Merger or Sale
The Indentures provide that we may consolidate or merge with or into, or
sell all or substantially all of our properties and assets to, another
corporation or other entity, provided that any successor assumes our
obligations under the Indentures and the Debt Securities issued under the
Indentures. We must also deliver an opinion of counsel to the Trustee
affirming our compliance with all conditions in the applicable Indenture
relating to the transaction. When the conditions are satisfied, the successor
will succeed to and be substituted for us under the Senior Indenture, and we
will be relieved of our obligations under the Senior Indenture and the Debt
Securities issued under them. (Sections 801 & 802 of the Senior Indenture &
Sections 11.1, 11.2 & 11.3 of the Subordinated Indenture.)
Events of Default
Event of Default when used in each of the Indentures, will mean any of the
following:
. failure to pay the principal or any premium on any Debt Security when due;
. with respect to the Senior Debt Securities, failure to deposit any sinking
fund payment when due that continues for 60 days;
. failure to pay any interest on any Debt Securities of that series, when due,
that continues for 60 days (or for 30 days in the case of any Junior
Subordinated
9
<PAGE>
Debentures); provided that, if applicable, for this purpose, the date on which
interest is due is the date on which we are required to make payment following
any deferral of interest payments by it under the terms of Junior Subordinated
Debentures that permit such deferrals;
. failure to perform any other covenant in the Indentures (other than a
covenant expressly included solely for the benefit of other series) that
continues for 90 days after the Trustee or the holders of at least 33% of the
outstanding Debt Securities (25% in the case of the Junior Subordinated
Debentures) of that series give us written notice of the default;
. certain events in bankruptcy, insolvency or reorganization of the Company; or
. any other Event of Default included in the Indentures or any supplemental
indenture. (Section 501 of the Senior Indenture & Section 6.1 of the
Subordinated Indenture.)
In the case of a general covenant default described above, the Trustee may
extend the grace period. In addition, if holders of a particular series have
given a notice of default, then holders of at least the same percentage of Debt
Securities of that series, together with the Trustee, may also extend the grace
period. The grace period will be automatically extended if we have initiated
and are diligently pursuing corrective action.
An Event of Default for a particular series of Debt Securities does not
necessarily constitute an Event of Default for any other series of Debt
Securities issued under the Indentures. Additional events of default may be
established for a particular series and, if established, will be described in
the applicable prospectus supplement.
If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee or the holders of at least 33% (25%, in the case of the
Junior Subordinated Debentures) in aggregate principal amount of the Debt
Securities of the series may declare the entire principal of all the Debt
Securities of that series to be due and payable immediately. If this happens,
subject to certain conditions, the holders of a majority of the aggregate
principal amount of the Debt Securities of that series can void the trust
agreement. (Section 502 of the Senior Indenture & Section 6.1 of the
Subordinated Indenture.)
The Trustee may withhold notice to the holders of Debt Securities of any
default (except in the payment of principal or interest) if it considers the
withholding of notice to be in the best interests of the holders. Other than
its duties in case of a default, a Trustee is not obligated to exercise any of
its rights or powers under the Indentures at the request, order or direction of
any holders, unless the holders offer the Trustee reasonable indemnity. If they
provide this reasonable indemnification, the holders of a majority in principal
amount of any series of Debt Securities may direct the time, method and place
of conducting any proceeding or any remedy available to the Trustee, or
exercising any power conferred upon the Trustee, for any series of Debt
Securities. (Sections 512, 601 & 602 of the Senior Indenture & Sections 6.6,
7.1 & 7.2 of the Subordinated Indenture.)
The holder of any Debt Security will have an absolute and unconditional right
to receive payment of the principal, any premium and, within certain
limitations, any interest on that Debt Security on its maturity date or
redemption date and to
10
<PAGE>
enforce those payments. (Section 508 of the Senior Indenture & Section 14.2 of
the Subordinated Indenture.)
Satisfaction; Discharge
We may discharge all our obligations (except those described below) to
holders of the Debt Securities issued under the Indentures, which Debt
Securities have not already been delivered to the Trustee for cancellation and
which either have become due and payable or are by their terms due and payable
within one year, or are to be called for redemption within one year, by
depositing with the Trustee an amount certified to be sufficient to pay when
due the principal, interest and premium, if any, on all outstanding Debt
Securities. However, certain of our obligations under the Indentures will
survive, including with respect to the following:
. remaining rights to register the transfer, conversion, substitution or
exchange of Debt Securities of the applicable series;
. rights of holders to receive payments of principal of, and any interest on,
the Debt Securities of the applicable series, and other rights, duties and
obligations of the holders of Debt Securities with respect to any amounts
deposited with the Trustee; and
. the rights, obligations and immunities of the Trustee under the Indentures.
(Section 401 of Senior Indenture & Section 12.1 of Subordinated Indenture.)
Modification of Indentures; Waiver
Under the Indentures our rights and obligations and the rights of the holders
may be modified with the consent of the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of each series affected by
the modification. No modification of the principal or interest payment terms,
and no modification reducing the percentage required for modifications, is
effective against any holder without its consent. (Section 902 of the Senior
Indenture & Section 10.2 of the Subordinated Indenture.) In addition, we may
supplement the Indentures to create new series of Debt Securities and for
certain other purposes, without the consent of any holders of Debt Securities.
(Section 901 of the Senior Indenture & Section 10.1 of the Subordinated
Indenture.)
The holders of a majority of the outstanding Debt Securities of all series
under the applicable Indenture with respect to which a default has occurred and
is continuing may waive a default for all those series, except a default in the
payment of principal or interest, or any premium, on any Debt Securities or a
default with respect to a covenant or provision which cannot be amended or
modified without the consent of the holder of each outstanding Debt Security of
the series affected. (Section 513 of the Senior Indenture & Section 6.6 of the
Subordinated Indenture.)
In addition, under certain circumstances, the holders of a majority of the
outstanding Junior Subordinated Debentures of any series may waive in advance,
for that series, our compliance with certain restrictive provisions of the
Subordinated Indenture under which those Junior Subordinated Debentures were
issued. (Section 4.7 of the Subordinated Indenture.)
Concerning the Trustee
The Chase Manhattan Bank is the Subordinated Indenture Trustee and the
Trustee under the Senior Indenture. We and certain of our affiliates maintain
deposit accounts and banking relationships with The Chase Manhattan Bank. The
Chase
11
<PAGE>
Manhattan Bank also serves as trustee under other indentures pursuant to which
securities of ours and of certain of our affiliates are outstanding. It has
purchased, and is likely to purchase in the future, our securities and
securities of our affiliates.
The Trustee will perform only those duties that are specifically set forth in
the Indentures unless an event of default under an Indenture occurs and is
continuing. The Trustee is under no obligation to exercise any of its powers
under the Indentures at the request of any holder of Debt Securities unless
that holder offers reasonable indemnity to the Trustee against the costs,
expenses and liabilities which it might incur as a result. (Section 601 of the
Senior Indenture & Section 7.1 of the Subordinated Indenture.)
The Trustee administers its corporate trust business at 450 West 33rd Street,
New York, New York 10001 (Attention: Capital Markets Fiduciary Services).
ADDITIONAL TERMS OF SENIOR DEBT SECURITIES
Repayment at the Option of the Holder; Repurchases by the Company
We must repay the Senior Debt Securities at the option of the Holders prior
to the Stated Maturity Date only if specified in the applicable prospectus
supplement. Unless otherwise provided in the prospectus supplement, the Senior
Debt Securities subject to repayment at the option of the Holder will be
subject to repayment:
. on the specified Repayment Dates; and
. at a repayment price equal to 100% of the unpaid principal amount to be
repaid, together with unpaid interest accrued to the Repayment Date. (Section
1302 of the Senior Indenture.)
