U.S. $400,000,000
VIRGINIA ELECTRIC AND POWER COMPANY
Medium-Term Notes
Series G
DISTRIBUTION AGREEMENT
----------------------
_________, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The undersigned, Virginia Electric and Power Company (the "Company"),
hereby confirms its agreement with each of you with respect to the issuance and
sale by the Company of the below-described Notes.
Subject to the terms and conditions stated herein, the Company (i) hereby
appoints each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("Merrill"), ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("Goldman"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇") and ▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇"), as an agent of the
Company, for the purpose of soliciting and receiving offers to purchase such
Notes from the Company by others, and (ii) hereby agrees that whenever the
Company determines to sell such Notes directly to one or more of you as
principal for resale to others it will, if
requested by any of you to whom such Notes are to be sold, enter into a Terms
Agreement relating to such sale in accordance with the provisions of paragraph
3(b) hereof. The Company reserves the right to sell such Notes directly on its
own behalf to investors, and to or through any of you or any other person whom
the Company may appoint as agent in the future. As used herein, the terms "you",
"your" and the like shall refer to each of Merrill, Goldman, ▇▇▇▇▇▇ and ▇▇▇▇▇▇,
individually, and, as the context requires, to all of such firms collectively.
1. Description of Notes. The Company proposes to issue and sell up to
--------------------
U.S. $400,000,000* aggregate principal amount of its Medium-Term Notes, Series G
due 9 Months or more from the date of issue (the "Notes"). The Notes will have
the maturity ranges, interest rates per annum, redemption and repayment
provisions and other terms specified from time to time in the Prospectus
referred to below. The Notes are to be issued pursuant to an Indenture, dated
as of April 1, 1988, as amended and supplemented by the First Supplemental
Indenture, dated as of August 1, 1989, and the Second Supplemental Indenture,
dated as of May 1, 1999, (such Indenture, as amended and supplemented, hereafter
referred to as the "Indenture") between the Company and The Chase Manhattan Bank
(formerly known as Chemical Bank), as trustee (the "Trustee"). All capitalized
terms not defined herein have the meanings ascribed to them in the Indenture.
2. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to you that:
(a) The Registration Statement on Form S-3 (Reg. No. 333-_______) for
the registration of the Notes under the Securities Act of 1933, as amended
(the "Securities Act"), heretofore filed with the Securities and Exchange
Commission (the "Commission"), a copy of which as so filed has been
delivered to you, has been declared effective. Unless the context
otherwise requires, such Registration Statement is hereinafter called the
"Registration Statement" and such Prospectus, as the same may be amended or
supplemented, is hereinafter called the "Prospectus". Whenever the term
"Registration Statement", "prospectus" or "Prospectus" is used herein, it
shall be deemed to include all documents or portions thereof incorporated
therein by reference (the "Incorporated Documents") pursuant to the
requirements of Form S-3 under the Securities Act, including documents
filed or to be filed by the Company pursuant to the Securities Exchange Act
of 1934, as amended (the "Securities Exchange Act") and incorporated by
reference into the Prospectus. The Company will not file any amendment or
supplement to the Registration Statement unless you shall have been advised
of the proposed amendment or supplement and the same shall not
---------------------------
* Or the equivalent in foreign currencies or composite currencies as specified
in a pricing supplement (with U.S. dollars or such specified foreign currencies
or composite currencies being referred to herein as the "Specified Currency").
2
have been disapproved as to substance by you or as to form by ▇▇▇▇ &
Valentine, L.L.P., who are acting as counsel for you.
(b) No order suspending the effectiveness of the Registration
Statement or otherwise preventing or suspending the use of the Prospectus
has been issued by the Commission and is in effect and no proceedings for
that purpose are pending before or, to the knowledge of the Company,
threatened by the Commission. The Registration Statement and the
Prospectus comply in all material respects with the provisions of the
Securities Act and the rules, regulations and releases of the Commission
thereunder and the Securities Exchange Act, and the rules, regulations and
releases of the Commission thereunder, and neither the Registration
Statement nor the Prospectus contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the foregoing representations and warranties in this subparagraph (b)
shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished in writing to the Company by you or on behalf of any
of you for use in the Registration Statement or Prospectus; and provided,
further, that the foregoing representations and warranties are given on the
basis that any statement contained in an Incorporated Document shall be
deemed not to be contained in the Registration Statement or Prospectus if
such statement has been modified or superseded by any statement in a
subsequently filed Incorporated Document or in the Registration Statement
or Prospectus.
(c) The Indenture qualifies under, and conforms in all material
respects to the requirements of, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(d) Deloitte & Touche LLP have examined certain of the financial
statements filed with the Commission and incorporated by reference in the
Registration Statement, are independent public accountants as required by
the Securities Act and the rules, regulations and releases of the
Commission thereunder.
(e) Except as reflected in, or contemplated by, the Registration
Statement, since the respective most recent dates as of which information
is given in the Registration Statement and Prospectus, there has not been
any material adverse change in the condition of the Company, financial or
otherwise. The Company has no material contingent financial obligation
which is not disclosed in the Registration Statement and Prospectus.
(f) The Company has taken all corporate action necessary to be taken
by it to authorize the execution by it of this Agreement and the
performance by it of all obligations on its part to be performed hereunder;
and the consummation of
3
the transactions herein contemplated and the fulfillment of the terms
hereof will not result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, or
other agreement or instrument to which the Company is now a party, or the
charter of the Company, as amended, or any order, rule, regulation or
release applicable to the Company of any federal or state regulatory board
or body or administrative agency having jurisdiction over the Company or
its property.
(g) The Notes, upon issuance thereof, will conform in all respects to
the terms of the relevant order or orders of the State Corporation
Commission of Virginia (the "Virginia Commission"), now or hereafter in
effect, with respect to the Notes, and no other filings or regulatory
approvals are necessary.
(h) This Agreement has been duly authorized, executed and delivered
by the Company.
(i) The Indenture has been duly authorized, executed and
delivered by the Company and is a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any debt securities issued under
the Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
(j) The Notes have been duly authorized by the Company for offer,
sale, issuance and delivery pursuant to this Agreement and, when issued,
authenticated and delivered in the manner provided for in the Indenture and
delivered against payment of the consideration therefor, will constitute
valid and legally binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
or by general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law), and except further as
enforcement thereof may be limited by requirements that a claim with
respect to any Notes payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States;
the Notes will be substantially in the form attached as Exhibits 4.3 and
4.4 to the Registration Statement; and each Holder of Notes will be
entitled to the benefits of the Indenture.
3. Solicitations as Agent; Purchases as Principal.
----------------------------------------------
4
(a) Solicitations as Agent. On the basis of the representations and
----------------------
warranties herein contained, but subject to the terms and conditions herein
set forth, each of you agree, as agent of the Company, to use your best
efforts to solicit offers to purchase the Notes upon the terms and
conditions set forth in the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Notes in any Specified Currency, for
any period of time or permanently. Upon receipt of instructions from the
Company, you will, as soon as practicable, but in no event later than one
business day after receipt of instruction from the Company, suspend
solicitation of offers to purchase the Notes from the Company until such
time as the Company has advised you that such solicitation may be resumed.
The Company agrees to pay you a commission, at the time of settlement
of each sale of Notes by the Company as a result of a solicitation made by
you, in an amount in U.S. dollars (which, in the case of Notes denominated
in currency units or in currencies other than U.S. dollars, shall be based
on the Exchange Rate (as defined below)) equal to the following percentage
of the aggregate principal amount of such Notes sold:
Commission
(percentage of aggregate
principal amount
Range of Maturities of Notes sold)
------------------- --------------
More than 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to 30 years .750%
More than 30 years As agreed
Unless otherwise agreed to, as agent, you are authorized to solicit
orders for the Notes at the principal amount thereof only in denominations
of U.S. $1,000 or any amount in excess thereof which is an integral
multiple of U.S.
5
$1,000* at a purchase price equal to 100% of the principal amount thereof,
unless otherwise specified in a supplement to the Prospectus. You shall
communicate to the Company, orally or in writing, each offer to purchase
Notes received by you as agent, other than those rejected by you. The
Company shall have the sole right to accept offers to purchase Notes and
may reject any such offer in whole or in part. You shall have the right, in
your discretion reasonably exercised, to reject any offer received by you
to purchase the Notes, in whole or in part, and any such rejection shall
not be deemed a breach of your agreement contained herein.
No Note which the Company has agreed to sell pursuant to this Agreement
shall be deemed to have been purchased and paid for, or sold, by the
Company until such Note shall have been delivered to the purchaser thereof
against payment by such purchaser.
The "Exchange Rate" on a given date for a Specified Currency other than
U.S. dollars means the noon dollar buying rate in New York City on such
date for cable transfers for the Specified Currency as certified for
customs purposes (or if not so certified, as otherwise determined) by the
Federal Reserve Bank of New York.
(b) Purchases as Principal. Each sale of Notes to you as principal
----------------------
shall be made in accordance with the terms of this Agreement and a separate
agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by, you. Each such separate agreement
(which may be oral (subsequently confirmed in writing) or written, and
which may be substantially in the form of Exhibit A hereto and which may
take the form of an exchange of any standard form of written
telecommunication between you and the Company) is herein referred to as a
"Terms Agreement". Your commitment to purchase Notes as principal, whether
pursuant to a Terms Agreement or otherwise, shall be deemed to have been
made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein
set forth. Each agreement by you to purchase Notes as principal (whether or
not set forth in a Terms Agreement) shall specify the principal amount of
Notes to be purchased by you pursuant thereto, the price to be paid to the
Company for such Notes, and such other terms, conditions and requirements
as may be agreed upon between us. Each such agreement shall also specify
any requirements for officers' certificates, opinions of counsel and
letters from the independent public accountants of the Company pursuant to
paragraph 7 hereof. A Terms Agreement may also specify certain provisions
relating to the reoffering of such Notes by you. You may utilize a selling
or dealer group in connection with the resale of the Notes purchased by you
as principal.
----------------------------
*Or the equivalent of U.S. $1,000 (rounded down to an integral multiple of 1,000
units of the Specified Currency) in the Specified Currency or such larger amount
in integral multiples of 1,000 units of the Specified Currency.
6
4. Procedures. Procedural details relating to the issuance and
----------
delivery of Notes, the solicitation of offers to purchase by others, and
purchase by you as principal of, Notes, and the payment in each case therefor,
are set forth in the Medium-Term Note Administrative Procedures and the Multi-
Currency Procedures Supplement attached hereto as Exhibit B and are hereby
incorporated herein by reference (the "Procedures"). Each of you and the Company
agree to perform the respective duties and obligations specifically provided to
be performed by each in the Procedures, as they may be amended from time to
time. The Procedures may only be amended by written agreement of the Company and
you.
5. Time and Place of Closing. The documents required to be delivered on
-------------------------
the "Closing Date" pursuant to paragraph 7 hereof shall be delivered at the
offices of McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, at 10:00 a.m., Richmond, Virginia time, on May __, 1999, or at such
other time as you and the Company may agree upon in writing, the time and date
of such delivery being herein called the "Closing Date".
6. Covenants of the Company. The Company agrees that:
------------------------
(a) The Company, at or prior to the Closing Date, will deliver to you
conformed copies of the Registration Statement as originally filed and of
all amendments or supplements thereto, including any post-effective
amendment (in each case including all exhibits filed therewith and
including copies of each consent and certificate included therein or filed
as an exhibit thereto, except exhibits incorporated by reference unless
specifically requested). As soon as the Company is advised thereof, it will
advise you orally of the issuance of any stop order under the Securities
Act with respect to the Registration Statement, or the institution of any
proceedings therefor of which the Company shall have received notice, and
will use its best efforts to prevent the issuance of any such stop order
and to secure the prompt removal thereof, if issued. The Company will
deliver to you as many copies of the Registration Statement and Prospectus
and of all amendments thereto (in each case without exhibits) as you may
reasonably request for the purposes contemplated by the Securities Act or
the Securities Exchange Act.
(b) The Company will pay all expenses in connection with (i) the
preparation and filing by it of the Registration Statement and Prospectus,
(ii) the preparation, issuance and delivery of the Notes and (iii) the
reproduction and delivery to you in accordance with this Agreement of
copies of this Agreement, the Registration Statement and Prospectus (each
as originally filed and as subsequently amended or supplemented). The
Company also will pay all taxes, if any, on the issuance of the Notes. In
addition, the Company will pay the reasonable fees and disbursements of
your counsel, ▇▇▇▇ & Valentine, L.L.P., including fees and disbursements
incurred in connection with qualifying the Notes
7
under state securities or blue-sky laws or investment laws (if and to the
extent such qualification is required by you or the Company), your
reasonable out-of-pocket expenses in connection with the transactions
contemplated hereby and your advertising expenses, which have been
approved, in writing in advance, by the Company.
