Exhibit 1
U.S. $1,600,000,000
VIRGINIA ELECTRIC AND POWER COMPANY
Medium-Term Notes
Series H
DISTRIBUTION AGREEMENT
______________________
September 10, 2002
Goldman, Sachs & Co. Lehman Brothers Inc.
85 Broad Street 745 Seventh Avenue
New York, New York 10004 New York, New York 10019
Merrill Lynch, Pierce, Fenner & Smith Morgan Stanley & Co. Incorporated
Incorporated 1585 Broadway
4 World Financial Center, Floor 15 New York, New York 10036
New York, New York 10080
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
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 Goldman, Sachs & Co., Lehman Brothers Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and
Salomon Smith Barney 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 Section
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
"Agent", "you", "your" and the like shall refer to each of Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co.
Incorporated, and Salomon Smith Barney Inc., and any other agent named by the
Company who becomes a party to this Agreement, 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.
$1,600,000,0001 aggregate principal amount of its Medium-Term Notes, Series H
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 the Company's Indenture, dated as of June
1, 1998, between the Company and JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as Trustee (the Trustee), as previously supplemented, and
as further supplemented by a Seventh Supplemental Indenture, dated as of
September 1, 2002 (such Indenture, as supplemented, is referred to herein as the
Indenture). 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. 333-96973) for the
registration of debt securities, including the Notes, junior subordinated
debentures and trust preferred securities and related guarantee under the
Securities Act of 1933, as amended (the Securities Act), heretofore filed
with the Securities and Exchange Commission (the Commission), has been
declared effective. The registration statement, including all exhibits
thereto, (and any further registration statements which may be filed by the
Company for the purpose of registering additional Notes and in connection
with which this Agreement is included as an exhibit) and the prospectus
constituting a part of such registration statement, and any prospectus
supplement relating to the Notes, as from time to time amended or
supplemented by the filing of documents pursuant to the Securities Act, the
Securities Exchange Act of 1934, as amended (the Exchange Act) or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus", respectively. As used herein, the terms "Registration
Statement" and "Prospectus" include all documents or portions thereof
(including any Current Report on Form 8-K) incorporated therein by
reference, and shall include any documents or portions thereof (including
any Current Report on Form 8-K) filed after the date of such Registration
Statement or Prospectus and incorporated therein by reference from the date
of filing of such incorporated documents (collectively, the Incorporated
Documents).
(b) No order suspending the effectiveness of the Registration Statement
or otherwise preventing or suspending the use of the Prospectus has been
issued by the Commission and is in effect and no proceedings for that
___________
* 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").
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purpose are pending before or, to the knowledge of the Company, threatened by
the Commission. The Registration Statement and the Prospectus comply in all
material respects with the provisions of the Securities Act, the Exchange Act,
the Trust Indenture Act of 1939, as amended (the Trust Indenture Act), and the
related rules, regulations and releases of the Commission (the Rules and
Regulations), and neither the Registration Statement on the date it was declared
effective (the Effective Date) nor the Prospectus on the date hereof contained
or contains an untrue statement of a material fact or omitted 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 Section 2 (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 or to that part of the Registration Statement
constituting the Trustee's Statement of Eligibility and Qualification under the
Trust Indenture Act; 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.
(d) Deloitte & Touche LLP, who have audited certain of the Company's
financial statements filed with the Commission and incorporated by reference in
the Registration Statement, are independent public accountants as required by
the Securities Act and the Rules and Regulations relating to the Securities Act.
(e) Except as reflected in, or contemplated by, the Registration Statement
and Prospectus (exclusive of any amendments or supplements after the date
hereof), since the respective most recent dates as of which information is given
in the Registration Statement and Prospectus (exclusive of any amendments or
supplements after the date hereof), there has not been any material adverse
change or event which would result in a material adverse effect on the condition
of the Company and its subsidiaries taken as a whole, financial or otherwise (a
Material Adverse Effect). The Company and its subsidiaries taken as a whole has
no material contingent liability which is not disclosed in the Registration
Statement and the 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
the transactions contemplated in this Agreement and in the Registration
Statement
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(including the issuance and sale of the Notes and the use of the proceeds from
the sale of the Notes as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations under this
Agreement, the Indenture and the Notes do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any subsidiary pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument, to
which the Company or any subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or bylaws
of the Company or any subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their respective properties, assets or
operations, and the Company has full power and authority to authorize, issue and
sell the Notes as contemplated by this Agreement.
(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 in effect with respect to the Notes.