For any Senior Debt Security to be repaid, the Trustee must receive, at its
office maintained for that purpose in the Borough of Manhattan, New York City
not more than 60 nor less than 30 calendar days prior to the date of repayment:
. in the case of a certificated Senior Debt Security, the certificated Senior
Debt Security and the form in the Senior Debt Security entitled Option of
Holder to Elect Purchase duly completed; or
. in the case of a book-entry Senior Debt Security, instructions to that effect
from the beneficial owner to the securities depositary and forwarded by the
securities depositary. Exercise of the repayment option by the Holder will be
irrevocable. (Section 1303 of the Senior Indenture.)
Only the securities depositary may exercise the repayment option in respect
of beneficial interests in the book-entry Senior Debt Securities. Accordingly,
beneficial owners that desire repayment in respect of all or any portion of
their beneficial interests must instruct the participants through which they
own their interests to direct the securities depositary to exercise the
repayment option on their behalf. All instructions given to participants from
beneficial owners relating to the option to elect repayment will be
irrevocable. In addition, at the time the instructions are given, each
beneficial owner will cause the participant through which it owns its interest
to transfer its interest in the book-entry Senior Debt Securites or the global
certificate representing the related book-entry Senior Debt Securities, on the
securities depositary's records, to the Trustee. See DESCRIPTION OF THE DEBT
SECURITIES--GLOBAL SECURITIES.
12
<PAGE>
Defeasance
We will be discharged from our obligations on the Senior Debt Securities of
any series at any time if we deposit with the Trustee sufficient cash or
government securities to pay the principal, interest, any premium and any other
sums due to the stated maturity date or a redemption date of the Senior Debt
Securities of the series. If this happens, the holders of the Senior Debt
Securities of the series will not be entitled to the benefits of the Senior
Indenture except for registration of transfer and exchange of Senior Debt
Securities and replacement of lost, stolen or mutilated Senior Debt Securities.
(Section 402 of the Senior Indenture.)
Under federal income tax law as of the date of this prospectus, a discharge
may be treated as an exchange of the related Senior Debt Securities. Each
holder might be required to recognize gain or loss equal to the difference
between the holder's cost or other tax basis for the Senior Debt Securities and
the value of the holder's interest in the trust. Holders might be required to
include as income a different amount than would be includable without the
discharge. We urge prospective investors to consult their own tax advisers as
to the consequences of a discharge, including the applicability and effect of
tax laws other than the federal income tax law.
ADDITIONAL TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
Additional Covenants Applicable to Junior Subordinated Debentures
Under the Subordinated Indenture, we will:
. maintain 100% ownership of any Trust to which the Junior Subordinated
Debentures have been issued while the Junior Subordinated Debentures remain
outstanding; and
. pay to any Trust to which the Junior Subordinated Debentures have been issued
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States or any other
taxing authority on that Trust, so that the net amounts received and retained
by that Trust (after paying any taxes, duties, assessments or other
governmental charges) will be not less than the Trust would have received had
no such taxes, duties, assessments or other governmental charges been
imposed. (Sections 4.8 & 4.9 of the Subordinated Indenture.)
Option to Extend Interest Payment Period
We can defer interest payments by extending the interest payment period for
the number of consecutive extension periods specified in the applicable
prospectus supplement (each, an Extension Period). Other details regarding the
Extension Period will also be specified in the applicable prospectus
supplement. No Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. At the end of the Extension Period(s), we will pay all
interest then accrued and unpaid, together with interest compounded quarterly
at the rate for the Junior Subordinated Debentures, to the extent permitted by
applicable law. (Section 2.10 of the Subordinated Indenture.)
13
<PAGE>
During any Extension Period, we will not make distributions related to our
capital stock, including dividends, redemptions, repurchases, liquidation
payments, or guarantee payments. Also we will not make any payments, redeem or
repurchase any debt securities of equal or junior rank to the Junior
Subordinated Debentures or make any guarantee payments on any such debt
securities. We may, however, make the following types of distributions:
. dividends paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan;
. payments to a trust holding securities of the same series under a guarantee;
or
. repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants.
Subordination
Each series of Junior Subordinated Debentures will be subordinate and junior
in right of payment, to the extent set forth in the Subordinated Indenture, to
all Senior Indebtedness as defined below. If:
. we make a payment or distribution of any of our assets to creditors upon our
dissolution, winding-up, liquidation or reorganization, whether in
bankruptcy, insolvency or otherwise;
. a default beyond any grace period has occurred and is continuing with
respect to the payment of principal, interest or any other monetary amounts
due and payable on any Senior Indebtedness; or
. the maturity of any Senior Indebtedness has been accelerated because of a
default on that Senior Indebtedness,
then the holders of Senior Indebtedness generally will have the right to
receive payment, in the case of the first instance, of all amounts due or to
become due upon that Senior Indebtedness, and, in the case of the second and
third instances, of all amounts due on that Senior Indebtedness, or we will
make provision for those payments, before the holders of any Junior
Subordinated Debentures have the right to receive any payments of principal or
interest on their Junior Subordinated Debentures. (Sections 14.1 and 14.9 of
the Subordinated Indenture.)
Senior Indebtedness means, with respect to any series of Junior Subordinated
Debentures, the principal, premium, interest and any other payment in respect
of any of the following:
. all of our indebtedness for borrowed or purchased money that is evidenced by
notes, debentures, bonds or other written instruments;
. our obligations for reimbursement under letters of credit, banker's
acceptances, security purchase facilities or similar facilities issued for
our account;
. any of our other indebtedness or obligations with respect to commodity
contracts, interest rate commodity and currency swap agreements and other
similar agreements or arrangements; and
. all indebtedness of others of the kinds described in the preceding
categories which we have assumed or guaranteed.
Senior Indebtedness will not include our obligations to trade creditors or
indebtedness to our subsidiaries. (Section 1.1 of the Subordinated Indenture.)
14
<PAGE>
Senior Indebtedness will be entitled to the benefits of the subordination
provisions in the Subordinated Indenture irrespective of the amendment,
modification or waiver of any term of the Senior Indebtedness. We may not
amend the Subordinated Indenture to change the subordination of any
outstanding Junior Subordinated Debentures without the consent of each holder
of Senior Indebtedness that the amendment would adversely affect. (Sections
10.2 & 14.7 of the Subordinated Indenture.)
The Subordinated Indenture does not limit the amount of Senior Indebtedness
that we may issue.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following is a summary of the principal terms of the Trust Preferred
Securities. The form of amended trust agreement is filed as an exhibit to the
registration statement of which this prospectus forms a part, or is
incorporated by reference. The terms of the Trust Preferred Securities will
include those stated in the amended trust agreement and those made part of the
amended trust agreement by the Trust Indenture Act.
General
Each Trust will exist until terminated as provided in its amended trust
agreement. Except under certain circumstances, we will be entitled to appoint,
remove, or replace trustees, who will conduct the business and affairs of each
Trust. The trustees of each Trust will consist of:
. two employees, officers or affiliates of the Company as Administrative
Trustees;
. a financial institution unaffiliated with us that will act as property
trustee and as indenture trustee for purposes of the Trust Indenture Act,
under the terms set forth in a prospectus supplement (the Property Trustee);
and
. one trustee with its principal place of business or who resides in the State
of Delaware and who will act under the terms set forth in a prospectus
supplement. (Sections 6.1 through 6.5 of the Amended Trust Agreement.)