(c) The Company will furnish you with copies of each further amendment
and supplement to the Prospectus in such quantities as you may from time to
time reasonably request. If at any time when the delivery of a prospectus
shall be required by law in connection with the sale of any Note, any event
relating to or affecting the Company, or of which the Company shall be
advised in writing by you, shall occur, which in the opinion of the Company
or of your counsel should be set forth in a supplement to or an amendment
of the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances when it is delivered, or if for any other reason
it shall be necessary during such period to amend or supplement the
Prospectus or any document incorporated by reference in the Prospectus in
order to comply with the Securities Act, the Securities Exchange Act or the
Trust Indenture Act, the Company forthwith will (i) notify you to suspend
solicitation of purchases of Notes and (ii) at its expense, prepare and
furnish to you a reasonable number of copies of a supplement or supplements
or an amendment or amendments to the Prospectus which will supplement or
amend the Prospectus so that, as supplemented or amended, it will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered, not misleading
or which will effect any other necessary compliance. During the period
specified in the preceding sentence, the Company will continue to prepare
and file with the Commission on a timely basis all documents or amendments
required to be filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act; provided, that the Company shall
not file such documents or amendments without also furnishing copies
thereof to you and ▇▇▇▇ & Valentine, L.L.P. Notwithstanding any other
provision of this paragraph 6(c), until the distribution of any Notes you
may own as principal has been completed, if any event described above in
this paragraph 6(c) occurs, the Company will, at its own expense, forthwith
prepare and cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or Prospectus, as then amended or
supplemented, satisfactory in all respects to you; will supply such amended
or supplemented Prospectus to you in such quantities as you may reasonably
request; and will furnish to you pursuant to paragraph 7(c) and (d) such
documents, certificates, opinions and letters as you may request in
connection with the preparation and filing of such amendment or supplement.
(d) The Company will make available to its security holders, as soon
as it is practicable to do so, an earnings statement of the Company (which
need not be audited) in reasonable detail, covering a period of at least 12
months
8
beginning within three months after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of
Section 11(a) of the Securities Act.
(e) During any period when delivery of a prospectus shall be required
by law in connection with the sale of any Note, and for a period of five
years following the termination of such period, the Company will deliver to
you, as soon as practicable after the end of each fiscal year, a balance
sheet of the Company as of the end of such year and statements of income
and earnings reinvested in business for such year, all as certified by
independent public or certified public accountants, and will deliver to you
upon request, as soon as practicable after the end of each quarterly
period, statements of income and earnings reinvested in business for the
12-month period ending with the end of such quarterly period.
(f) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing
Date and to satisfy all conditions precedent to the delivery by it of the
Notes.
(g) The Company will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the Notes for offer
and sale under the securities or blue-sky laws of such states as you may
designate; provided, however, that the Company shall not be required in any
state to qualify as a foreign corporation, or to file a general consent to
service of process, or to submit to any requirements that it deems unduly
burdensome.
(h) If required pursuant to the terms of a Terms Agreement, between
the dates of any Terms Agreement and the settlement date with respect to
such Terms Agreement, the Company will not, without your prior written
consent, offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company in a public offering which are substantially
similar to the Notes.
(i) If the Company enters into any amendment to this Agreement, then
such amendment shall be entered into by each of you; provided, however,
that this Agreement may be terminated in accordance with paragraphs 7 or 12
as to any one of you without being terminated as to the others of you.
(j) If the Company adds a new agent with respect to the Notes, then
such agent shall enter into an agreement substantially similar to this
Agreement, as such may be amended from time to time.
7. Conditions of Your Obligations. Your obligations as agent of the
------------------------------
Company to initiate solicitations of offers to purchase the Notes and to
continue such solicitations, as the case may be, and your obligations to
purchase Notes as principal pursuant to any Terms Agreement or otherwise, shall
be subject to the continuing
9
solicitations, as the case may be, and your obligations to purchase Notes as
principal pursuant to any Terms Agreement or otherwise, shall be subject to the
continuing accuracy of the representations and warranties on the part of the
Company contained herein, to the accuracy of the statements of the Company's
officers made in any certificate furnished pursuant to the provisions hereof, to
the performance and observance by the Company of all covenants and agreements
contained herein on its part to be performed and observed and to the following
additional conditions:
(a) An order or orders of the Virginia Commission permitting the
issuance and sale of the Notes substantially in accordance with the terms
and conditions hereof shall be in full force and effect and shall contain
no provision unacceptable to you or the Company (but all provisions of such
order or orders heretofore entered, copies of which have heretofore been
delivered to you, are deemed acceptable to you and the Company, and all
provisions of such order or orders hereafter entered shall be deemed
acceptable to you and the Company unless within 24 hours after receiving a
copy of any such order any party to this Agreement shall give notice to the
other parties to the effect that such order contains an unacceptable
provision).
(b) You shall receive on the Closing Date the opinion of ▇▇▇▇ &
Valentine, L.L.P., dated the Closing Date, substantially in the form
attached hereto as Exhibit C.
(c) You shall receive (i) on the Closing Date, (ii) on any date that
the Registration Statement or the Prospectus shall be amended or
supplemented (other than by an amendment or supplement relating solely to a
change in the Specified Currency or in the interest rate offered on the
Notes), (iii) each time a document filed under the Securities Act or the
Securities Exchange Act is incorporated by reference into the Prospectus
(other than Current Reports on Form 8-K filed exclusively to incorporate
exhibits, required to be filed as Exhibits 1, 4 and 12 under Item 601 of
Regulation S-K of the Securities Exchange Act, in registration statements
on Form S-3), and (iv) each time, if so indicated in the applicable Terms
Agreement or otherwise, the Company sells Notes to you as principal, the
legal opinion of McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP or other counsel
satisfactory to you in your reasonable judgment, dated the Closing Date,
the date of such amendment, supplement, incorporation by reference or
settlement date, relating to a sale of Notes pursuant to a Terms Agreement
or otherwise, as the case may be, substantially in the form attached hereto
as Exhibit D. In lieu of such opinion to be delivered upon such amendment,
supplement, incorporation by reference or settlement date relating to a
sale of Notes under a Terms Agreement or otherwise, each counsel last
furnishing such an opinion to you shall furnish you with a letter to the
effect that you may rely upon such last opinion to the same extent as
though it were dated the date of such letter authorizing reliance (except
that statements in such last opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such letter authorizing reliance).
10
(d) You shall receive (i) on the Closing Date, (ii) each time that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by an amendment or supplement relating solely to a change in
the Specified Currency or in the interest rate offered on the Notes) and
each time a document filed under the Securities Act or the Securities
Exchange Act is incorporated by reference in the Prospectus (other than
Current Reports on Form 8-K filed exclusively to incorporate exhibits,
required to be filed as Exhibits 1, 4 and 12 of Item 601 under Regulation
S-K of the Securities Exchange Act, in registration statements on Form S-
3), in the case of each such amendment, supplement or incorporation by
reference to set forth financial information included in or derived from
the Company's financial statements, and (iii) each time, if so indicated in
the applicable Terms Agreement or otherwise, the Company sells Notes to you
as principal, from Deloitte & Touche LLP, or another independent public
accounting firm satisfactory to you, a letter addressed to you, dated the
Closing Date, the date of such amendment, supplement, incorporation or
settlement date relating to a sale pursuant to a Terms Agreement or
otherwise, as the case may be: (1) confirming that they are independent
public accountants as required by the Securities Act; (2) stating in effect
that, in their opinion, the financial statements included in or
incorporated by reference in the Registration Statement and the Prospectus
and examined by them as stated in their report incorporated by reference in
the Registration Statement, comply as to form in all material respects with
the applicable accounting requirements adopted pursuant to the Securities
Exchange Act; (3) stating, in effect, that on the basis of a reading of the
minutes of the meetings of the Board of Directors of the Company and of
committees of the Board since the end of the most recent fiscal year with
respect to which an audit report has been issued and inquiries of officials
of the Company responsible for financial and accounting matters (which
procedures did not constitute an audit conducted in accordance with
generally accepted auditing standards) nothing came to their attention that
caused them to believe that the most recent unaudited financial statements
included in or incorporated by reference in the Registration Statement and
the Prospectus are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by reference therein;
and (4) stating, in effect, that on the basis of more limited procedures
than those set forth in the foregoing clause (3), consisting merely of the
reading of the minutes referred to in such clause and inquiries of
officials of the Company responsible for financial and accounting matters,
nothing came to their attention at a date not more than five business days
prior to the date of such letter that caused them to believe that (i) at
such date there was any decrease in the common stockholders equity or any
increase in long-term debt (including amounts classified as due within one
year, but excluding unamortized discount (net of premium)) of the Company
or any decrease in net assets as compared with the amounts shown in the
most recent audited balance sheet incorporated by reference in the
Registration Statement, or (ii) for the period from the date of the most
recent unaudited financial statements included in or incorporated by
reference in the Registration
11
Statement and the Prospectus to a date not more than five business days
prior to the date of such letter there were any decreases, as compared with
the corresponding period in the preceding year, in the operating revenues,
in operating income, or net income except (with respect to (i) or (ii)) in
all instances for changes or decreases which the Registration Statement
discloses have occurred or may occur; provided, however, that such letters
may vary from the requirements specified in clause (4) hereof in such
manner as you in your sole discretion may deem to be acceptable. Such
letters shall also state that the unaudited dollar amounts, percentages and
other financial information (in each case to the extent that such dollar
amounts, percentages and other financial information, either directly or by
analysis or computation, are derived from the general accounting records of
the Company) which appear (i) in the Prospectus under the caption Ratio of
Earnings to Fixed Charges, or (ii) in the Company's most recent Annual
Report on Form 10-K under the caption "Selected Financial Data" have been
compared with the general accounting records of the Company and such dollar
amounts, percentages and financial information have been found to be in
agreement with the accounting records of the Company and the computations
have been found to be arithmetically correct. Each such letter shall relate
to the Registration Statement and Prospectus as amended or supplemented to
the date of each such letter.
(e) Since the date of the most recent audited or unaudited financial
statements included in or incorporated by reference in the Registration
Statement and Prospectus, and up to (in the case of your obligation to
solicit offers to purchase Notes) the time of such solicitations or since
the date of any agreement by you to purchase Notes as principal and up to
(in the case of your obligation to purchase Notes as principal) the
settlement date relating to such purchase pursuant to a Terms Agreement or
otherwise, there shall not have been any material adverse change in the
condition of the Company, financial or otherwise.
(f) Since the respective most recent dates as of which information is
given (i) in the Registration Statement and Prospectus, as amended or
supplemented through the date of this Agreement, including by incorporation
by reference therein, and up to the Closing Date, the Company shall not
have any material contingent liability, except as reflected in or
contemplated by the Registration Statement or Prospectus as so amended or
supplemented, (ii) in the Registration Statement and Prospectus as amended
or supplemented through the date of any agreement by you to purchase Notes
as principal, including by incorporation by reference, and prior to each
corresponding settlement date, the Company shall not have any material
contingent liability, except as reflected in or contemplated by the
Registration Statement or Prospectus as so amended or supplemented.
(g) On the Closing Date or any applicable date referred to in paragraph
7(c) hereof, as the case may be, the representations and
warranties of
12
the Company in this Agreement shall be true and correct, and the Company
shall have performed all obligations and satisfied all conditions required
of it under this Agreement.
(h) At the Closing Date or any applicable date referred to in paragraph
7(c) hereof, as the case may be, you shall have received a certificate to
such effect, signed by the Chairman of the Board, the President or any Vice
President of the Company, it being understood that such certificate shall
relate to the Registration Statement and Prospectus as amended or
supplemented to the date of such certificate.
(i) All legal proceedings to be taken in connection with the
transactions contemplated by this Agreement shall have been satisfactory to
▇▇▇▇ & Valentine, L.L.P.
In case any of the conditions specified above in this paragraph 7 shall not
have been fulfilled, this Agreement may be terminated by any of you, as to
yourself only, upon mailing or delivering written notice thereof to the Company.
Any such termination shall be without liability of the terminating party and the
Company to each other, except as otherwise provided in paragraphs 6(b), 9(e) and
10 hereof.