(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
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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 4.2 and 4.3 to the
Company's Current Report on Form 8-K, filed with the Commission on or about
September 10, 2002, and each holder of Notes will be entitled to the benefits of
the Indenture.
(k) There are no Significant Subsidiaries of the Company as such term is
defined in Rule 1-02 of Regulation S-X.
(l) The Company is not, and, after giving effect to the offering and sale
of the Notes and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" or a company "controlled" by an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended.
3. Solicitations as Agent; Purchases as Principal.
(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 applicable percentage of the aggregate
principal amount of each Note sold as set forth in Schedule A attached hereto.
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Unless otherwise agreed to, as agent, you are authorized to solicit orders
for the Notes at the principal amount thereof only in the denominations
specified in the applicable pricing supplement (which will be either U.S. $25*
or U.S. $1,000* and integral multiples of such denominations in excess thereof)
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 or
written, and which may be substantially in the form of Exhibit A hereto or 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 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 Section 7 hereof. A Terms
Agreement may also specify certain provisions relating to the reoffering of such
Notes by you. Each purchase of Notes, unless otherwise agreed, shall be at a
discount from the principal amount of each such Note equivalent to the
applicable commission
___________________
* Or the equivalent of U.S. $25 or U.S. $1,000, as the case may be, in the
Specified Currency.
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set forth in Schedule A hereto. You may utilize a selling or dealer group
in connection with the resale of the Notes purchased by you as principal.
If the Company and two or more Agents enter into an agreement pursuant
to which such Agents agree to purchase Notes from the Company as principal
and one or more of such Agents shall fail at the Settlement Date to
purchase the Notes which it or they are obligated to purchase (the
"Defaulted Notes"), then the nondefaulting Agents shall have the right,
within 24 hours thereafter, to make arrangements for one of them or one or
more other Agents or underwriters to purchase all, but not less than all,
of the Defaulted Notes in such amounts as may be agreed upon and upon the
terms herein set forth; provided, however, that if such arrangements shall
not have been completed within such 24-hour period, then:
(1) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of Notes to be so purchased by
all of such Agents on the Settlement Date, the nondefaulting Agents shall
be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective initial underwriting
obligations bear to the underwriting obligations of all nondefaulting
Agents; or
(2) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of Notes to be so purchased by all of
such Agents on the Settlement Date, such agreement shall terminate without
liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any
defaulting Agent from liability in respect of its default. In the event of
any such default which does not result in a termination of such agreement,
either the nondefaulting Agents or the Company shall have the right to
postpone the Settlement Date for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or the
Prospectus or in any other documents or arrangements.
4. Administrative 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,
shall be agreed upon between the Company and each of you, as applicable (the
Administrative Procedures), and shall be furnished to the Trustee. Each of you
and the Company agree to perform, and the Company agrees to cause the Trustee to
perform, the respective duties and obligations substantially as provided to be
performed by each in the Administrative Procedures, attached hereto as Exhibit
D, as amended from time to time.
5. Time and Place of Closing. The documents required to be delivered on
the "Closing Date" pursuant to Section 7 hereof shall be delivered at the
offices of McGuireWoods LLP, One James Center, Richmond, Virginia, at 10:00
a.m., Richmond, Virginia time, on September 10, 2002, or at such other time
and/or place as you and the
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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) On or prior to the Closing Date, the Company 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). After the Closing Date, 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 Exchange Act.
(b) As soon as the Company is advised thereof, it will advise you
orally of: (i) 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
(ii) any change in the rating assigned 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) to any debt
securities (including the Notes) of the Company, or any notification from
such an organization of any intended or potential downgrading or of any
review for a possible change with possible negative implications in its
ratings of such securities. The Company will use its best efforts to
prevent the issuance of any stop order and to secure the prompt removal
thereof, if issued.
(c) 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, (iii) any fees
and expenses of the Trustee and (iv) the printing and delivery to you in
accordance with this Agreement of copies of 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, Troutman Sanders LLP, including fees and
disbursements incurred in connection with qualifying the Notes 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.