The amended trust agreement will authorize the Administrative Trustees to
issue, on behalf of the applicable Trust, two classes of trust securities,
Trust Preferred Securities and trust common securities, each of which will
have the terms described in this prospectus and in the applicable prospectus
supplement. We will own all of the trust common securities. The trust common
securities will rank equally in right of payment, and payments will be made on
the trust common securities, proportionately with the trust preferred
securities. However, if an event of default occurs and is continuing under the
amended trust agreement, the rights of the holders of the trust common
securities to payment for distributions and payments upon liquidation,
redemption and otherwise, will be subordinated to the rights of the holders of
the trust preferred securities. We will acquire, directly or indirectly, trust
common securities in a total liquidation amount of approximately 3% of the
total capital of each of the Trusts. (Sections 3.6, 5.1, 5.2 and 7.1 of the
Amended Trust Agreement.)
The proceeds from the sale of the Trust Preferred Securities will be used by
the applicable Trust to purchase our Junior Subordinated Debentures. These
Junior Subordinated Debentures will be held in trust by the Property Trustee
for the benefit
15
<PAGE>
of the holders of the trust securities. We will guarantee the payments of
distributions and payments on redemption or liquidation with respect to the
Trust Preferred Securities, but only to the extent the Trust has funds
available to make those payments and has not made the payments. See DESCRIPTION
OF THE GUARANTEES.
The assets of the Trust available for distribution to the holders of Trust
Preferred Securities will be limited to payments from us under the Junior
Subordinated Debentures held by the Trust. If we fail to make a payment on the
Junior Subordinated Debentures, the Trust will not have sufficient funds to
make related payments, including distributions, on its Trust Preferred
Securities.
The Guarantee, when taken together with our obligations under the Junior
Subordinated Debentures, the Subordinated Indenture and the amended trust
agreement, will provide a full and unconditional guarantee of amounts due on
the Trust Preferred Securities issued by the Trust.
The Trust Preferred Securities will have the terms, including distributions,
redemption, voting, liquidation rights and other preferred, deferred or other
special rights or restrictions that will be described in the amended trust
agreement or made part of the amended trust agreement by the Trust Indenture
Act or the Delaware Business Trust Act. The terms of the Trust Preferred
Securities will mirror the terms of the Junior Subordinated Debentures held by
the Trust. In other words, the distribution rate and the distribution payment
dates and other payment dates for the Trust Preferred Securities will
correspond to the interest rate and interest payment dates and other payment
dates on the Junior Subordinated Debentures. Holders of Trust Preferred
Securities have no preemptive or similar rights. (Section 7.1 of the Amended
Trust Agreement.)
Provisions of a Particular Series
Each Trust may issue only one series of Trust Preferred Securities. The
applicable prospectus supplement will set forth the principal terms of the
Trust Preferred Securities that will be offered, including:
. the name of the Trust Preferred Securities;
. the liquidation amount and number of Trust Preferred Securities issued;
. the annual distribution rate(s) or method of determining such rate(s), the
payment date(s) and the record dates used to determine the holders who are to
receive distributions;
. the date from which distributions will be cumulative;
. the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions on which the Trust Preferred
Securities will be purchased or redeemed, in whole or in part;
. the terms and conditions, if any, upon which the Junior Subordinated
Debentures and the related Guarantee may be distributed to holders of those
Trust Preferred Securities;
. any securities exchange on which the Trust Preferred Securities will be
listed;
. whether the Trust Preferred Securities are to be issued in book-entry form
and represented by one or more global certificates, and if so, the depository
for
16
<PAGE>
those global certificates and the specific terms of the depositary
arrangements; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of the Trust Preferred Securities. (Article 7 of the Amended
Trust Agreement.)
The interest rate and interest and other payment dates of each series of
Junior Subordinated Debentures issued to a Trust will correspond to the rate at
which distributions will be paid and the distribution and other payment dates
of the Trust Preferred Securities of that Trust.
Extensions
We have the right under the Subordinated Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest
payment period from time to time on the Junior Subordinated Debentures. The
Administrative Trustees will give the holders of the Trust Preferred Securities
notice of any Extension Period upon their receipt of notice from us. If
distributions are deferred, the deferred distributions and accrued interest
will be paid to holders of record of the Trust Preferred Securities as they
appear on the books and records of the Trust on the record date next following
the termination of such deferral period. See DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES--OPTION TO EXTEND INTEREST PAYMENT PERIOD.
Distributions on the Trust Preferred Securities will be made on the dates
payable to the extent that the Trust has funds available for the payment of
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the trust securities will be limited to payments
received from us on the Junior Subordinated Debentures. We have guaranteed the
payment of distributions out of monies held by the Trust to the extent set
forth under DESCRIPTION OF THE GUARANTEES.
Distributions on the Trust Preferred Securities will be payable to the
holders named on the securities register of the Trust at the close of business
on the relevant record dates, which, as long as the Trust Preferred Securities
remain in book-entry only form, will be one business day prior to the relevant
payment dates. Distributions will be paid through the Property Trustee who will
hold amounts received in respect of the Junior Subordinated Debentures in the
Property Account for the benefit of the holders of the trust securities. In the
event that the Trust Preferred Securities do not continue to remain in book-
entry only form, the relevant record dates will conform to the rules of any
securities exchange on which the Trust Preferred Securities are listed and, if
none, the Administrative Trustees will have the right to select relevant record
dates, which will be more than 14 days but less than 60 days prior to the
relevant payment dates. In the event that any date on which distributions are
to be made on the Trust Preferred Securities is not a business day, then
payment of the distributions payable on that date will be made on the next
succeeding day which is a business day and without any interest or other
payment in respect of that delay, except that, if that business day is in the
next succeeding calendar year, the payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the record date. (Section 7.2 of the Amended Trust Agreement.)
17
<PAGE>
Mandatory Redemption of Trust Preferred Securities
The Trust Preferred Securities have no stated maturity date, but will be
redeemed upon the maturity of the Junior Subordinated Debentures or to the
extent the Junior Subordinated Debentures are redeemed prior to maturity. The
Junior Subordinated Debentures will mature on the date specified in the
applicable prospectus supplement and may be redeemed at any time, in whole but
not in part, in certain circumstances upon the occurrence of a Tax Event or an
Investment Company Event as described under SPECIAL EVENT REDEMPTION.
Upon the maturity of the Junior Subordinated Debentures, the proceeds of
their repayment will simultaneously be applied to redeem all the outstanding
trust securities at the Redemption Price. Upon the redemption of the Junior
Subordinated Debentures, either at our option or as a result of a Tax Event or
an Investment Company Event, the proceeds from the redemption will
simultaneously be applied to redeem trust securities having a total liquidation
amount equal to the total principal amount of the Junior Subordinated
Debentures so redeemed at the redemption price; provided, that holders of trust
securities will be given not less than 20 nor more than 60 days' notice of the
redemption. In the event that fewer than all of the outstanding trust
securities are to be redeemed, the trust securities will be redeemed
proportionately. (Section 7.3 of the Amended Trust Agreement.)
Special Event Redemption
Both a Tax Event and an Investment Company Act Event constitute Special
Events for purposes of the redemption provisions described in the preceding
paragraph.
A Tax Event means that the Administrative Trustees have received an opinion
of independent tax counsel experienced in those matters to the effect that, as
a result of:
. any amendment to, change or announced proposed change in, the laws or
regulations of the United States or any of its political subdivisions or
taxing authorities, or
. any official administrative pronouncement, action or judicial decision
interpreting or applying those laws or regulations, which amendment or change
becomes effective or proposed change, pronouncement, action or decision is
announced on or after the date
. the Trust Preferred Securities are issued and sold there is more than an
insubstantial risk that:
. the Trust is or within 90 days would be subject to U.S. federal income tax
with respect to income accrued or received on the Junior Subordinated
Debentures,
. interest payable to the Trust on the Junior Subordinated Debentures is not or
within 90 days would not be deductible, in whole or in part, by us for U.S.
federal income tax purposes, or
. the Trust is or within 90 days would be subject to a material amount of other
taxes, duties or other governmental charges.