8. Additional Covenant of the Company. The Company agrees that each
----------------------------------
acceptance by it of an offer for the purchase of Notes hereunder shall be deemed
to be an affirmation to you that the representations and warranties of the
Company contained in this Agreement are true and correct as of the date of such
acceptance as though made at and as of such time, and a covenant that such
representations and warranties will be true and correct as of the date of
delivery to the purchaser or the purchaser's agent of the Note or Notes relating
to such acceptance and (in the case of your obligation to purchase Notes as
principal) as of the settlement date relating to such purchase pursuant to a
Terms Agreement or otherwise, as though made at and as of each such date (except
that such representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to each
such date).
9. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless you, your
officers and directors and each person who controls you within the meaning
of Section 15 of the Securities Act, or Section 20(a) of the Securities
Exchange Act, against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Securities Exchange Act or any other statute or common
law and to reimburse you and each of your officers, directors and
controlling persons for any legal or other expenses (including, to the
extent hereunder provided, reasonable counsel fees) incurred by you or them
in connection with investigating any such losses, claims, damages,
liabilities, or in connection with defending any actions that arise out of
or are
13
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, as
originally filed or as amended or supplemented from time to time (if such
amendments or supplements thereto shall have been furnished pursuant to
paragraph 2(a) hereof), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided that the indemnity
agreement contained in this paragraph shall not apply to any such losses,
claims, damages, liabilities, expenses or actions arising out of or based
upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in
reliance upon information furnished in writing to the Company by any of you
or on behalf of any of you for use in the Registration Statement or any
amendment thereto, in the Prospectus or in any supplement thereto.
(b) Each of you agree to indemnify and hold harmless the Company, its
officers and directors and each person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Securities Exchange Act or any other
statute or common law and to reimburse each of them for any legal or other
expenses (including, to the extent hereinafter provided, reasonable counsel
fees) incurred by them in connection with investigating any such losses,
claims, damages or liabilities or in connection with defending any actions,
insofar as such losses, claims, damages, liabilities, expenses or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus, as originally filed or as amended or supplemented from time to
time (if such amendments or supplements thereto shall have been furnished
pursuant to paragraph 2(a) hereof) or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or omission
was made in reliance upon information furnished in writing to the Company
by you or on your behalf for use in the Registration Statement or the
Prospectus or any amendment or supplement to either thereof.
(c) Each of you and the Company agree that, upon the receipt of notice
of the commencement of any action against the Company or any of its
officers or directors, or any person controlling the Company, or against
you, your officers, directors or any controlling person as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, you or the Company, as the case may be, will
promptly give written notice of the commencement thereof to the party or
parties against whom indemnity shall be sought hereunder, but the omission
so to notify such indemnifying party or parties of any such action shall
not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party or parties otherwise
14
than on account of such indemnity agreement. In case such notice of any
such action shall be so given, such indemnifying party shall be entitled to
participate at its own expense in the defense or, if it so elects, to
assume (in conjunction with any other indemnifying parties) the defense of
such action, in which event such defense shall be conducted by counsel
chosen by such indemnifying party (or parties) and reasonably satisfactory
to the indemnified party or parties who shall be defendant or defendants in
such action, and such defendant or defendants shall bear the fees and
expenses of any additional counsel retained by them; provided that, if the
defendants in any such action include both the indemnified party and the
indemnifying party (or parties) and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party (or parties), the indemnified
party shall have the right to select separate counsel to assert such legal
defenses and to participate otherwise in the defense of such action on
behalf of such indemnified party. The indemnifying party shall bear the
reasonable fees and expenses of counsel retained by the indemnified party
if (i) the indemnified party shall have retained such counsel in connection
with the assertion of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel, representing the indemnified parties under (a) or (b), as the case
may be, of this paragraph 9 who are parties to such action), (ii) the
indemnifying party shall elect not to assume the defense of such action,
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the commencement of the action, or
(iv) the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this paragraph 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable to such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand,
and of any of you participating in the transaction at issue, on the other,
in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any
15
other relevant equitable considerations, including relative benefit. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
relates to information supplied by the Company on the one hand or by you on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and each of you agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined
by pro rata allocation (even if all of you were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (d), none of you
shall be required to contribute any amount in excess of the amount by which
the total price at which the Notes purchased by or through you were sold
exceeds the amount of any damages which you have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of each of you under this subparagraph
(d) to contribute are several in proportion to the respective purchases
made by or through you to which such loss, claim, damage or liability (or
action in respect thereof) relates and are not joint.
(e) The agreements contained in this paragraph 9 shall remain
operative and in full force and effect regardless of any termination of
this Agreement, any investigation made by or on behalf of such party, or
any person controlling such party, and shall survive each delivery of the
Notes.
10. Representations, Warranties and Agreements to Survive Delivery. All
--------------------------------------------------------------
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall remain operative and in full force and effect regardless of any
investigation made by you or on your behalf or on behalf of any controlling
person of you, or by or on behalf of the Company, and shall survive each
delivery of and payment for any of the Notes.
11. Status as Agent. In soliciting offers by others to purchase Notes
---------------
from the Company, you are acting solely as agent for the Company, and not as
principal. You will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes has been accepted by
the Company, but you shall not have any liability to the Company in the event
such purchase is not
16
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company shall hold
you harmless against any loss, claim or damage arising from or as a result of
such default by the Company.
12. Termination. This Agreement may be terminated for any reason, at any
-----------
time by any of you as to the Company or by the Company as to any of you upon the
giving by the terminating party of five (5) business days' written notice of
such termination to the other parties hereto. Each of you may also terminate
any agreement by you to purchase Notes as principal, immediately upon notice to
the Company, at any time prior to the settlement date relating thereto if during
such period (a) there shall have occurred any material adverse change in the
financial markets in the United States or in the financial markets of the
country or countries of origin of any foreign currency or currencies in which
the Notes are denominated or payable or any outbreak or escalation of
hostilities or other national or international calamity or crisis the effect of
which is such as to make it, in your judgment, impracticable or inadvisable to
market the Notes or enforce contracts for the sale of Notes on the terms and in
the manner contemplated in the Prospectus, or (b) if trading in any securities
of the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange shall have been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either of such exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium shall have been
declared either by federal or New York authorities or by the relevant
authorities in the country or countries of origin of any foreign currency or
currencies in which the Notes are denominated or payable, or (c) after the
acceptance by you of such agreement to purchase Notes as principal and at or
prior to the settlement date relating thereto, the Company shall have sustained
a substantial loss by fire, flood, accident or other calamity which in your
judgment renders it inadvisable to consummate the sale of the Notes and the
delivery of the Notes upon the terms set forth in such agreement, regardless of
whether or not such loss shall have been insured, or (d) there shall have
occurred a downgrading in the rating accorded the Company's unsecured debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act.
In the event of any such termination, neither the terminating party nor the
terminated party shall have any liability to the other except as provided in the
third full paragraph of paragraph 3(a), paragraph 6(b), paragraph 9 and
paragraph 10 and except that, if at the time of termination you shall own any of
the Notes with the intention of reselling them or an offer for the purchase of
Notes shall have been accepted by the Company but the time of delivery to the
purchaser or such purchaser's agent of the Note or Notes relating thereto shall
not yet have occurred, you shall comply with the Procedures, and the Company
shall also have the obligations provided in paragraphs 7(c) through (h) and
paragraph 8 hereof until such Notes have been resold or delivered, as the case
may be; provided, however, that the Company's obligation to comply with the
17
provisions of paragraphs 7(c) through (h) and paragraph 8 hereof as set forth in
the immediately preceding clause of this sentence shall be subject to the
following conditions: (i) no stop order suspending the effectiveness of the
Registration Statement shall be in effect on the Closing Date and no proceedings
for that purpose shall be pending before, or to the knowledge of the Company
threatened by, the Commission on such date, and (ii) at the Closing Date an
order or orders of the Virginia Commission permitting the issuance and sale of
the Notes substantially in accordance with the terms and conditions hereof shall
be in full force and effect and shall contain no provision unacceptable to you
or the Company (but all provisions of such order or orders heretofore entered,
copies of which have heretofore been delivered to you, are deemed acceptable to
you and the Company, and all provisions of such order or orders hereafter
entered shall be deemed acceptable to you and the Company unless within 24 hours
after receiving a copy of any such order any party to this Agreement shall give
notice to the other parties to the effect that such order contains an
unacceptable provision).
13. Miscellaneous. The validity and interpretation of this Agreement
-------------
shall be governed by the laws of the State of New York. This Agreement may be
executed in two or more counterparts. This Agreement shall inure to your
benefit, the benefit of the Company and, with respect to the provisions of
paragraph 9 hereof, each person who controls you and each of your officers and
directors and each controlling person and each officer and director of the
Company referred to in such paragraph 9, and their respective successors,
assigns, executors and administrators. Nothing in this Agreement is intended or
shall be construed to give to any person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors" as used in this Agreement
shall not include any of the purchasers, as such, of any of the Notes.
14. Notices. Except as otherwise specifically provided herein or in the
-------
Procedures, all communications hereunder shall be in writing or by telegram and,
if to you, shall be sent by telex, facsimile transmission, registered mail or
delivered to the address set forth under your signature below and, if to the
Company, shall be sent by telex, facsimile transmission, registered mail or
delivered to it, attention of Treasurer, Virginia Electric and Power Company,
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇).
Please sign and return to us eight copies of this letter, whereupon
this letter will become a binding agreement between the Company and you in
accordance with its terms.
Very truly yours,
VIRGINIA ELECTRIC AND POWER COMPANY
By:
18
Title:
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
By:
----------------------------------
Authorized Signatory
Address for Notices:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: MTN Product Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, SACHS & CO.
By:
----------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
Address for Notices:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Medium-Term Note Desk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By:
----------------------------------
Authorized Signatory
19
Address for Notices:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager--Continuously Offered Products
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Investment Banking Information Center
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ BROTHERS INC.
By:
----------------------------------
Authorized Signatory
Address for Notices:
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: MTN Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
20
EXHIBIT A
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTES, SERIES G
TERMS AGREEMENT
_________, 1999
Virginia Electric and Power Company
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Re: Distribution Agreement dated _________, 1999
The undersigned agrees to purchase the following principal amount of
Securities:
$_______________
Interest Rate:
Stated Maturity:
Purchase Price: _____% of par
Specified Currency:
Original Issue Date:
Redemption Terms:
(i) Initial Redemption Date
(ii) Initial Redemption Percentage (% of par)
(iii) Annual Redemption Percentage Reduction
(iv) Limitation Date
(v) Refunding Rate
Repayment Terms:
(i) Repayment Date(s)
(ii) Repayment Rate(s)
Settlement Date and Time:
Requirements, if any, pursuant to paragraph 6(h) of the Distribution
Agreement:
21
[Insert the certificates, opinions and accountants' letters to be required
pursuant to paragraph 7 of the Distribution Agreement.]
[Name of Agent Purchasing as Principal]
By:
-----------------------------------
Title:
Accepted:
Virginia Electric and Power Company
By:
---------------------------
Title:
22
EXHIBIT B
VIRGINIA ELECTRIC AND POWER COMPANY
Medium-Term Note Administrative Procedures
Medium-Term Notes, Series G due 9 Months or more from the date of issue
(the "Notes") in the aggregate principal amount at any time outstanding not to
exceed U.S. $400,000,000 or the equivalent thereof in Specified Currencies are
offered on a continuing basis by Virginia Electric and Power Company (the
"Company") through ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, ▇▇▇▇▇▇▇, Sachs & Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇
Brothers Inc., as agents (the "Agents"), who have agreed to use their best
efforts to solicit offers to purchase the Notes and who may also purchase Notes,
as principals, for resale. Each of the Agents will not be obligated to purchase
Notes for its own account but may do so pursuant to the terms and settlement
details of a Terms Agreement entered into between the Company and such Agent, as
contemplated by the Distribution Agreement. Only those provisions contained in
these Administrative Procedures which are applicable to the particular role that
the Agent shall perform shall apply.
The Notes are being sold pursuant to Distribution Agreements, dated
_________, 1999 between the Company and each of the Agents (the "Distribution
Agreements"). The Company has reserved the right to sell Notes directly on its
own behalf. The Notes will be senior, unsecured debt and have been registered
with the Securities and Exchange Commission (the "Commission"). The Chase
Manhattan Bank (formerly known as Chemical Bank) is the trustee (the "Trustee"
or "Chase") under the Indenture, dated as of April 1, 1988, as supplemented by
the First Supplemental Indenture, dated as of August 1, 1989, and the Second
Supplemental Indenture, dated as of May 1, 1999, between the Company and the
Trustee (such Indenture, as amended and supplemented, hereafter referred to as
the "Indenture") covering the Notes. The Chase Manhattan Bank shall also act as
a paying agent, pursuant to an appointment by the Company, for payment of the
principal of (and premium, if any) and interest on the Notes when due.