(d) The Company will furnish you with copies of each further amendment
and supplement to the Prospectus in such quantities as you may from
8
time to time reasonably request. If at any time when the delivery of the
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 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 the
supplement or supplements or the amendment or amendments to the Prospectus
so that the Prospectus, as supplemented or amended, 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
Exchange Act; provided, however, that the Company shall not file its
reports on Forms 10-Q or 10-K, including any amendments thereto (other than
amendments to Form 10-K filed solely pursuant to General Instruction A to
Form 11-K), without also furnishing copies thereof to you and Troutman
Sanders LLP. Notwithstanding any other provision of this Section 6(d), if
before the earlier of: (i) the expiration of thirty (30) days after the
Prospectus has been amended or (ii) the distribution of any Notes you may
own as principal has been completed, an event described above in this
Section 6(d) 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 Sections 7(c), 7(d) and 7(h)
such documents, certificates, opinions and letters as you may request in
connection with the preparation and filing of such amendment or supplement.
(e) The Company will advise you promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus relating to the
Notes (other than by filing a document under the Exchange Act which will be
incorporated by reference into the Registration Statement or Prospectus, or
an amendment or supplement providing solely for a specification of the
interest rates or other terms of the Notes commonly included in a pricing
supplement, or an amendment or supplement relating solely to an offering of
securities other than the Notes) and will afford you a reasonable
opportunity to comment on any such proposed amendment or supplement.
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(f) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but not later than 90 days after the
close of the period covered thereby, an earnings statement of the Company
(which need not be audited, but which will comply with the provisions of
Rule 158 under the Securities Act), covering each 12-month period
beginning, in each case, not later than the first day of the Company's
fiscal quarter next following the "effective date" of the Registration
Statement (as defined in such Rule 158) with respect to each sale of Notes.
(g) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing
Date and to satisfy all conditions precedent to the delivery by it of the
Notes.
(h) 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.
(i) 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.
(j) 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 Sections 7 or 12
herein as to any one of you without being terminated as to the others of
you.
(k) 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 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 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:
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(a) An order or orders of the State Corporation Commission of Virginia
authorizing the issuance and sale of the relevant amount of Notes shall be
in full force and effect.
(b) You shall receive on the Closing Date the opinion of Troutman
Sanders LLP, dated the Closing Date, substantially in the form attached
hereto as Exhibit B.
(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 providing solely for
the specification of the variable terms of the Notes commonly included in a
pricing supplement or an amendment or supplement relating solely to an
offering of securities other than the Notes), including an amendment
effected by the filing of a document that is incorporated by reference into
the Registration Statement or Prospectus (other than (A) a Current Report
on Form 8-K containing only information responsive to Item 5 or Item 9
thereof, or Item 10 as proposed or substantially as proposed in Securities
Act Release No. 33-8090 (Item 10), and any exhibits relating to such
information, (B) the proxy materials of the Company that are distributed in
connection with the annual meeting of shareholders and do not contain
disclosures pursuant to Items 11, 12, 13, 14, 15 or 16 of Schedule 14A or
(C) an amendment to the Company's annual report on Form 10-K filed solely
pursuant to General Instruction A to Form 11-K) and (iii) each time, if so
indicated in the applicable Terms Agreement or otherwise, the Company sells
Notes to you as principal, the legal opinion of McGuireWoods 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 C. 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).
(d) You shall receive (i) on the Closing Date, (ii) on any date that
the Registration Statement or the Prospectus shall be amended or
supplemented to include additional financial information (other than by an
amendment or supplement relating solely to the issuance and/or offering of
securities other than the Notes), including an amendment effected by the
filing of a document that is incorporated by reference into the
Registration Statement or Prospectus (other than (A) a Current Report on
Form 8-K containing only information responsive to Item 5, Item 9 or Item
10, thereof and any exhibits relating to such information or
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(B) the proxy materials of the Company that do not contain disclosures
pursuant to Items 11, 12, 13, 14, 15 or 16 of Schedule 14A) 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, containing statements
and information of the type ordinarily included in accountants' SAS 72
"comfort letters" to underwriters with respect to financial statements and
certain financial information contained or incorporated by reference into
the Prospectus, including any pro forma financial information.
(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, in the case of your obligation to solicit
offers to purchase Notes, up to the time of such solicitations or since the
date of any agreement by you to purchase Notes as principal and, in the
case of your obligation to purchase Notes as principal, up to the
settlement date relating to such purchase pursuant to a Terms Agreement or
otherwise, there shall not have been any material adverse change or event
which would result in a Material Adverse Effect.