Investment Company Event means that the Administrative Trustees have received
an opinion of a nationally recognized independent counsel to the effect that,
as a result of an amendment to or change in the Investment Company Act or
regulations
18
<PAGE>
thereunder on or after the date the Trust Preferred Securities are issued and
sold, there is more than an insubstantial risk that the Trust is or will be
considered an investment company and be required to be registered under the
Investment Company Act. (Section 1.1 of the Amended Trust Agreement.)
Redemption Procedures
The Trust may not redeem fewer than all the outstanding trust securities
unless all accrued and unpaid distributions have been paid on all trust
securities for all distribution periods terminating on or before the date of
redemption. In the event that fewer than all of the outstanding trust
securities are to be redeemed, the trust securities will be redeemed
proportionately.
If the Trust gives a notice of redemption in respect of the trust securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, and if we have paid to the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Junior Subordinated Debentures, the Property Trustee will irrevocably deposit
with the depositary funds sufficient to pay the applicable redemption price and
will give the depositary irrevocable instructions and authority to pay the
redemption price to the holders of the Trust Preferred Securities, and the
paying agent will pay the applicable redemption price to the holders of the
trust common securities by check. If notice of redemption has been given and
funds deposited as required, then, immediately prior to the close of business
on the date of the deposit, distributions will cease to accrue and all rights
of holders of Trust Preferred Securities called for redemption will cease,
except the right of the holders of the Trust Preferred Securities to receive
the redemption price but without interest on the redemption price. In the event
that any date fixed for redemption of Trust Preferred Securities is not a
business day, then payment of the redemption price payable on that date will be
made on the next succeeding day that is a business day, without any interest or
other payment in respect of any such delay, except that, if that business day
falls in the next calendar year, payment will be made on the immediately
preceding business day. In the event that payment of the redemption price in
respect of Trust Preferred Securities is improperly withheld or refused and not
paid either by the Trust or by us under the Guarantee, distributions on the
Trust Preferred Securities will continue to accrue at the then applicable rate
from the original redemption date to the date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the redemption price.
Subject to the foregoing and applicable law, including, without limitation,
U.S. federal securities laws, we or our subsidiaries may at any time, and from
time to time, purchase outstanding Trust Preferred Securities by tender, in the
open market or by private agreement. (Section 7.4 of the Amended Trust
Agreement.)
Conversion or Exchange Rights
The terms on which the Trust Preferred Securities are convertible into or
exchangeable for common stock or our other securities will be contained in the
applicable prospectus supplement. Those terms will include provisions as to
whether conversion or exchange is mandatory, at the
19
<PAGE>
option of the holder or at our option, and may include provisions under which
the number of shares of common stock or our other securities to be received by
the holders of Trust Preferred Securities would be subject to adjustment.
Distribution of the Junior Subordinated Debentures
We will have the right at any time to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, to cause Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities in a total stated principal
amount equal to the total stated liquidation amount of the Trust Preferred
Securities then outstanding. Prior to any such dissolution, we will obtain any
required regulatory approvals. The right to dissolve the trust and distribute
the Junior Subordinated Debentures will be conditioned on our receipt of an
opinion rendered by an independent tax counsel that the distribution would not
result in the recognition of gain or loss for federal income tax purposes by
the holders. (Section 8.1 of the Amended Trust Agreement.)
Liquidation Distribution Upon Dissolution
The amended trust agreement will state that the Trust will be dissolved:
. upon our bankruptcy;
. upon the filing of a certificate of dissolution or its equivalent with
respect to us;
. upon the filing of a certificate of cancellation with respect to the Trust
after obtaining the consent of at least a majority in liquidation amount of
the Trust Preferred Securities, voting together as a single class;
. 90 days after the revocation of our charter, but only if the charter is not
reinstated during that 90-day period;
. upon the distribution of the related Junior Subordinated Debentures directly
to the holders of the trust securities;
. upon the redemption of all of the trust securities; or
. upon entry of a court order for the dissolution of us or the Trust. (Section
8.1 of the Amended Trust Agreement.)
In the event of a dissolution, after the Trust pays all amounts owed to
creditors, the holders of the Trust Preferred Securities will be entitled to
receive:
. cash equal to the total liquidation amount of each Trust Preferred Security
specified in an accompanying prospectus supplement, plus accumulated and
unpaid distributions to the date of payment, or
. Junior Subordinated Debentures in a total principal amount equal to the
total liquidation amount of the Trust Preferred Securities.
If the Trust cannot pay the full amount due on its trust securities because
insufficient assets are available for payment, then the amounts payable by the
Trust on its trust securities will be paid proportionately. However, if an
event of default under the related amended trust agreement occurs, the total
amounts due on the Trust Preferred Securities will be paid before any
distribution on the trust common securities. Under certain circumstances
involving the dissolution of a Trust, subject to obtaining any required
regulatory approval, Junior Subordinated Debentures
20
<PAGE>
will be distributed to the holders of the trust securities in liquidation of
that Trust. (Section 8.2 of the Amended Trust Agreement.)
Trust Enforcement Events
An event of default under the Subordinated Indenture relating to the Junior
Subordinated Debentures will be an event of default under the amended trust
agreement (a Trust Enforcement Event). See DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES--EVENTS OF DEFAULT.
In addition, the voluntary or involuntary dissolution, winding up or
termination of the Trust is also a Trust Enforcement Event, except in
connection with:
. the distribution of the Junior Subordinated Debentures to holders of the
trust securities of the Trust,
. the redemption of all of the trust securities of the Trust, and
. mergers, consolidations or amalgamations permitted by the amended trust
agreement of the Trust.
Under the amended trust agreement, the holder of the trust common securities
will be deemed to have waived any Trust Enforcement Event with respect to the
trust common securities until all Trust Enforcement Events with respect to the
Trust Preferred Securities have been cured, waived or otherwise eliminated.
Until all Trust Enforcement Events with respect to the Trust Preferred
Securities have been so cured, waived, or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on behalf of the holders of the
Trust Preferred Securities and only the holders of the Trust Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the amended trust agreement and the Subordinated
Indenture. In the event that any Trust Enforcement Event with respect to the
Trust Preferred Securities is waived by the holders of the Trust Preferred
Securities as provided in the amended trust agreement, under the amended trust
agreement the holders of trust common securities have agreed that the waiver
also constitutes a waiver of the Trust Enforcement Event with respect to the
trust common securities for all purposes under the amended trust agreement
without any further act, vote or consent of the holders of trust common
securities. (Section 2.6 of the Amended Trust Agreement.)
We and the Administrative Trustees must file annually with the Property
Trustee a certificate evidencing compliance with all the applicable conditions
and covenants under the amended trust agreement. (Section 2.4 of the Amended
Trust Agreement.)
Upon the occurrence of a Trust Enforcement Event the Property Trustee, as the
sole holder of the Junior Subordinated Debentures, will have the right under
the Subordinated Indenture to declare the principal of, interest and premium,
if any, on the Junior Subordinated Debentures to be immediately due and
payable.