In the case of purchases of Notes by any of the Agents, as principal, the
relevant terms and settlement details related thereto, including the settlement
date referred to in paragraph 3(b) of each Distribution Agreement, will be set
forth in a Terms Agreement or otherwise entered into between such Agent and the
Company pursuant to the relevant Distribution Agreement.
The Notes will bear interest at either fixed rates or floating rates. The
Notes will either be issued (i) in book-entry form and represented by one or
more fully registered Notes (each, a "Global Security") delivered to The Chase
Manhattan Bank or its successor (the "Trustee"), as agent for The Depository
Trust Company (the
23
"Depositary"), and recorded in the book-entry system maintained by the
Depositary, or (ii) in certificated form delivered to the purchaser thereof or a
person designated by such purchaser (each, a "Certificated Note"). Owners of
beneficial interests in a Global Security will be entitled to physical delivery
of Notes in certificated form equal in principal amount to their respective
beneficial interests only upon certain limited circumstances described in the
Prospectus.
Administrative responsibilities, document control and record-keeping
functions will be handled for the Company by its Treasurer's Department. The
Company will advise the Agents in writing of those persons handling
administrative responsibilities with whom the Agents are to communicate
regarding offers to purchase Notes and the details of their delivery.
General procedures relating to the issuance and administration of all Notes
are set forth in Part I hereof. Additionally, Global Securities and beneficial
interests therein will be issued and administered in accordance with the
procedures set forth in Part II hereof and Certificated Notes will be issued and
administered in accordance with the procedures set forth in Part III hereof.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Notes, as the case may be.
Part I: Administrative
Procedures of General Applicability
Date of Issuance;
Authentication: Each Note will be dated as of the date of its authentication
by the Trustee. Each Note will also bear an original issue
date (the "Original Issue Date"). Except for the
consolidation of two or more Global Securities, the Original
Issue Date shall remain the same for all Notes subsequently
issued upon transfer, exchange or substitution of such
original Note regardless of their dates of authentication.
Maturity;
Redemption: Each Note will mature on a date selected by the purchaser and
agreed to by the Company, which will be at least 9 months
from the Original Issue Date. The Notes will be subject to
redemption by the Company on and after the Redemption Date,
if any, at the respective Redemption Prices. Redemption Dates
and the applicable Redemption Prices, if any, will be agreed
to by the Company and the purchaser at the time of sale and
set forth on the applicable Note and in the applicable
Pricing Supplement. If no Redemption Date is indicated with
respect to a Note, such Note will not be redeemable prior to
Stated Maturity. If the applicable
24
Pricing Supplement so provides, the terms of a Note which is
subject to redemption prior to Stated Maturity may specify
that the Company may not redeem such Note prior to a specified
date (the "Limitation Date") as a part of, or in anticipation
of, a refunding operation by the application of monies
borrowed having an interest cost to the Company of less than a
specified rate (the "Refunding Rate"). The Notes will not be
subject to amortization or a sinking fund.
Repayment at
Holder's Option: Except as otherwise specified in the applicable Pricing
Supplement and on the Notes, the Company is not required to
repay the Notes at the option of the Holder prior to the
Stated Maturity. Repayment Dates and the applicable Repayment
Prices, if any, will be agreed to by the Company and the
purchaser at the time of sale and set forth on the applicable
Note and in the applicable Pricing Supplement. If no Repayment
Date is indicated with respect to a Note, such Note will not
be repayable prior to Stated Maturity.
Price to Public: Each Note will be issued at 100% of its principal amount,
unless otherwise mutually agreed upon by the purchaser and the
Company and specified in the applicable pricing supplement.
Denominations: Unless otherwise determined by the Company, Notes will be
issued and payable in U.S. dollars in the denomination of U.S.
$1,000 and any larger denomination which is an integral
multiple of U.S. $1,000.
Registration: Notes will be issued only in fully registered certificated or
book-entry form.
Base Rates
Applicable to
Floating Rate
Notes: Unless otherwise provided in the applicable Pricing
Supplement, Floating Rate Notes (except for certain Original
Issue Discount Notes) will bear interest at a rate determined
by reference to the CD Rate ("CD Rate Notes"), the Commercial
Paper Rate ("Commercial Paper Rate Notes"), LIBOR ("LIBOR
Notes"), the Prime Rate ("Prime Rate Notes"), the Federal
Funds Rate ("Federal Funds Rate Notes"), the Treasury Rate
("Treasury Rate Notes"), the CMT Rate ("CMT Rate Notes"), or
such other interest rate basis or formula as may be set forth
in the applicable Pricing Supplement, as adjusted by the
Spread and/or Spread Multiplier, if any, applicable to such
Floating Rate Notes.
25
Interest Payments: Unless otherwise provided in an applicable Fixed Rate Note,
interest payments on Fixed Rate Notes (except defaulted
interest) will be made on each January 1 and July 1 and at
Stated Maturity or upon earlier redemption or repayment, as
the case may be. Interest payments on Floating Rate Notes
will be made as specified in the related Floating Rate Note
and Pricing Supplement. Interest payments will be made on
the interest payment dates established as set forth above
(the "Interest Payment Dates") to the registered owners at
the close of business on the immediately preceding record
dates, which shall, unless otherwise indicated in the
applicable Pricing Supplement, be the dates 15 calendar days
(whether or not a Business Day) preceding such Interest
Payment Dates, respectively (the "Record Dates"); except
that where a Note is issued between a Record Date and the
Interest Payment Date relating thereto, interest for the
period beginning on the Original Issue Date and ending on
such Interest Payment Date will be paid on the second
Interest Payment Date following the Original Issue Date to
the person in whose name such Note was registered on the
Record Date immediately preceding such Interest Payment
Date. Interest payable at Stated Maturity or upon earlier
redemption or repayment, as the case may be, will be paid to
the same person to whom principal is payable. Interest will
begin to accrue on the Original Issue Date of a Note for the
first interest period and from the most recent Interest
Payment Date to which interest has been paid for all
subsequent interest periods. Each payment of interest shall
include interest accrued through the day before the Interest
Payment Date, Stated Maturity or earlier redemption or
repayment, as the case may be (each Stated Maturity or
Redemption or Repayment Date is referred to herein as
"Maturity"). If an Interest Payment Date with respect to any
Fixed Rate Note falls on a day that is not a Business Day,
the payment of interest required to be made on such Interest
Payment Date need not be made on such day, but may be made
on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date and no
interest shall accrue on such payment for the period from
and after such Interest Payment Date. If an Interest Payment
Date (other than at Maturity) with respect to any Floating
Rate Note would otherwise fall on a day that is not a
Business Day, such Interest Payment Date will be the
following day that is a Business Day, except that in the
case of a LIBOR Note (or a Note for which LIBOR is an
applicable Base Rate), if such day falls in the next
succeeding calendar month, such Interest Payment Date will
be the preceding day that is a Business Day. If the date of
Maturity of a Note is not a Business Day, the payment of
principal and interest due on such day shall be made on the
next succeeding Business
26
Day and no interest shall accrue on such payment for the
period from and after such Maturity. For additional special
provisions relating to Floating Rate Notes, see the
Prospectus and the applicable Pricing Supplement. "Business
Day" or "business day" means any day, other than a Saturday
or Sunday, that is neither a legal holiday nor a day on
which commercial banking institutions are authorized or
required by law, regulation or executive order to close in
New York City; provided, however, that with respect to Notes
the payment of which is to be made in a Specified Currency
other than U.S. dollars, such day is also not a day on which
commercial banking institutions are authorized or required
by law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the country
issuing such Specified Currency (or, in the case of the
euro, is also a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System
is open); provided, further, that, with respect to Notes as
to which LIBOR is an applicable Interest Rate Basis, the day
is also a London Business Day (as defined below). "London
Business Day" means any day: (i) if the Specified Currency
for a LIBOR Note is other than the euro, on which dealings
in such Specified Currency are transacted in the London
interbank market or (ii) if the Specified Currency for a
LIBOR Note is the euro, on which the TARGET System is open.
"Principal Financial Center" will generally be the capital
city of the country of the Specified Currency, as the case
may be, except that with respect to United States dollars,
Deutsche marks, Dutch guilders, Italian lire, Portuguese
escudos, Swiss francs, Australian dollars, Canadian dollars,
South African rand and the euro, the Principal Financial
Center shall be New York City, Frankfurt, Amsterdam, Milan,
London (but only in the case of the Index Currency), Zurich,
Melbourne, Toronto, Johannesburg and Frankfurt,
respectively.
Computation of
Interest: In the case of Fixed Rate Notes, interest (including payments for
partial periods) will be calculated on the basis of a 360-day
year of twelve 30-day months. (Examples of interest calculations
are as follows: 6-15-95 to 12-15-95 equals six months, zero days
or 180 days; thus the interest paid equals 180/360 x the annual
rate of interest x face value. The period from 6-17-95 to 11-15-
95 equals four months, 28 days or 148 days; thus the interest
paid equals 148/360 x the annual rate of interest x face value.)
Interest does not accrue on the 31st day of any month.
27
The interest rate on each Floating Rate Note will be
calculated by reference to the specified Base Rate in
either case plus or minus the applicable Spread, if any,
and/or multiplied by the applicable Spread Multiplier, if
any.
Unless otherwise provided in the applicable Pricing
Supplement, interest on each Floating Rate Note will be
calculated by multiplying its face amount by an accrued
interest factor. Such accrued interest factor is computed
by adding the interest factor calculated for each day in
the period for which accrued interest is being calculated.
Unless otherwise specified in the applicable Pricing
Supplement, the interest factor for each such day is
computed by dividing the interest rate applicable to such
day by 360 in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes or Prime
Rate Notes, or by the actual number of days in the year in
the case of Treasury Rate Notes and CMT Rate Notes.
Acceptance and
Rejection of Offers: The Company will have the right to accept or reject in
whole or in part offers to purchase Notes. Each Agent
shall communicate to the Company, orally or in writing,
each offer to purchase Notes received by it, other than
those rejected by it as unreasonable. Each Agent may
reject any offer in whole or in part.
Payment: The Company, prior to the first sale of any of the Notes
hereunder, shall deliver to each Agent standing wire
transfer instructions for funds payable by such Agent to
the Company for Notes sold by such Agent hereunder. Such
instructions may be changed at any time by the Company.
Settlement: The receipt of immediately available funds by the Company
in payment for a Note and the authentication and issuance
of such Note shall constitute "settlement" with respect to
such Note. All offers accepted by the Company will be
settled not later than the third Business Day next
following such acceptance pursuant to the timetable for
settlement set forth in Parts II and III hereof unless the
Company and the purchaser agree to settlement on a later
date; provided, however, that in the case of a delayed
settlement the Company will notify the Trustee at least 24
hours prior to the time of settlement.
In the event of a purchase of Notes by an Agent, as
principal, appropriate settlement details will be set
forth in the applicable
28
Terms Agreement or otherwise to be entered into between
the Agent and the Company pursuant to the Distribution
Agreements.
Procedure for Rate: When a decision has been reached to set the interest rates
of Notes being sold by the Company, the Company will
promptly advise the Agents, who will forthwith suspend
solicitation of offers to purchase Notes. At that time,
the Agents may recommend and the Company may establish new
or revised "posted" rates. Immediately thereafter, the
Agents may solicit offers to purchase Notes at the posted
rates. Until such time, only "indications of interest" may
be recorded. On the afternoon of or on the morning
following any sale of Notes, the Company will prepare
Pricing Supplements reflecting such posted rates and will
arrange to have ten Pricing Supplements filed with, or
mailed for filing to, the Commission pursuant to Rule
424(b) of the Securities Act of 1933, as amended. In each
instance that a Pricing Supplement is prepared, the Agents
will affix the Pricing Supplements to the Prospectuses
prior to its use. Outdated Pricing Supplements (other than
those retained for files) will be destroyed. The Company
will provide to the Agent the necessary quantity of
Pricing Supplements as provided in the Distribution
Agreement.