If a Property Trustee fails to enforce its rights under the amended trust
agreement or the Subordinated Indenture to the fullest extent permitted by law
and subject to the terms of the amended trust agreement and the Subordinated
Indenture, any holder of Trust Preferred Securities may sue us, or seek other
remedies, to
21
<PAGE>
enforce the Property Trustee's rights under the amended trust agreement or the
Subordinated Indenture without first instituting a legal proceeding against the
Property Trustee or any other person. If a Trust Enforcement Event occurs and
is continuing as a result of our failure to pay principal of or interest or
premium, if any, on the Junior Subordinated Debentures when payable, then a
holder of the Trust Preferred Securities may directly sue us or seek other
remedies, to collect its proportionate share of payments owned. See
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES HELD BY THE TRUST.
Removal and Replacement of Trustees
Only the holders of trust common securities have the right to remove or
replace the trustees of the Trust, except that while an event of default in
respect of the Junior Subordinated Debentures has occurred or is continuing,
the holders of a majority of the Trust Preferred Securities will have this
right. The resignation or removal of any trustee and the appointment of a
successor trustee will be effective only on the acceptance of appointment by
the successor trustee in accordance with the provisions of the amended trust
agreement. (Section 6.6 of the Amended Trust Agreement.)
Mergers, Consolidations or Amalgamations of the Trust
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other corporation or other body (each, a Merger Event), except
as described below. The Trust may, with the consent of a majority of its
Administrative Trustees and without the consent of the holders of its trust
securities, consolidate, amalgamate, merge with or into, or be replaced by
another trust, provided that:
. the successor entity either
. assumes all of the obligations of the Trust relating to its trust
securities, or
. substitutes other securities for the trust securities that are
substantially similar to the trust securities, so long as the successor
securities rank the same as the trust securities for distributions and
payments upon liquidation, redemption and otherwise;
. we acknowledge a trustee of the successor entity who has the same powers and
duties as the Property Trustee of the Trust, as the holder of the Junior
Subordinated Debentures;
. the Trust Preferred Securities are listed, or any successor securities will
be listed, upon notice of issuance, on the same securities exchange or other
organization that the Trust Preferred Securities are then listed;
. the Merger Event does not cause the Trust Preferred Securities or successor
securities to be downgraded by any nationally recognized rating agency;
. the Merger Event does not adversely affect the rights, preferences and
privileges of the holders of the trust securities or successor securities in
any material way, other than with respect to any dilution of the holders'
interest in the new entity;
. the successor entity has a purpose identical to that of the Trust;
22
<PAGE>
. prior to the Merger Event, we have received an opinion of counsel from a
nationally recognized law firm stating that
. the Merger Event does not adversely affect the rights of the holders of the
Trust Preferred Securities or any successor securities in any material way,
other than with respect to any dilution of the holders' interest in the new
entity, and
. following the Merger Event, neither the Trust nor the successor entity will
be required to register as an investment company under the Investment
Company Act; and
. we guarantee the obligations of the successor entity under the successor
securities in the same manner as in the Guarantee.
In addition, unless all of the holders of the Trust Preferred Securities and
trust common securities approve otherwise, the Trust will not consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it,
if, in the opinion of a nationally recognized tax counsel experienced in such
matters, the transaction would cause the Trust or the successor entity to be
classified other than as a grantor trust for U.S. federal income tax purposes.
(Section 3.15 of the Amended Trust Agreement.)
Voting Rights; Amendment of Trust Agreement
The holders of Trust Preferred Securities have no voting rights except as
discussed under DESCRIPTION OF TRUST SECURITIES--MERGERS, CONSOLIDATIONS OR
AMALGAMATIONS OF THE TRUST AND DESCRIPTION OF THE GUARANTEES--AMENDMENTS, and
as otherwise required by law and the amended trust agreement.
The amended trust agreement may be amended if approved by a majority of the
Administrative Trustees of the Trust. However, if any proposed amendment
provides for, or the Administrative Trustees otherwise propose to effect,
. any action that would adversely affect the powers, preferences or special
rights of the trust securities, whether by way of amendment to the amended
trust agreement or otherwise, or
. the dissolution, winding-up or termination of the Trust other than under the
terms of its amended trust agreement,
then the holders of the Trust Preferred Securities as a single class will be
entitled to vote on the amendment or proposal. In that case, the amendment or
proposal will only be effective if approved by at least a majority in
liquidation amount of the Trust Preferred Securities affected by the amendment
or proposal.
No amendment may be made to an amended trust agreement if that amendment
would:
. cause the Trust to be characterized as other than a grantor trust for U.S.
federal income tax purposes;
. reduce or otherwise adversely affect the powers of the Property Trustee; or
. cause the Trust to be deemed to be an investment company which is required to
23
<PAGE>
be registered under the Investment Company Act. (Section 11.1 of the Amended
Trust Agreement.)
The holders of a majority of the total liquidation amount of the Trust
Preferred Securities have the right to:
. direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee; or
. direct the exercise of any trust or power conferred upon the Property Trustee
under the amended trust agreement, including the right to direct the Property
Trustee, as the holder of the Junior Subordinated Debentures, to
. exercise the remedies available under the Subordinated Indenture with
respect to the Junior Subordinated Debentures,
. waive any event of default under the Subordinated Indenture that is
waivable, or
. cancel an acceleration of the principal of the Junior Subordinated
Debentures.
In addition, before taking any of the foregoing actions, the Property Trustee
must obtain an opinion of counsel stating that, as a result of that action, the
Trust will continue to be classified as a grantor trust for U.S. federal income
tax purposes. (Section 7.5 of the Amended Trust Agreement.)
As described in the form of amended trust agreement, the Property Trustee may
hold a meeting to have holders of Trust Preferred Securities vote on a change
or have them approve a change by written consent.
If a vote by the holders of Trust Preferred Securities is taken or a consent
is obtained, any Trust Preferred Securities owned by us or any of our
affiliates will, for purposes of the vote or consent, be treated as if they
were not outstanding, which will have the following consequences:
. we and any of our affiliates will not be able to vote on or consent to
matters requiring the vote or consent of holders of Trust Preferred
Securities; and
. any Trust Preferred Securities owned by us or any of our affiliates will not
be counted in determining whether the required percentage of votes or
consents has been obtained. Section 7.5 of the Amended Trust Agreement.)
Information Concerning the Property Trustee
For matters relating to compliance with the Trust Indenture Act, the Property
Trustee will have all of the duties and responsibilities of an indenture
trustee under the Trust Indenture Act. The Property Trustee, other than during
the occurrence and continuance of a Trust Enforcement Event, undertakes to
perform only the duties that are specifically described in the amended trust
agreement and, upon a Trust Enforcement Event, must use the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers given it by the applicable amended
trust agreement at the request of any holder of Trust Preferred Securities
unless it is offered reasonable security or indemnity against the costs,
expenses and liabilities that it might incur. However, the holders of the Trust
Preferred
24
<PAGE>
Securities will not be required to offer such an indemnity where the holders,
by exercising their voting rights, direct the Property Trustee to take any
action following a Trust Enforcement Event. (Section 3.9 of the Amended Trust
Agreement.)
Information Concerning the Administrative Trustees
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in a way that:
. will not cause it to be deemed to be an investment company required to be
registered under the Investment Company Act;
. will cause it to be classified as a grantor trust for U.S. federal income tax
purposes; and
. will cause the Junior Subordinated Debentures it holds to be treated as our
indebtedness for U.S. federal income tax purposes.
We and the Administrative Trustees are authorized to take any action, so long
as it is consistent with applicable law or the certificate of trust or amended
trust agreement, that we and the Administrative Trustees determine to be
necessary or desirable for those purposes. (Section 3.6 of the Amended Trust
Agreement.)
DESCRIPTION OF THE GUARANTEES
We will execute the Guarantees from time to time for the benefit of the
holders of the Trust Preferred Securities of the respective Trusts.
The Chase Manhattan Bank will act as Guarantee Trustee under each Guarantee.
The Guarantee Trustee will hold each Guarantee for the benefit of the holders
of the Trust Preferred Securities to which it relates.
The following description of the Guarantees is only a summary. The form of
Guarantee is an exhibit to the registration statement.
General
We will irrevocably and unconditionally agree under each Guarantee to pay the
Guarantee Payments that are defined below, to the extent specified in that
Guarantee, to the holders of the Trust Preferred Securities to which the
Guarantee relates, to the extent that the Guarantee Payments are not paid by or
on behalf of the related Trust. We are required to pay the Guarantee Payments
to the extent specified in the relevant Guarantee regardless of any defense,
right of set-off or counterclaim that we may have or may assert against any
person. (Section 5.1 of the Guarantee.)
The following payments and distributions on the Trust Preferred Securities of
a Trust are Guarantee Payments:
. any accrued and unpaid distributions required to be paid on the Trust
Preferred Securities of the Trust, but only to the extent that the Trust has
funds legally and immediately available for those distributions;
. the redemption price for any Trust Preferred Securities that the Trust calls
for redemption, including all accrued and unpaid distributions to the
redemption date, but only to the extent that the Trust
25
<PAGE>
has funds legally and immediately available for the payment; and
. upon a dissolution, winding-up or termination of the Trust, other than in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities of the Trust or the redemption of all the Trust
Preferred Securities of the Trust, the lesser of:
. the sum of the liquidation amount and all accrued and unpaid distributions on
the Trust Preferred Securities of the Trust to the payment date, to the
extent that the Trust has funds legally and immediately available for the
payment; and
. the amount of assets of the Trust remaining available for distribution to
holders of the Trust Preferred Securities of the Trust in liquidation of the
Trust. (Section 1.1 of the Guarantee.)
We may satisfy our obligation to make a Guarantee Payment by making that
payment directly to the holders of the related Trust Preferred Securities or by
causing the Trust to make the payment to those holders. (Section 5.1 of the
Guarantee.)
Each Guarantee will be a full and unconditional guarantee, subject to certain
subordination provisions, of the Guarantee Payments with respect to the related
Trust Preferred Securities from the time of issuance of those Trust Preferred
Securities, except that the Guarantee will only apply to the payment of
distributions and other payments on the Trust Preferred Securities when the
Trust has sufficient funds legally and immediately available to make those
distributions or other payments.
If we do not make the required payments on the Junior Subordinated Debentures
that the Property Trustee holds under a Trust, that Trust will not make the
related payments on its Trust Preferred Securities.
Subordination
Our obligations under each Guarantee will be unsecured obligations of the
Company. Those obligations will rank:
. subordinate and junior in right of payment to all of our other liabilities,
other than obligations or liabilities that rank equal in priority or
subordinate by their terms;
. equal in priority with the Junior Subordinated Debentures that we may issue
and similar guarantees; and
. senior to our common stock. (Section 6.2 of the Guarantee.)
We have $257.7 million in Junior Subordinated Debentures outstanding that
will rank equal in priority with the Guarantees. We have common stock
outstanding that will rank junior to the Guarantees.
Each Guarantee will be a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against us, as guarantor, to enforce its rights under the Guarantee without
first instituting a legal proceeding against any other person or entity.
(Section 5.4 of the Guarantee.)
The terms of the Trust Preferred Securities will provide that each holder of
the Trust Preferred Securities, by accepting those Trust Preferred Securities,
agrees to the subordination provisions and other terms of the related
Guarantee.
26
<PAGE>
Amendments
We may amend each Guarantee without the consent of any holder of the Trust
Preferred Securities to which that Guarantee relates if the amendment does not
materially and adversely affect the rights of those holders. We may otherwise
amend each Guarantee with the approval of the holders of at least 50% of the
outstanding Trust Preferred Securities to which that Guarantee relates.
(Section 9.2 of the Guarantee.)
Termination
Each Guarantee will terminate and be of no further effect when:
. the redemption price of the Trust Preferred Securities to which the Guarantee
relates is fully paid;
. we distribute the related Junior Subordinated Debentures to the holders of
those Trust Preferred Securities; or
. the amounts payable upon liquidation of the related Trust are fully paid.
(Section 7.1 of the Guarantee.)
Each Guarantee will remain in effect or will be reinstated if at any time any
holder of the related Trust Preferred Securities must restore payment of any
sums paid to that holder with respect to those Trust Preferred Securities or
under that Guarantee.
Material Covenants
We will covenant that, so long as any Trust Preferred Securities remain
outstanding, if there is an event of default under the Guarantee or the amended
trust agreement:
. we will not make distributions related to our debt securities that rank
equally with or junior to the Junior Subordinated Debentures, including any
payment of interest, principal or premium, or repayments, repurchases or
redemptions; and
. we will not make distributions related to our capital stock, including
dividends, redemptions, repurchases, liquidation payments, or guarantee
payments. We may, however, make the following types of distributions:
. dividends paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan;
. payments to a trust holding securities of the same series under a
guarantee; and
. repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any benefit plan or other similar arrangement with
or for the benefit of employees, officers, directors or consultants.
(Section 6.1 of the Guarantee.)
Because we are a holding company that conducts all of our operations through
our subsidiaries, our ability to meet our obligations under the Guarantees is
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to us. The
Trust, as holder of the Guarantee and the Junior Subordinated Debentures will
generally have a junior position to claims of creditors of our subsidiaries,
including trade creditors, debtholders, secured creditors, taxing authorities,
guarantee holders and any preferred stockholders.
27
<PAGE>
Events of Default
An event of default will occur under any Guarantee if we fail to perform any
of our payment obligations under that Guarantee. The holders of a majority of
the Trust Preferred Securities of any series may waive any such event of
default and its consequences on behalf of all of the holders of the Trust
Preferred Securities of that series. (Section 2.6 of the Guarantee.) The
Guarantee Trustee is entitled to enforce the Guarantee for the benefit of the
holders of the Trust Preferred Securities of a series if an event of default
occurs under the related Guarantee. (Section 3.1 of the Guarantee.)
The holders of a majority of the Trust Preferred Securities to which a
Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee
with respect to that Guarantee or to direct the exercise of any trust or power
that the Guarantee Trustee holds under that Guarantee. Any holder of the
related Trust Preferred Securities may institute a legal proceeding directly
against us to enforce that holder's rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity. (Section 5.4 of the Guarantee.)
Concerning the Guarantee Trustee
The Chase Manhattan Bank is the Guarantee Trustee. It is also the Property
Trustee, the Subordinated Indenture Trustee and the Senior Indenture Trustee.
We and certain of our affiliates maintain deposit accounts and banking
relationships with The Chase Manhattan Bank. The Chase Manhattan Bank also
serves as trustee under other indentures pursuant to which securities of ours
and certain of our affiliates are outstanding.
The Guarantee Trustee will perform only those duties that are specifically
set forth in each Guarantee unless an event of default under the Guarantee
occurs and is continuing. In case an event of default occurs and is continuing,
the Guarantee Trustee will exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. (Section
3.1 of the Guarantee.) Subject to those provisions, the Guarantee Trustee is
under no obligation to exercise any of its powers under any Guarantee at the
request of any holder of the related Trust Preferred Securities unless that
holder offers reasonable indemnity to the Guarantee Trustee against the costs,
expenses and liabilities which it might incur as a result. (Section 3.2 of the
Guarantee.)