Preparation
of Pricing
Supplement: Information to be included in the Pricing Supplement shall include:
1. the name of the Company;
2. the title of the securities, including series designation, if
any;
3. the date of the Pricing Supplement and the dates of the
Prospectus and Prospectus Supplement to which the Pricing
Supplement relates;
4. the name of the Presenting Agent (as defined below);
5. whether such Notes are being sold to the Presenting Agent as
principal or to an investor or other purchaser through the
Presenting Agent acting as agent for the Company;
6. with respect to Notes sold to the Presenting Agent as
principal, whether such Notes will be resold by the Presenting
Agent to investors and other purchasers (i) at a fixed public
offering price of a specified percentage of their principal
amount, (ii) at varying prices related to prevailing market
prices at the time of resale to be
29
determined by the Presenting Agent or (iii) at 100% of their
principal amount;
7. with respect to Notes sold to an investor or other purchaser
through the Presenting Agent acting as agent for the Company,
whether such Notes will be sold at (i) 100% of their
principal amount or (ii) at a specified percentage of their
principal amount;
8. the Presenting Agent's commission or underwriting discount;
9. Net proceeds to the Company;
10. the Principal Amount, Original Issue Date, Stated Maturity,
Redemption Date, if any, Initial Redemption Percentage, if
any, Annual Redemption Percentage Reduction, if any, and
Optional Repayment Date or Dates, if any, Repayment Price or
Prices, if any, and, in the case of Fixed Rate Notes, the
Interest Rate, the Interest Payment Date or Dates (if other
than July 1 and January 1 of each year) and the Record Date
or Dates (if other than June 15 and December 15 of each
year), and, in the case of Floating Rate Notes, the Base Rate
or Rates, the Index Maturity (if applicable), the Initial
Interest Rate, the Maximum Interest Rate, if any, the Minimum
Interest Rate, if any, the Interest Payment Date or Dates,
the Record Date or Dates, the Interest Reset Date or Dates,
the Spread and/or Spread Multiplier, if any, and the
Calculation Agent; and any other information needed to
complete a Floating Rate Note or a Fixed Rate Note;
11. the information with respect to the terms of the Notes set
forth below (whether or not the applicable Note is a Book-
Entry Note or a Certificated Note) under "Administrative
Procedures Relating to Global Securities - Settlement
Procedures", items (A)1, 2, 3 and 10; and
12. any other provisions of the Notes material to investors or
other purchasers of the Notes not otherwise specified in the
Prospectus or Pricing Supplement.
Pricing Supplement
Instructions: The Company shall have delivered a completed Pricing
Supplement via next day mail or telecopy to arrive no later
than 11:00 A.M. on the Business Day following the trade date,
to the Agent which made or presented the offer to purchase
the applicable Note (in such capacity, the Presenting Agent)
at the following locations:
30
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. - Tritech Services
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Prospectus Operations/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇/75/76
also, for record keeping purposes, please send a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
Merrill, Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: MTN Product Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Medium-Term Note Trading Desk, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Medium-Term Note Desk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ Brothers Inc.
31
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Medium-Term Notes/Bruni Vasquez
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Suspension of
Solicitation;
Amendment or
Supplement: Subject to its representations, warranties and covenants
contained in the Distribution Agreements, the Company may
instruct the Agents to suspend solicitation of offers to purchase
at any time. Upon receipt of such instructions, each Agent
forthwith will suspend solicitation until such time as the
Company has advised it that solicitation of offers to purchase
may be resumed. If the Company decides to amend or supplement the
Registration Statement or the Prospectus relating to the Notes
(other than to change rates), it will promptly advise the Agents
and will furnish them and the Trustee with copies of the proposed
amendment or supplement, all consistent with its obligations
under the Distribution Agreements. In the event that at the time
the solicitation of offers to purchase is suspended (other than
to change interest rates) there shall be any orders outstanding
which have not been settled, the Company will, consistent with
its obligations under the Distribution Agreements, promptly
advise the Agents and the Trustee whether such orders may be
settled and whether copies of the Prospectus as in effect at the
time of the suspension may be delivered in connection with the
settlement of such orders. The Company will have the sole
responsibility for such decision and for any arrangements which
may be made in the event that the Company determines that such
orders may not be settled or that copies of such Prospectus may
not be so delivered.
Delivery of
Prospectus: A copy of the Prospectus as most recently amended or supplemented
must be sent by the Agent to a customer or a customer's agent
prior to or together with the earlier of delivery of (i) each
written confirmation of a sale sent to such customer or agent or
(ii) each Note delivered to such customer or agent. If notice of
a change in the terms of the Note is received by the Agents
between the time an order for Notes is placed and the time
written confirmation thereof is sent to a customer or a
customer's agent, such confirmation shall be accompanied by a
Prospectus bearing a supplement setting forth the rates in effect
when the order was placed and a supplement setting forth the
revised rates.
32
Authenticity
of
Signatures: The Company will cause the Trustee to furnish the Agents from
time to time with the specimen signatures of each of the
officers, employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will have no
obligation or liability to the Company or the Trustee in respect
of the authenticity of the signature of any officer, employee or
agent of the Company or the Trustee on any Note.
Advertising
Costs: The Company will determine with the Agents the amount of
advertising that may be appropriate in connection with the
solicitation of offers to purchase the Notes. Advertising
expenses approved by the Company in connection with the
solicitation of offers to purchase Notes from the Company will be
paid by the Company.
Chase Not
to Risk
Funds: Nothing herein will be deemed to require Chase to risk or expend
its own funds in connection with any payment to the Company, the
Agent, the Depositary or any Holder, it being understood by all
parties that payments made by Chase to any party will be made
only to the extent that funds are provided to Chase for such
purpose.
Part II: Administrative
Procedures Relating to Global Securities
In connection with the qualification of Global Securities for eligibility
in the book-entry system maintained by the Depositary, Chase will perform the
custodial, document control and administrative functions described below, in
accordance with the obligations of Chase under a Letter of Representations from
the Company and Chase to the Depositary, dated _________, 1999, and a Medium-
Term Note Certificate Agreement, dated December 2, 1998, as amended on ______,
1999, between Chase and the Depositary (the "Certificate Agreement"), and
Chase's obligations as a participant in the Depositary, including the
Depositary's Same-Day Funds Settlement System ("SDFS"). It is understood that
the ownership interests of purchasers in Global Securities will be credited to
the book-entry accounts of one or more participants in the Depositary (each a
"Participant") in accordance with the Depositary's customary practices and
reflected in the records of such Participants or one or more indirect
participants in the Depositary designated by such purchasers in accordance with
the arrangements between such purchasers and such Participants and indirect
participants.
Issuance: All Fixed Rate Notes issued in book-entry form having the same
Original Issue Date, redemption and/or repayment terms, if any,
33
Interest Payment Dates, interest rate, Specified Currency,
original issue discount provisions, if any, and Stated Maturity
(collectively, the "Fixed Rate Terms") will be represented
initially by a single Global Security in fully registered form
without coupons, and all Floating Rate Notes issued in book-
entry form having the same Original Issue Date, Base Rate, which
may be the CD Rate, the Commercial Paper Rate, the Federal Funds
Rate, LIBOR, the Prime Rate, the Treasury Rate, the CMT Rate or
any other interest rate basis or formula set forth by the
Company, Initial Interest Rate, Index Maturity, Spread and/or
Spread Multiplier, if any, Minimum Interest Rate, if any,
Maximum Interest Rate, if any, redemption and/or repayment
terms, if any, and Stated Maturity (collectively, "Floating Rate
Terms") will be represented initially by a single Global
Security in fully registered form without coupons. Each Global
Security will bear an Original Issue Date, which will be (i)
with respect to an original Global Security (or any portion
thereof), its issue date, and (ii) following a consolidation of
Global Securities, the most recent date to which interest has
been paid or duly provided for on the predecessor Global
Securities, regardless of the date of authentication of such
subsequently issued Global Security. No Global Security will
represent (i) both Fixed Rate and Floating Rate book-entry Notes
or (ii) any Certificated Note.
Identification: The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau") for
the reservation of approximately 900 CUSIP numbers which have
been reserved for future assignment to Global Securities, and
the Company has delivered to Chase and the Depositary an initial
written list of such CUSIP numbers. The Company will assign
CUSIP numbers to Global Securities as described below under
Settlement Procedure B. The Depositary will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the
Company has assigned to Global Securities. The Trustee will
notify the Company at any time when fewer than 100 of the
reserved CUSIP numbers remain assigned to Global Securities,
and, if it deems necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Securities. Upon
obtaining such additional CUSIP numbers, the Company will
deliver a list of such additional numbers to Chase and the
Depositary. Ownership interests of purchasers having an
aggregate principal amount in excess of U.S. $200,000,000 will
be represented by two or more Global Securities which shall all
be assigned the same CUSIP number.
34
Registration: Each Global Security will be registered in the name of the
nominee for the Depositary, Cede & Co. or such other nominee as
requested by an authorized representative of the Depositary
("Cede & Co."), on the register maintained by Chase under the
Indenture.
Transfers: Transfers of interests in a Global Security will be effected in
accordance with arrangements in effect between Participants (and
in certain cases, one or more indirect participants in the
Depositary) and the beneficial transferors and beneficial
transferees of such interests, which will be reflected as
appropriate by book entries made by the Depositary.
Exchanges;
Consolidation: Chase may deliver to the Depositary and the CUSIP Service Bureau
at any time a written notice specifying (i) the CUSIP numbers of
two or more Global Securities having the same Fixed Rate Terms
or Floating Rate Terms (except that Original Issue Dates need
not be the same) and for which interest (if any) has been paid
to the same date; (ii) a date, occurring at least 30 days after
such written notice is delivered and at least 30 days before the
next Interest Payment Date (if any) for such Global Securities,
on which such Global Securities shall be exchanged for a single
replacement Global Security; and (iii) a new CUSIP number
obtained from the Company to be assigned to such replacement
Global Security. A copy of such notice will be attached to such
replacement Global Security. Upon receipt of such a notice, the
Depositary will send to its Participants (including Chase) a
written reorganization notice to the effect that such exchange
will occur on such date. Prior to the specified exchange date,
Chase will deliver to the CUSIP Service Bureau written notice
setting forth such exchange date and the new CUSIP number and
stating that, as of such exchange date, the CUSIP numbers of the
Global Securities to be exchanged will no longer be valid. On
the specified exchange date, Chase will exchange such Global
Securities for a single Global Security bearing the new CUSIP
number and a new Original Issue Date, and the CUSIP numbers of
the exchanged Global Securities will, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately
reassigned. Notwithstanding the foregoing, if the Global
Securities to be exchanged exceed U.S. $200,000,000 in aggregate
principal amount, one replacement Global Security will be
authenticated and issued to represent each U.S. $200,000,000 of
principal amount of the exchanged Global Securities and an
additional Global Security will be authenticated and issued to
represent any remaining
35
principal amount of such Global Securities (see "Denominations"
below).
Denominations: All Global Securities will currently be denominated in U.S.
dollars. Unless otherwise determined by the Company, beneficial
interests in such Securities will be issued in denominations of
U.S. $1,000 and any larger denomination which is an integral
multiple of U.S. $1,000. Global Securities will be denominated
in principal amounts not in excess of U.S. $200,000,000. If one
or more such beneficial interests having an aggregate principal
amount in excess of U.S. $200,000,000 would, but for the
preceding sentence, be represented by a single Global Security,
then one Global Security will be issued to represent each U.S.
$200,000,000 principal amount of such interest or interests and
an additional Global Security will be issued to represent any
remaining principal amount of such interest or interests. In
such a case, each of the Global Securities representing such
interest or interests shall be assigned the same CUSIP number.
Interest: General. The Depositary will arrange for each pending deposit
-------
message described under Settlement Procedure C below to be
transmitted to Standard & Poor's Corporation, which will use the
message to include certain information regarding the related
Global Security in the appropriate daily bond report published
by Standard & Poor's Corporation.
Regular Record Date. Unless otherwise specified in the related
-------------------
Pricing Supplement, the Record Dates with respect to any Global
Security bearing interest at a Fixed Rate will be the December
15 and June 15 next preceding the January 1 and July 1 Interest
Payment Dates, whether or not such date shall be a Business Day.
Unless otherwise specified in the related Pricing Supplement,
the Record Date with respect to any Interest Payment Date for
any Global Security bearing interest at a Floating Rate shall be
the date 15 calendar days (whether or not a Business Day)
preceding such Interest Payment Date.
Payments of
Principal,
Premium
and Interest: Payments of Interest Only. Promptly after each Record Date,
-------------------------
Chase will deliver to the Company and the Depositary a written
notice specifying by CUSIP number the amount of interest, if
then known, to be paid on each Global Security on the following
Interest Payment Date (other than an Interest Payment Date
36
coinciding with Stated Maturity) and the total of such amounts.
The Company will confirm with Chase the amount payable on each
Global Security on such Interest Payment Date. The Depositary
will confirm the amount payable on each Global Security on such
Interest Payment Date by reference to the daily bond reports
published by Standard & Poor's Corporation. On such Interest
Payment Date, the Company will pay to Chase, and Chase in turn
will pay to the Depositary, such total amount of interest due
(other than at Stated Maturity), at the times and in the manner
set forth below under "Manner of Payment".
Payments at Stated Maturity or upon Redemption or Repayment. On
-----------------------------------------------------------
or about the first Business Day of each month, Chase will deliver
to the Company and the Depositary a written list of principal
(and premium, if any) and interest to be paid, if then known, on
each Global Security maturing either at Stated Maturity or upon
earlier redemption or repayment in the following month. Chase,
the Company and the Depositary will confirm the amounts of such
principal (and premium, if any) and interest payments with
respect to each such Global Security on or about the fifth
Business Day preceding Stated Maturity or earlier redemption or
repayment of such Global Security. At such Stated Maturity or
earlier redemption or repayment, the Company will pay to Chase,
and Chase in turn will pay to the Depositary, the principal
amount of such Global Security, together with interest and
premium, if any, due on such Stated Maturity or upon such earlier
redemption or repayment, at the times and in the manner set forth
below under "Manner of Payment". Promptly after payment to the
Depositary of the principal (and premium, if any) and interest
due at Stated Maturity or upon earlier redemption or repayment of
such Global Security, the Trustee will cancel and dispose of such
Global Security, make appropriate entries in its records and
deliver a certificate of disposition with respect thereto.
Manner of Payment. The total amount of any principal (and
-----------------
premium, if any) and interest due on Global Securities on any
Interest Payment Date or at Stated Maturity or upon earlier
redemption or repayment shall be paid by the Company to Chase in
funds immediately available for use by Chase as of 9:30 a.m., New
York City time, on such date. The Company will make such payment
on such Global Securities by instructing Chase to withdraw funds
from the account (number 322-012120) maintained by the Company
with Chase. The Company will confirm such instructions in
writing by facsimile or other acceptable means to Chase. For
maturity, redemption and repayment, prior to 10:00
37
a.m., New York City time, on each Stated Maturity or upon earlier
redemption or repayment or as soon as possible thereafter, Chase,
following receipt of such funds from the Company, will pay by
separate wire transfer (using Fedwire message entry instructions
in a form previously specified by the Depositary) to an account
at the Federal Reserve Bank of New York previously specified by
the Depositary, in funds available for immediate use by the
Depositary, each payment of principal (and premium, if any) and
interest due on Global Securities on such date; and for interest
payments, Chase will pay the Depositary in same-day funds on the
Interest Payment Date in accordance with existing arrangements
between Chase and the Depositary. Thereafter on each such date,
the Depositary will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for
immediate use to the respective Participants in whose names the
beneficial interests in such Global Securities are recorded in
the book-entry system maintained by the Depositary. Once payment
has been made to the Depositary, neither the Company nor Chase
shall have any responsibility or liability for the payment by the
Depositary of the principal of (and premium, if any) or interest
on such beneficial interests to such Participants.
Withholding Taxes. The amount of any taxes required under
-----------------
applicable law to be withheld from any interest payment on a
beneficial interest in a Global Security will be determined and
withheld by the Participant, indirect participant in the
Depositary or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such interest,
or as applicable law may otherwise require.
Settlement
Procedures: Settlement Procedures with regard to each beneficial interest in
a Global Security purchased by the Agent, as principal, or sold
by the Agent, as agent of the Company, will be as follows:
A. After the acceptance of an offer by the Company with respect to a
beneficial interest in a Global Security, the Agent will
communicate the following details of the terms of such offer (the
Book-Entry Sale Information) to the Company by telephone or other
acceptable means:
1. Principal amount of the beneficial interest to be purchased;
2. (a) Fixed Rate Notes:
38
(i) Interest Rate,
(ii) Interest Payment Dates,
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multiplier, if any,
(iv) Interest Reset Date or Dates,
(v) Interest Reset Period,
(vi) Interest Payment Dates,
(vii) Record Dates,
(viii) Index Maturity,
(ix) Maximum and Minimum Interest Rates, if any,
(x) Calculation Agent;
3. Stated Maturity;
4. Specified Currency (presently, only U.S. dollars);
5. If the Specified Currency is other than U.S. dollars (see 4,
above), the applicable Exchange Rate (as hereinafter defined)
for such Specified Currency, and the authorized denominations
(including the minimum denomination);
6. Original Issue Date;
7. Commission due to Agent;
8. Net proceeds to the Company;
9. Settlement date;
10. (a) If the Note is redeemable by the Company, such of the
following as are applicable:
39
(i) Initial Redemption Date,
(ii) Initial Redemption Percentage (% of par),
(iii) Annual Redemption Percentage Reduction,
(iv) Limitation Date, and
(v) Refunding Rate;
(b) If the Note is repayable at the option of the Holder:
(i) Repayment Date(s), and
(ii) Repayment Rate(s);
11. Denomination of Global Securities to be delivered at
settlement;
12. Current interest rate of U.S. Treasury security with
comparable maturity;
13. Price;
14. Whether the Agent is acting as agent or principal; and
15. Any other information needed to complete the transaction or
the applicable form of Note.
B. The Company will assign a CUSIP number to the Global Security
relating to the beneficial interest sold by the Agent, and upon
receiving the Book-Entry Sale Information from the Agent, the
Company will advise Chase in writing, including facsimile or
electronic transmission, of the Book-Entry Sale Information
received from the Agent and the CUSIP number.
▇. ▇▇▇▇▇ will communicate to the Depositary, and the Agent, through
the Depositary's Participant Terminal System, a pending deposit
message specifying the following settlement information:
1. The applicable Book-Entry Sale Information;
2. Identification numbers of the Participant accounts maintained
by the Depositary on behalf of Chase and the Agent;
40
3. Identification of the book-entry note as a Fixed Rate Note or
Floating Rate Note;
4. Initial Interest Payment Date for the Global Security, number
of days by which such date succeeds the related Record Date
for Depositary purposes (or, in the case of Floating Rate
Notes which reset daily or weekly, the date five calendar days
preceding the Interest Payment Date), and the amount of
interest payable on such Interest Payment Date per $1,000
principal amount of such Security;
5. CUSIP number of the Global Security; and
6. Whether the Global Security will represent any other
beneficial interests in such Security issued or to be issued
(to the extent then known).
D. The Company will deliver to the Trustee a Global Security
representing such interest or interests, and the Company will
instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate such Global Security, to
register such Global Security in the name of Cede & Co., as
nominee of the Depositary, and to effect delivery thereof to the
Depositary by Chase's possession of such authenticated Global
Security as agent for the Depositary.
▇. ▇▇▇▇▇ will complete and authenticate the Global Security
representing such interest or interests, and Chase will register
such Global Security in the name of Cede & Co., as nominee of the
Depositary, and take delivery thereof as agent for the
Depositary.
F. The Depositary will credit such interest or interests to the
Participant account of Chase maintained by the Depositary.
▇. ▇▇▇▇▇ will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to
debit such interest or interests to Chase's Participant account
and credit such interest or interests to the Participant account
of the Agent maintained by the Depositary and (ii) to debit the
settlement account of the Agent and credit the settlement account
of Chase maintained by the Depositary, in an amount equal to the
price of such interest or interests less the Agent's commission
(or discount, as the case may be). Any entry of such a deliver
order shall be deemed to constitute a representation and warranty
by Chase to the
41
Depositary that (i) the Global Security representing such
interest or interests has been executed and authenticated and
(ii) Chase is holding such Global Security pursuant to the
Certificate Agreement.
H. The Agent will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the
Depositary (i) to debit each interest to the Participant account
of the Agent and credit each interest to the Participant account
of each Participant maintained by the Depositary with respect to
each interest and (ii) to debit the settlement account of each
Participant and credit the settlement account of the Agent
maintained by the Depositary in an amount equal to the price of
each interest.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures G and H will be settled in
accordance with SDFS operating procedures in effect on the
settlement date.
▇. ▇▇▇▇▇ will wire to the Company, in accordance with the standing
instructions of the Company theretofore delivered to Chase, the
amount transferred to Chase in accordance with Settlement
Procedure G in funds available for immediate use, subject to
later confirmation of the receipt of such funds.
K. The Agent will confirm the purchase of each beneficial interest
to the purchaser either by transmitting to the Participant with
respect to such interest a confirmation order through the
Depositary's Participant Terminal System or by mailing a written
confirmation to such purchaser.
Settlement
Procedures
Timetable: For orders of beneficial interests in a Global Security accepted
by the Company, Settlement Procedures "A" through "K" set forth
above shall be completed as soon as possible but not later than
the respective times (New York City time) set forth below:
Settlement
Procedure Time
--------- ----
A 11:00 a.m. on the trade date
B 12:00 noon on the trade date
C 2:00 p.m. on the trade date
D 3:00 p.m. on the Business Day
42
before settlement date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the
trade date, Settlement Procedures A, B and C may, if necessary,
be completed at any time prior to the specified times on the
first Business Day after such sale date. Settlement Procedure I
is subject to extension in accordance with any extension of
Fedwire closing deadlines and in the other events specified in
the SDFS operating procedures in effect on the settlement date.
If settlement of a beneficial interest in a Global Security is
rescheduled or cancelled, the Company will as soon as practicable
give Chase notice to such effect. Chase will deliver to the
Depositary, through the Depositary's Participant Terminal System,
a cancellation message to such effect by no later than 2:00 p.m.,
New York City time, on the Business Day immediately preceding the
scheduled settlement date (provided Chase has received such
notice from the Company by noon on the Business Day immediately
preceding the settlement date) and in any case as soon as
practicable. A copy of such message will be routed through the
facilities of the Depositary to the Agent by Chase and to
Standard & Poor's Corporation by the Depositary.
Failures: If Chase fails to enter an SDFS deliver order in timely fashion
with respect to any purchase of a beneficial interest in the
Global Security pursuant to Settlement Procedure G, Chase may
deliver to the Depositary, through the Depositary's Participant
Terminal System, as soon as practicable a withdrawal message
instructing the Depositary to debit such Global Security to the
Participant account of Chase, as applicable, maintained at the
Depositary. A copy of such message will be routed through the
facilities of the Depositary to the Agent. The Depositary will
process the withdrawal message, provided that such Participant
account contains beneficial interests having the same Fixed Rate
Terms or Floating Rate Terms, and having an aggregate principal
amount that is at least equal to the principal amount to be
debited. If withdrawal messages are processed with respect to all
the beneficial interests represented by a particular Global
Security, the Trustee will immediately cancel such Global
Security, make appropriate entries in its records and, unless
otherwise instructed
43
by the Company, dispose of the Global Security and deliver a
certificate of disposition with respect thereto. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately
reassigned. If withdrawal messages are processed with respect to
only a portion of the beneficial interests represented by a
particular Global Security, the Trustee will exchange such Global
Security for two Global Securities, one of which shall represent
the beneficial interest or interests for which withdrawal
messages are processed and shall be cancelled and disposed of
immediately after issuance, and the other of which shall
represent the other beneficial interest or interests previously
represented by the surrendered Global Security and shall bear the
CUSIP number of the surrendered Global Security. The Company will
reimburse the Agent on an equitable basis for its loss of the use
of funds during any period when the funds were credited to the
account of the Company in connection with such attempted
settlement.
If the purchase price for any beneficial interest in a Global
Security is not timely paid to the Participants with respect to
such interest by the purchaser thereof or by a Person, including
an indirect participant in the Depositary, acting on behalf of
such purchaser (other than the Agent, if any), such Participants
and, in turn, the Agent, may enter SDFS deliver orders through
the Depositary's Participant Terminal System debiting such
interest free to the Agent's Participant account maintained by
the Depositary and crediting such interest free to the
Participant account of Chase maintained by the Depositary and
shall notify Chase and the Company thereof. Thereafter, Chase
will (i) promptly confirm that such Note has been credited to its
Participant account and (ii) immediately notify the Company, and
the Company will immediately transfer by Fedwire immediately
available funds to the Agent an amount equal to the price of such
interest which was previously transferred from the account of the
Agent under Settlement Procedure G. Immediately thereafter, Chase
will deliver the withdrawal message and take the related actions
described in the preceding paragraph. The debits and credits
described in the previous sentence will be made on the settlement
date, if possible, and in any event not later than 5:00 p.m. on
the following Business Day. The Company will reimburse the Agent
on an equitable basis for its loss of the use of funds during any
period when the funds were credited to the account of the Company
in connection with such attempted settlement.
44
Notwithstanding the foregoing, upon any failure to settle with
respect to any portion of a Global Security, the Depositary may
take any actions in accordance with its SDFS operating procedures
then in effect. In the event of a failure to settle with respect
to any beneficial interest in a Global Security that was to have
been represented by a Global Security also representing other
beneficial interests, Chase will provide, in accordance with
Settlement Procedures D and E, for the authentication and
issuance of a Global Security representing the remaining
principal amount to have been represented by such Global Security
and will make appropriate entries in its records.