Agreements as to Expenses and Liabilities
We will enter into an Agreement as to Expenses and Liabilities under each
Trust Agreement. Each Agreement as to Expenses and Liabilities will provide
that we will, with certain exceptions, irrevocably and unconditionally
guarantee the full payment of any indebtedness, expenses or liabilities of the
related Trust to each person or entity to whom that Trust becomes indebted or
liable. The exceptions are the obligations of the Trust to pay to the holders
of the related trust common or other similar interests in that Trust the
amounts due to the holders under the terms of those trust common securities or
those similar interests.
28
<PAGE>
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES HELD BY THE TRUST
We will guarantee payments of distributions and redemption and liquidation
payments due on the Trust Preferred Securities, to the extent the trust has
funds available for the payments, to the extent described under DESCRIPTION OF
THE GUARANTEES. No single document executed by us in connection with the
issuance of the Trust Preferred Securities will provide for our full,
irrevocable and unconditional guarantee of the Trust Preferred Securities. It
is only the combined operation of our obligations under the Guarantee, the
amended trust agreement and the Subordinated Indenture that has the effect of
providing a full, irrevocable and unconditional guarantee of the Trust's
obligations under the Trust Preferred Securities.
As long as we make payments of interest and other payments when due on the
Junior Subordinated Debentures held by the Trust, those payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the Trust Preferred Securities issued by the Trust, primarily
because:
. the total principal amount of the Junior Subordinated Debentures will be
equal to the sum of the total liquidation amount of the trust securities;
. the interest rate and interest and other payment dates on the Junior
Subordinated Debentures will match the distribution rate and distribution and
other payment dates for the Trust Preferred Securities;
. we will pay for any and all costs, expenses and liabilities of the Trust
except its obligations under its Trust Preferred Securities; and
. each amended trust agreement will provide that the Trust will not engage in
any activity that is not consistent with the limited purposes of the Trust.
If and to the extent that we do not make payments on the Junior Subordinated
Debentures, the Trust will not have funds available to make payments of
distributions or other amounts due on its Trust Preferred Securities. In those
circumstances, you will not be able to rely upon the Guarantee for payment of
these amounts. Instead, you may directly sue us or seek other remedies to
collect your proportionate share of payments owed. If you sue us to collect
payment, then we will assume your rights as a holder of Trust Preferred
Securities under the amended trust agreement to the extent we make a payment to
you in any such legal action.
ACCOUNTING TREATMENT
Each Trust will be treated as a subsidiary of ours for financial reporting
purposes. Accordingly, our consolidated financial statements will include the
accounts of each Trust. The Trust Preferred Securities, along with other trust
preferred securities that we guarantee on an equivalent basis, will be
presented as a separate line item in our consolidated balance sheets, and
appropriate disclosures about the Trust Preferred Securities, the Guarantees
and the Junior Subordinated Debentures will be included in the notes to the
consolidated financial statements. We will record distributions that each Trust
pays on the Trust Preferred Securities as an expense in our consolidated
statement of income.
29
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of September 30, 1999, our authorized capital stock was 520,000,000
shares. Those shares consisted of: (a) 20,000,000 shares of preferred stock,
none of which were outstanding; and (b) 500,000,000 shares of common stock, of
which 190,807,645 shares were outstanding as of October 31, 1999. No holder of
shares of common stock or preferred stock has any preemptive rights.
Common Stock
Listing
Our outstanding shares of common stock are listed on the New York Stock
Exchange under the symbol "D". Any additional common stock we issue will also
be listed on the NYSE.
Dividends
Common shareholders may receive dividends when declared by the Board of
Directors. Dividends may be paid in cash, stock or other form. In certain
cases, common shareholders may not receive dividends until we have satisfied
our obligations to any preferred shareholders. Under certain circumstances, the
Subordinated Indenture also restricts our ability to pay cash dividends.
Fully Paid
All outstanding shares of common stock are fully paid and non-assessable. Any
additional common stock we issue will also be fully paid and non-assessable.
Voting Rights
Each share of common stock is entitled to one vote in the election of
directors and other matters. Common shareholders are not entitled to cumulative
voting rights.
Other Rights
We will notify common shareholders of any shareholders' meetings according to
applicable law. If we liquidate, dissolve or wind up our business, either
voluntarily or not, common shareholders will share equally in the assets
remaining after we pay our creditors and preferred shareholders.
Transfer Agents and Registrars
We, along with Chase Mellon Shareholder Services, are transfer agent and
registrar. You may contact us at the address listed on page 2 or Chase Mellon
located in Ridgefield, New Jersey.
Preferred Stock
The following description of the terms of the preferred stock sets forth
certain general terms and provisions of our authorized preferred stock. If we
offer preferred stock, the specific designations and rights will be described
in the prospectus supplement and a description will be filed with the SEC.
Our Board of Directors can, without approval of shareholders, issue one or
more series of preferred stock. The Board can also determine the number of
shares of each series and the rights, preferences and limitations of each
series including the dividend rights, voting rights, conversion rights,
redemption rights and any liquidation preferences of any wholly unissued series
of preferred stock, the number of shares constituting each series and the terms
and conditions of issue. In some cases, the issuance of preferred stock could
delay a change in control of the Company and make it harder to remove present
management. Under certain circumstances, preferred stock could also restrict
dividend payments to holders of our common stock.
30
<PAGE>
The preferred stock will, when issued, be fully paid and non-assessable.
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will rank on a parity in all respects with any outstanding
preferred stock we may have and will have priority over our common stock as to
dividends and distributions of assets. Therefore, the rights of any preferred
stock that may subsequently be issued may limit the rights of the holders of
our common stock and preferred stock.
The transfer agent, registrar, and dividend disbursement agent for a series
of preferred stock will be named in a prospectus supplement. The registrar for
shares of preferred stock will send notices to shareholders of any meetings at
which holders of the preferred stock have the right to elect directors or to
vote on any other matter.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating holders
to purchase from us, and us to sell to the holders, a specified number of
shares of common stock at a future date or dates, which we refer to in this
prospectus as stock purchase contracts. The price per share of common stock and
the number of shares of common stock may be fixed at the time the stock
purchase contracts are issued or may be determined by reference to a specific
formula set forth in the stock purchase contracts. The stock purchase contracts
may be issued separately or as part of units consisting of a stock purchase
contract and beneficial interests in debt securities, trust preferred
securities, preferred stock or debt obligations of third parties, including
U.S. treasury securities, securing the holders' obligations to purchase the
common stock under the stock purchase contracts, which we refer to in this
prospectus as stock purchase units. The stock purchase contracts may require us
to make periodic payments to the holders of the stock purchase units or vice
versa, and these payments may be unsecured or refunded on some basis. The stock
purchase contracts may require holders to secure their obligations under those
contracts in a specified manner.
The applicable prospectus supplement will describe the terms of the stock
purchase contracts or stock purchase units, including, if applicable,
collateral or depositary arrangements, relating to the stock purchase contracts
or stock purchase units.
VIRGINIA STOCK CORPORATION ACT AND THE ARTICLES AND THE BYLAWS
General
We are a Virginia corporation subject to the Virginia Stock Corporation Act
(the Virginia Act). Provisions of the Virginia Act, in addition to provisions
of our Articles of Incorporation and Bylaws, address corporate governance
issues, including the rights of shareholders. Some of these provisions could
hinder management changes while others could have an anti-takeover effect. This
anti-takeover effect may, in some circumstances, reduce the control premium
that might otherwise be reflected in the value of our common stock. If you are
buying this stock as part of a short-term investment strategy, this might be
especially important to you.