Part III: Administrative Procedures
Relating to Notes in Certificated Form
Denominations: The Company may determine, upon agreement with a purchaser of
Notes, that such Notes will be denominated and payable in a
currency or currency unit to be specified in a Pricing Supplement
as the Specified Currency. Where the Specified Currency is not
U.S. dollars, unless otherwise specified in such supplement, the
authorized minimum denominations of such Notes will be the
foreign currency or currency unit equivalent, as determined by
the noon (New York City time) dollar buying rate for cable
transfers for the Specified Currency as certified for customs
purposes (or, if not so certified, as otherwise determined) by
the Federal Reserve Bank of New York (the "Exchange Rate") on the
Business Day immediately preceding the date of settlement (as
defined below) for such Notes, of U.S. $1,000 (rounded down to an
integral multiple of 1,000 units of the Specified Currency). A
Note may also be issued in any higher denomination which is an
even multiple of U.S. $1,000 or 1,000 units of the Specified
Currency, as the case may be.
Payments of
Principal,
Premium
and Interest: The Trustee will in its capacity as paying agent pay the
principal of (and premium, if any) and interest on each Note at
Stated Maturity or earlier redemption or repayment, as the case
may be, upon presentment of the Note to the Trustee. Such payment
will be made in immediately available funds by the Trustee,
provided the Trustee has timely received (i) from or on behalf of
the Company funds available to the Trustee before such payment
and (ii) appropriate wire transfer instructions from the Holder.
Notes presented to the Trustee at Stated Maturity or earlier
redemption or
45
repayment, as the case may be, for payment will be cancelled by
the Trustee; the Trustee will deliver Notes presented to it for
payment at Stated Maturity or earlier redemption or repayment, as
the case may be, to the Company with an appropriate debit advice.
All interest payments (other than interest due at Stated Maturity
or earlier redemption or repayment, as the case may be) will be
made by the Trustee by wire transfer to an account designated by
the Holder or, in the absence of such a designation, by check
drawn on the Trustee and mailed by the Trustee to the Person
entitled thereto, or, in the case of interest payments to be made
in the Specified Currency other than U.S. dollars, by wire
transfer to a bank account designated by the Holder of such Note
in the country of the Specified Currency (see Multi-Currency
Procedures Supplement), as provided in the Indenture and the
Note. Following each Record Date, the Trustee will furnish the
Company with a list of interest payments to be made on the
following Interest Payment Date, each stated in the currency in
which payment is to be made for each Note theretofore issued. The
Trustee will provide monthly to the Company's Treasurer's
Department a list of the principal (and premium, if any) and
interest to be paid on Notes maturing in the next succeeding
month. The Trustee will assume responsibility for U.S.
withholding taxes on interest paid to non-residents of the United
States.
Settlement
Procedures: Settlement Procedures with regard to each Note purchased by an
Agent, as principal, or through an Agent, as agent, shall be as
follows:
A. The Agent will advise the Company of the following settlement
information:
1. Exact name in which Note is to be registered ("Registered
Owner");
2. Exact address of the Registered Owner and address for payment
of principal (premium, if any) and interest;
3. Taxpayer identification number of the Registered Owner (if
applicable);
4. Principal amount(s) (and denomination(s)) of the Note(s);
5. (a) Fixed Rate Notes:
46
(i) Interest Rate,
(ii) Interest Payment Dates;
(b) Floating Rate Notes:
(i) Base Rate or Rates,
(ii) Initial Interest Rate,
(iii) Spread and/or Spread Multiplier, if any,
(iv) Interest Reset Date or Dates,
(v) Interest Reset Period,
(vi) Interest Payment Dates,
(vii) Record Dates,
(viii) Index Maturity,
(ix) Maximum and Minimum Interest Rates, if any,
(x) Calculation Agent;
6. Stated Maturity;
7. Specified Currency of the Notes;
8. If the Note is to be denominated in a Specified Currency
other than U.S. dollars, the applicable Exchange Rate and the
denomination of the Note (including the minimum
denomination);
9. Original Issue Date;
10. Commission due to Agent;
11. Net proceeds to the Company;
12. Settlement date;
13. Date of delivery of the Note to the Agent if different from
the settlement date;
47
14. (a) If the Note is redeemable by the Company, such of the
following as are applicable:
(i) Initial Redemption Date,
(ii) Initial Redemption Percentage (% of par),
(iii) Annual Redemption Percentage Reduction,
(iv) Limitation Date, and
(v) Refunding Rate;
(b) If the Note is repayable by the Company at the option of
the Holder:
(i) Repayment Date(s), and
(ii) Repayment Rates(s);
15. Current interest rate of U.S. Treasury security with
comparable maturity;
16. Wire transfer information, if any (including overseas bank
account in the country of the Specified Currency, if any);
17. Price, including currency;
18. Whether Agent is acting as agent or principal; and
19. Any other information needed to complete the Transaction or
the applicable form of Note.
B. The Company will advise the Trustee of the above settlement
information received from such Agent. The Company shall promptly
confirm such advice in writing to the Trustee.
C. The Trustee will complete the preprinted multi-ply Note packet
containing the following documents in forms approved by the
Company, the Agent and the Trustee:
1. Note with Agent's customer confirmation;
2. Stub 1 - for the Agent;
48
3. Stub 2 - for the Trustee;
4. Stub 3 - for the Company; and
5. Stub 4 (if any) - not designated.
D. The Trustee will authenticate the Note and deliver the Note (with
the confirmation) and Stub 1 to the Agent or to a representative
designated in writing by the Agent (the "Representative"), and
the Agent or its Representative will acknowledge receipt of the
Note by stamping the delivery receipt with the date and time
received and returning it to the Trustee. Such delivery will be
made only against such time stamp. Upon receipt the Agent or its
Representative shall verify that the Notes delivered have been
correctly completed and shall as promptly as possible notify the
Trustee of any discrepancies which shall as promptly as possible
be remedied by the delivery to the Agent or its Representative of
a corrected Note by the Trustee. Promptly following such
delivery, the Agent or its Representative shall wire to the
Company, in accordance with the standing instructions of the
Company theretofore delivered to the Agent, in funds available
for immediate use, an amount equal to the principal amount of the
Note in the Specified Currency, less the applicable commission in
U.S. dollars or discount determined as provided in paragraph 3 of
the Distribution Agreement. In the event that the instructions
given by the Agent for payment to the account of the Company are
revoked and such payment is received by the Company, the Company
will as promptly as possible remit such payment to the Agent in
an amount of immediately available funds equal to the amount of
such payment. The Agent will return to the Trustee any Notes
previously delivered in connection with such revoked payment.
E. The Agent or its Representative will deliver the Note (with
confirmation) to the customer against payment in immediately
available funds. In all cases, receipt by the customer of the
Prospectus must accompany or precede any written offer of the
Note, delivery of the Note, and confirmation and payment by the
customer for the Note.
If instructed by its customer to deliver the Note and
confirmation to different locations, the Note and the
confirmation will each be accompanied or preceded by the
Prospectus then in effect.
49
F. The Agent or its Representative will obtain the acknowledgement
of receipt of the Note by the customer through a time-stamped
delivery receipt of the Agent.
G. The Trustee will retain Stub 2 and will send Stub 3 to the
Company's Treasurer by first class mail. Periodically, the
Trustee will also send to the Company's Treasurer a statement to
the Company setting forth the principal amount of the Notes
outstanding as of that date after giving effect to such
transaction and all other orders of which the Company has advised
the Trustee but which have not yet been settled.
50
Settlement
Procedures
Timetable: For offers accepted by the Company, Settlement Procedures "A"
through "G" set forth above shall be completed on or before the
respective times set forth below.
Settlement
Procedure Time
--------- ----
A 3:00 p.m. on Business Day
prior to settlement or delivery
B 4:00 p.m. on Business Day
prior to settlement or delivery
C-D 2:15 p.m. on day of settlement
or delivery
E-F 3:00 p.m. on settlement date
G 5:00 p.m. on settlement date
Failures: In the event that a purchaser of a Note shall fail to either
accept delivery of or make payment for any Note on the date fixed
by the Company for settlement, the Agent or its Representative
will forthwith notify the Trustee and the Company's Treasurer by
telephone, confirmed in writing, of such failure. If the Note has
been delivered to the Agent or its Representative on behalf of
the purchaser, the Agent or its Representative will immediately
return the Note to the Trustee. If funds have been advanced to
the Company for the purchase of the Note, the Company will as
promptly as practicable following such notification wire to the
account of the Agent an amount of immediately available funds
equal to the amount previously advanced by the Agent or its
Representative in respect of the Note. Such wire transfer will be
made on the day of settlement, if possible, and in any event not
later than the Business Day following the day of settlement. If
such failure shall have occurred for any reason other than
default by the Agent in the performance of its obligations
hereunder and under the Distribution Agreement, the Company will
reimburse the Agent on an equitable basis for its loss of the use
of the funds during the period when they were credited to the
account of the Company. Immediately upon receipt of the Note in
respect of which the failure occurred, the Trustee will ▇▇▇▇ the
Note "cancelled", and will make appropriate entries in its
records and deliver to the Company an appropriate certificate of
disposition.
51
Multi-Currency Procedures Supplement
The principal of and interest on Notes denominated in a foreign
currency or currency unit specified on the Note and in an
applicable Pricing Supplement setting forth the terms of each
issuance of Notes ("Pricing Supplement") will be payable by the
Company in such Specified Currency.
Payments in
Specified
Currency other
than
U.S. Dollars: If so designated on the Note and in the applicable Pricing
Supplement, payments of principal and interest on such Note will
be made in such Specified Currency by wire transfer to a bank
account maintained by the Holder of such Note in the country of
the Specified Currency ("overseas account"). Such Holder may
elect to receive payments of principal and interest on such Note
in U.S. dollars by transmitting a written request for such
payment to the Trustee at its Corporate Trust Office in the City
of New York on or prior to the Record Date relating to such
payment of interest or at least 16 days prior to Stated Maturity,
as the case may be. Such request may be in writing (mailed or
hand delivered) or by cable, telex or other form of facsimile
transmission. Such Holder may elect to receive payments in U.S.
dollars for any or all principal and interest payments and need
not file a separate election for each such payment. Such election
shall remain in effect until the Note is transferred or until
such election is changed by written notice to the Trustee, but
written notice of any such change must be received by the Trustee
on or prior to such Record Date or at least 16 days prior to
Stated Maturity, as the case may be. In the event of such an
election, Chase in its capacity as exchange rate agent, or such
other person appointed by the Company ("Exchange Rate Agent"),
will convert all payments of principal and interest on such Note
to U.S. dollars. The U.S. dollar amount to be received by a
Holder of such Note electing to receive payments in U.S. dollars
will be based on the highest bid quotation in New York City
received by the Exchange Rate Agent at approximately 11:00 A.M.,
New York City time, on the second Business Day preceding the
applicable payment date from three recognized foreign exchange
dealers (one of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all Holders of Notes
denominated in such Specified Currency electing to receive U.S.
dollar payments and at which the
52
applicable dealer commits to execute a contract. If such bid
quotations are not available, payments will be made in the
Specified Currency. All currency exchange costs will be borne by
the Holders of such Notes, pro rata, by deductions from such
payments. Payments of principal and interest made in a Specified
Currency other than U.S. dollars will be made by wire transfer to
a Holder's overseas account as designated by the Holder by filing
the appropriate information with the Trustee at its Corporate
Trust Office in The City of New York on or prior to the Record
Date relating to such payment of interest or at least 16 days
prior to Stated Maturity, as the case may be, or in connection
with any transfer after such 16th day. The Trustee will, subject
to applicable laws and regulations, and until it receives notice
to the contrary or until such Note is transferred, make such
payment and all succeeding payments to such Holder by wire
transfer to the designated overseas account. The Company will pay
any administrative costs imposed by banks in connection with
making payments by wire transfer, but any tax, Assessment or
government charge imposed upon payments will be borne by the
Holders of such Notes in respect of which payments are made.
If a Specified Currency is not available for the payment of
principal or interest with respect to a Note due to the
imposition of exchange controls or other circumstances beyond the
control of the Company, the Company will be entitled to satisfy
its obligations to Holders of such Notes by making such payment
in U.S. dollars on the basis of the Exchange Rate two days prior
to such payment, or if such rate is not then available, as of the
most recent date prior thereto on which an Exchange Rate was
available. Notwithstanding the foregoing, if a payment cannot be
made by wire transfer because the required information has not
been received by the Trustee on or before the requisite date, a
notice will be mailed to the Holder of a Note at its registered
address requesting such information.