31
<PAGE>
We have summarized the key provisions below. You should read the actual
provisions of our Articles and Bylaws and the Virginia Act that relate to your
individual investment strategy.
Business Combinations
Our Articles require that any merger, share exchange or sale of substantially
all of the assets of the Company be approved by a plurality of the shares
represented at a meeting where a quorum is present. Abstentions and broker non-
votes have the same effect as a vote against the matter.
Section 13.1-725 of the Virginia Act contains several provisions relating to
transactions with interested shareholders. Interested shareholders are holders
of more than 10% of any class of a corporation's outstanding voting shares.
Transactions between a corporation and an interested shareholder are referred
to as affiliated transactions. The Virginia Act requires that material
affiliated transactions must be approved by at least two-thirds of the
shareholders not including the interested shareholder. Affiliated transactions
requiring this two-thirds approval include mergers, share exchanges, material
dispositions of corporate assets, dissolution or any reclassification of the
corporation with its subsidiaries which increases the percentage of voting
shares owned by an interested shareholder by more than five percent.
For three years following the time that a shareholder becomes an interested
shareholder, a Virginia corporation cannot engage in an affiliated transaction
with the interested shareholder without approval of two-thirds of the
disinterested voting shares, and majority approval of disinterested directors.
A disinterested director is a director who was a director on the date on which
an interested shareholder became an interested shareholder and was recommended
for election or elected by a majority of the disinterested directors then on
the board. After three years, the approval of the disinterested directors is no
longer required.
The provisions of the Virginia Act relating to affiliated transactions do not
apply if a majority of disinterested directors approve the acquisition of
shares making a person an interested shareholder.
The Virginia Act permits corporations to opt out of the affiliated
transactions provisions. We have not opted out.
The Virginia Act also contains provisions regulating certain control share
acquisitions, which are transactions causing the voting strength of any person
acquiring beneficial ownership of shares of a public corporation in Virginia to
meet or exceed certain threshold voting percentages (20%, 33 1/3%, or 50%).
Shares acquired in a control share acquisition have no voting rights unless the
voting rights are granted by a majority vote of all outstanding shares other
than those held by the acquiring person or any officer or employee-director of
the corporation. The acquiring person may require that a special meeting of the
shareholders be held to consider the grant of voting rights to the shares
acquired in the control share acquisition.
Our Bylaws give us the right to redeem the shares purchased by an acquiring
person in a control share acquisition. We can do this if the acquiring person
fails to deliver a statement to us listing information required by the Virginia
Act or if our shareholders vote not to grant voting rights to the acquiring
person.
32
<PAGE>
The Virginia Act permits corporations to opt out of the control share
acquisition provisions. We have not opted out.
Directors' Duties
The standards of conduct for directors of Virginia corporations are listed in
Section 13.1-690 of the Virginia Act. Directors must discharge their duties in
accordance with their good faith business judgement of the best interest of the
corporation. Directors may rely on the advice or acts of others, including
officers, employees, attorneys, accountants and board committees if they have a
good faith belief in their competence. Directors' actions are not subject to a
reasonableness or prudent person standard. Virginia's federal and state courts
have focused on the process involved with directors' decision-making and are
generally supportive of directors if they have based their decision on an
informed process. These elements of Virginia law could make it more difficult
to take over a Virginia corporation than corporations in other states.
Board of Directors
Members of our Board of Directors serve one-year terms and are elected
annually.
Shareholder Proposals and Director Nominations
Our shareholders can submit shareholder proposals and nominate candidates for
the Board of Directors if the shareholders follow advance notice procedures
described in our Bylaws.
To nominate directors, shareholders must submit a written notice to our
corporate secretary at least 60 days before a scheduled meeting. The notice
must include the name and address of the shareholder and of the nominee, a
description of any arrangements between the shareholder and the nominee,
information about the nominee required by the SEC, the written consent of the
nominee to serve as a director and other information.
Shareholder proposals must be submitted to our corporate secretary at least
90 days before the first anniversary of the date of our last annual meeting.
The notice must include a description of the proposal, the reasons for
presenting the proposal at the annual meeting, the text of any resolutions to
be presented, the shareholder's name and address and number of shares held and
any material interest of the shareholder in the proposal.
Director nominations and shareholder proposals that are late or that do not
include all required information may be rejected. This could prevent
shareholders from bringing certain matters before an annual or special meeting,
including making nominations for directors.
Meetings of Shareholders
Under our Bylaws, meetings of the shareholders may be called only by the
chairman of the board, the president or a majority of the Board of Directors.
This provision could have the effect of delaying until the next annual
shareholders' meeting shareholder actions which are favored by the holders of a
majority of our outstanding voting securities, because such person or entity,
even if it acquired a majority of our outstanding voting securities, would be
able to take action as a shareholder, such as electing new directors or
approving a merger, only at a duly called shareholders' meeting.
33
<PAGE>
Amendment of Articles and Bylaws
Generally, our Articles may be amended by a majority of the votes present by
each voting group entitled to vote on a given matter. Some provisions of the
Articles, however, may only be amended or repealed by a vote of at least two-
thirds of the outstanding shares entitled to vote.
Indemnification
We indemnify our officers and directors to the fullest extent permitted under
Virginia law against all liabilities incurred in connection with their service
to us.
Limitation of Liability
Our Articles provide that our directors and officers will not be personally
liable for monetary damages to us for breaches of their fiduciary duty as
directors or officers, unless they violated their duty of loyalty to us or our
shareholders, acted in bad faith, knowingly or intentionally violated the law,
authorized illegal dividends or redemptions or derived an improper personal
benefit from their action as directors or officers. This provision applies only
to claims against directors or officers arising out of their role as directors
or officers and not in any other capacity. Directors and officers remain liable
for violations of the federal securities laws and we retain the right to pursue
legal remedies other than monetary damages, such as an injunction or rescission
for breach of the officer's or director's duty of care.
PLAN OF DISTRIBUTION
We may sell the offered securities (a) through agents; (b) through
underwriters or dealers; or (c) directly to one or more purchasers.
By Agents
Offered securities may be sold through agents that we designate. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
By Underwriters
If underwriters are used in the sale, the offered securities will be acquired
by the underwriters for their own account. The underwriters may resell the
securities in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. The underwriters will be obligated to purchase
all the securities of the series offered if any of the securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to time.
Direct Sales
We may also sell offered securities directly. In this case, no underwriters
or agents would be involved.
General Information
Underwriters, dealers and agents that participate in the distribution of the
offered securities may be underwriters as defined in the Securities Act of 1933
(the Act), and any discounts or commissions received by them from us and any
profit on the resale of the offered securities by them may be treated as
underwriting discounts and commissions under the Act. Any underwriters or
agents will be identified and their compensation described in a prospectus
supplement.
34
<PAGE>
We may have agreements with the underwriters, dealers and agents to indemnify
them against certain civil liabilities, including liabilities under the Act, or
to contribute with respect to payments which the underwriters, dealers or
agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or our subsidiaries in the ordinary course of their
businesses.
LEGAL OPINIONS
McGuire, Woods, Battle & Boothe LLP, Richmond Virginia, counsel to the
Company, will issue an opinion about the legality of the offered securities for
us. As of December 20, 1999, partners of McGuire, Woods, Battle & Boothe LLP
own less than one half of one percent of our common stock. Certain matters
relating to the formation of the Trusts and the issuance of the Trust Preferred
Securities under Delaware law and the Trust Agreements will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Trusts and the
Company. Any underwriters will be advised about other issues relating to any
offering by their own legal counsel.
EXPERTS
The financial statements incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1998
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated by reference, and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
35
<PAGE>
[LOGO OF DOMINION RESOURCES INC.]