53
EXHIBIT C
PROPOSED FORM OF OPINION OF
▇▇▇▇ & VALENTINE, L.L.P.
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $400,000,000 Medium-Term Notes, Series G
_________, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
We have acted as counsel for you in connection with arrangements for
the issuance by Virginia Electric and Power Company (the "Company") of up to
U.S. $400,000,000 aggregate principal amount of its Medium-Term Notes, Series G
due 9 months or more from the Date of Issue (the "Notes") under and pursuant to
an Indenture, dated as of April 1, 1988, as supplemented by the First
Supplemental Indenture, dated as of August 1, 1989, and the Second Supplemental
Indenture, dated as of May 1, 1999, (the Indenture, as amended and supplemented,
hereafter referred to as the "Indenture") between the Company and The Chase
Manhattan Bank (formerly known as Chemical Bank), as trustee (the "Trustee"),
and the offering of the Notes by you pursuant to a Distribution Agreement dated
________, 1999 by and between you and the Company
54
(the "Distribution Agreement"). All terms not otherwise defined herein shall
have the meanings set forth in the Distribution Agreement.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of the Company, indentures, agreements and other
instruments, certificates of public officials, certificates of officers and
representatives of the Company and of the Trustee, and other documents, as we
have deemed necessary as a basis for the opinions hereinafter expressed. As to
various questions of fact material to such opinions, we have, when relevant
facts were not independently established, relied upon certifications by officers
of the Company, the Trustee and other appropriate persons and statements
contained in the Registration Statement hereinafter mentioned. All legal
proceedings taken as of the date hereof in connection with the transactions
contemplated by the Distribution Agreement have been satisfactory to us.
In addition, we attended the closing held today at the offices of
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at
which the Company satisfied the conditions contained in Section 7 of the
Distribution Agreement which are required to be satisfied as of the Closing
Date.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that:
A. The Company is a corporation duly incorporated and existing under
the laws of Virginia and is duly qualified as a foreign corporation in West
Virginia and North Carolina, and has corporate power to transact its business as
described in the Prospectus.
B. The Distribution Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by the
Company.
C. The Indenture has been duly authorized, executed and delivered by,
and constitutes a valid and binding obligation of, the Company and has been duly
qualified under the Trust Indenture Act, except that we express no opinion as to
the validity or enforceability of any covenant to pay interest on defaulted
interest and except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and except further as enforcement thereof may be limited by requirements
that a claim with respect to any debt securities issued under the Indenture that
are payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S. dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law or
by governmental authority to limit, delay or prohibit the making of payments
outside the United States.
D. The Notes have been duly authorized by the Company and, when
executed by the Company and completed and authenticated by the Trustee in
accordance with the Indenture and delivered and paid for as provided in the
Distribution Agreement, will have been duly issued under the Indenture and will
constitute valid and binding obligations of the Company entitled to the benefits
provided by the Indenture, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a foreign or
composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
E. The Registration Statement with respect to the Notes filed
pursuant to the Securities Act (Reg. No. 333-_______), has become effective and
remains in effect at this
55
date, and the Prospectus in the form filed as part of the Registration
Statement, including all Incorporated Documents constituting a part thereof may
lawfully be used for the purposes specified in the Securities Act in connection
with the offer for sale and the sale of Notes in the manner therein specified.
The Registration Statement and the Prospectus (except the financial
statements incorporated by reference therein, as to which we express no opinion)
appear on their face to be appropriately responsive in all material respects to
the requirements of the Securities Act, and to the applicable rules and
regulations of the Commission thereunder.
As to the statements under DESCRIPTION OF THE NOTES, subject to the
concluding paragraph of this opinion, we are of the opinion that the statements
are accurate and do not omit any material fact required to be stated therein or
necessary to make such statements not misleading. As to the statistical
statements in the Registration Statement (which includes the Incorporated
Documents), we have relied solely on the officers of the Company. As to other
matters, we have not undertaken to determine independently the accuracy or
completeness of the statements contained or incorporated by reference in the
Registration Statement or in the Prospectus. We accordingly assume no
responsibility for the accuracy or completeness of the statements made in the
Registration Statement except as stated above in regard to the above captions.
We have, however, participated in conferences with counsel for and
representatives of the Company in connection with the preparation of the
Registration Statement and the Prospectus, and we have reviewed all Incorporated
Documents and such of the corporate records of the Company as we deemed
advisable. None of the foregoing disclosed to us any information which gives us
reason to believe that the Registration Statement or the Prospectus contained
(except the financial statements incorporated by reference therein, as to which
we express no opinion) on the date the Registration Statement became effective
or now contains any untrue statement of a material fact or omitted on such date
or now omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The foregoing opinion is given on
the basis that any statement contained in an Incorporated Document shall be
deemed not to be contained in the Registration Statement or Prospectus if the
statement has been modified or superseded by any statement in a subsequently
filed Incorporated Document or in the Registration Statement or Prospectus.
F. An appropriate order of the Virginia Commission with respect to
the sale of the Notes on the terms and conditions set forth in the Distribution
Agreement has been issued, and such order remains in effect at this date and
constitutes valid and sufficient authorization for the sale of the Notes as
contemplated by the Distribution Agreement. We understand such order does not
contain any provision unacceptable to you under the Distribution Agreement. No
approval or consent by any public regulatory body, other than such order and
notification of effectiveness by the Commission, is legally required in
connection with the sale of the Notes as contemplated by the Distribution
Agreement (except compliance with the provisions of securities or blue-sky laws
of certain states in
56
connection with the sale of the Notes in such states) and the carrying out of
the provisions of the Distribution Agreement.
G. The Notes conform to their description in the Distribution
Agreement and to the statements with respect thereto contained in the
Registration Statement and the Prospectus.
To the extent that the foregoing opinions involve matters governed by
the laws of North Carolina and West Virginia, we have relied upon the opinion of
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP concurrently delivered to you and we believe
that you are justified in relying thereon.
Very truly yours.
▇▇▇▇ & VALENTINE, L.L.P.
57
EXHIBIT D
PROPOSED FORM OF OPINION
OF McGUIRE, WOODS, BATTLE & ▇▇▇▇▇▇ LLP
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $400,000,000 Medium-Term Notes, Series G
________, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Virginia Electric and Power Company
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
The arrangements for issuance of up to U.S. $400,000,000 aggregate
principal amount of Medium-Term Notes, Series G due 9 months or more from the
date of issue (the "Notes") of Virginia Electric and Power Company (the
"Company") under an Indenture, dated as of April 1, 1988, as amended and
supplemented by the First Supplemental Indenture, dated as of August 1, 1989,
and the Second Supplemental Indenture, dated as of May 1, 1999, (the Indenture,
as amended and supplemented, hereafter referred to as the "Indenture") between
the Company and The Chase Manhattan
58
Bank (formerly known as Chemical Bank), as trustee (the "Trustee"), pursuant to
a Distribution Agreement dated ________, 1999, by and between you and the
Company (the "Distribution Agreement"), have been taken under our supervision as
counsel for the Company. Terms not otherwise defined herein have the meanings
set forth in the Distribution Agreement.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of the Company, indentures, agreements and other
instruments, certificates of public officials, certificates of officers and
representatives of the Company and of the Trustee, and other documents, as we
have deemed it necessary to require as a basis for the opinions hereinafter
expressed. As to various questions of fact material to such opinions, we have,
when relevant facts were not independently established, relied upon
certifications by officers of the Company, the Trustee and other appropriate
persons and statements contained in the Registration Statement hereinafter
mentioned. All legal proceedings taken as of the date hereof in connection with
the transactions contemplated by the Distribution Agreement have been
satisfactory to us.
In regard to the title of the Company to its properties, we have made
no independent investigation of original records but our opinion is based (a)
with respect to land and rights of way for electric lines of 69,000 volts or
more, solely on reports and opinions by counsel in whom we have confidence and
(b) with respect to rights of way for electric lines of less than 69,000 volts
and various matters of fact in regard to all other properties, solely on
information from officers of the Company.
On this basis we are of the opinion that:
1. The Company is a corporation duly organized and existing under the
laws of Virginia, is duly qualified as a foreign corporation in West Virginia
and North Carolina. Neither the nature of the Company's business nor the
properties it owns or holds under lease makes necessary qualification as a
foreign corporation in any state where it is not now so qualified (other than
where the failure to so qualify could not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole),
and the Company has corporate power to conduct its business as described in the
Prospectus and to issue the Notes.
2. All requisite corporate and governmental authorizations have been
given for the issuance of the Notes under the Indenture.
3. The Distribution Agreement has been duly authorized by all
necessary corporate action and has been duly executed and delivered by the
Company.
4. The Indenture has been duly authorized, executed and delivered by,
and constitutes a valid and binding obligation of, the Company and has been duly
qualified under the Trust Indenture Act, except that we express no opinion as to
the validity or enforceability of any covenant to pay interest on defaulted
interest, and except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and except further as enforcement thereof may be limited by requirements
that a claim with respect to any debt securities issued under the Indenture that
are payable in foreign or composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or by
governmental authority to limit, delay or prohibit the making of payments
outside the United States.
59
5. The Notes have been duly authorized by the Company and, when duly
executed by the Company and completed and authenticated by the Trustee in
accordance with the Indenture and issued, delivered and paid for in accordance
with the Distribution Agreement, will have been duly issued under the Indenture
and will constitute valid and binding obligations of the Company entitled to the
benefits provided by the Indenture, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law), and except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a foreign or
composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
6. The Registration Statement with respect to the Notes filed
pursuant to the Securities Act (Reg. No. 333-______), has become effective and
remains in effect at this date, and the Prospectus may lawfully be used for the
purposes specified in the Securities Act in connection with the offer for sale
and the sale of the Notes in the manner therein specified.
The statements in regard to our firm made under the caption EXPERTS in
the Prospectus relating to the Notes are correct, and we are of the opinion
that, so far as governed by the laws of the United States, North Carolina or
Virginia, the legal conclusions relating to franchises, title to properties,
rates, environmental and other regulatory matters and litigation in the
Company's Annual Report on Form 10-K incorporated in the Prospectus by reference
and the description of the provisions of the Indenture and the terms of the
Notes contained in the Prospectus under DESCRIPTION OF THE NOTES are
substantially accurate and fair. As to the statistical statements in the
Registration Statement (which includes the Incorporated Documents), we have
relied solely on the officers of the Company. As to other matters of fact, we
have consulted with officers and other employees of the Company to inform them
of the disclosure requirements of the Securities Act and facilitated the
assembly of relevant data. We have examined various reports, records, contracts
and other documents of the Company and orders and instruments of public
officials, which our investigation led us to deem pertinent. In addition, we
attended the due diligence meetings with representatives of the Company and the
closing at which the Company satisfied the conditions contained in Paragraph 7
of the Distribution Agreement. We have not, however, undertaken to make any
independent review of the other records of the Company. We accordingly assume
no responsibility for the accuracy or completeness of the statements made in the
Registration Statement except as stated above in regard to the aforesaid
captions. But such consultation, examination and attendance disclosed to us no
information with respect to such other matters that gives us reason to believe
that the Registration Statement or the Prospectus contained on the date the
Registration Statement became effective or contains now any untrue statement of
a material fact or omitted on such date or omits now to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. We are of the opinion that the Registration Statement (excepting
the financial statements incorporated therein by reference, as to which we
express no opinion) complies as to form in all material respects with all legal
requirements and is now effective.
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The Registration Statement and the Prospectus (except the financial
statements incorporated by reference therein, as to which we express no opinion)
appear on their face to be appropriately responsive in all material respects to
the requirements of the Securities Act, and to the applicable rules and
regulations of the Commission thereunder.
7. The titles and interests of the Company in and to its properties
are reasonably adequate to enable the Company to carry on its business and the
Company holds such franchises, permits and licenses as are reasonably adequate
to enable the Company to carry on its business, and, as to any franchises,
permits and licenses that the Company does not hold, the absence thereof will
not materially adversely affect the operations, business and properties of the
Company as a whole.
8. Except as set forth in the Registration Statement, there are no
pending legal, administrative or judicial proceedings with respect to the
Company that are required to be described in Form S-3.
The opinions in paragraphs 6 and 8 hereof are given on the basis that
any statement contained in an Incorporated Document shall be deemed not to be
contained in the Registration Statement or Prospectus if the statement has been
modified or superseded by any statement in a subsequently filed Incorporated
Document or in the Registration Statement or Prospectus.
Yours very truly,
McGUIRE, WOODS, BATTLE & ▇▇▇▇▇▇ LLP
61