(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) The representations and warranties of 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 (i) on the Closing Date and (ii) on any date that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by an amendment or supplement providing solely for the
specification of the variable terms of the Notes commonly included in a
pricing supplement or an amendment or supplement relating solely to an
offering of securities other than the Notes), including an amendment
effected by the filing of a document that is incorporated by reference into
the Registration Statement or Prospectus (other than (A) a Current Report
on Form 8-K containing only information responsive to Item 5, Item 9, or
Item 10 thereof and any exhibits relating to such information, (B) the
12
proxy materials of the Company that are distributed in connection with
the annual meeting of shareholders and do not contain disclosures
pursuant to Items 11, 12, 13, 14, 15 or 16 of Schedule 14A or (C) an
amendment to the Company's annual report on Form 10-K filed solely
pursuant to General Instruction A to Form 11-K) and (iii) each time, if
so indicated in the applicable Terms Agreement or otherwise, the
Company sells Notes to you as principal.
(h) On the Closing Date and on any applicable date referred to in
Section 7(g)(ii) or (iii) hereof, as the case may be, you shall have
received a certificate, 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 Troutman Sanders LLP.
In case any of the conditions specified above in this Section 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; provided, however, that it shall not be considered a failure to fulfill
the conditions specified in Sections 7(c), 7(d) or 7(h) above if the Company
temporarily suspends its obligations under such sections in accordance with
Section 7A below. Any termination pursuant to the preceding sentence shall be
without liability of the terminating party and the Company to each other, except
as otherwise provided in Sections 6(c), 9(e) and 10 hereof.
7A. Temporary Suspension of Certain Obligations. After the Closing
Date, if the Company shall determine that it does not intend to be in the market
with respect to the Notes during the three months after the date of filing of a
quarterly report on Form 10-Q, an annual report on Form 10-K, or an amendment
thereto, the Company may deliver to each of you a notice, which shall be dated
the date of delivery thereof to each of you, to such effect (a Notice of
Temporary Suspension), in which event the obligations of the Company pursuant to
Sections 7(c), 7(d) and 7(h) with respect to such filings shall be deemed
suspended until such time as the Company notifies each of you that it wishes to
re-enter the market with respect to the Notes (which could be earlier than three
months after the date of the Notice of Temporary Suspension) and delivers to
each of you the documents required by Sections 7(c), 7(d) and 7(h), but dated as
of the date the Company re-enters the market with respect to the Notes.
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
13
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 and Contribution.
(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
Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which you or any of them may become
subject under the Securities Act, the 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 hereinafter provided, reasonable outside counsel fees)
incurred by you or them in connection with investigating or defending
any such losses, claims, damages, 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, in either
such document as originally filed or as amended or supplemented (if
such amendments or supplements thereto shall have been furnished
pursuant to Section 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 Section 9 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. The indemnity agreement of the
Company contained in this Section 9(a) and the representations and
warranties of the Company contained in Section 2 hereof shall remain
operative and in full force and effect, regardless of any investigation
made by you or on behalf of you or any such controlling person, and
shall survive the delivery of the Notes.
(b) Each of you agree, severally and not jointly, 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 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
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 outside counsel fees) incurred by them
in connection with investigating or defending any such losses, claims,
damages or
14
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 (if
such amendments or supplements thereto shall have been furnished
pursuant to Section 6(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. The indemnity agreement of each of you contained in
this Section 9(b) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Company or
any such controlling person, and shall survive the delivery of the
Notes.
(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 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 outside counsel retained by them; provided that, if the
defendants (including impleaded parties) 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 and direct such different or
additional 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 outside 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
15
liable for the expenses of more than one separate counsel (in addition
to one local counsel), representing the indemnified parties under
Section 9(a) or 9(b), as the case may be, who are parties to such
action), (ii) the indemnifying party shall have elected not to assume
the defense of such action, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice
of the commencement of the action, or (iv) the indemnifying party has
authorized the employment of outside counsel for the indemnified party
at the expense of the indemnifying party. Notwithstanding the foregoing
sentence, an indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent (such consent
not to be unreasonably withheld), but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which indemnification may be sought hereunder (whether or
not the indemnified party is an actual or potential party to such a
proceeding), by such indemnified party, unless such settlement (x)
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding and
(y) does not include a statement as to or an admission of fault,
culpability or failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(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 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
Section 9(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 Section 9(d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or
16
actions in respect thereof) referred to above in this Section 9(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. 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 obligations of each of you under this Section 9(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 remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
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 to this
Agreement 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 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 at or 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 the judgment of the relevant Agent (which shall
be the lead manager(s) in the case of a syndicated transaction) 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
17
generally on either the American Stock Exchange or the New York Stock Exchange
shall have been suspended, or any limitation on prices in such trading or any
restrictions on the distribution of securities are established 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 the judgment of the relevant Agent (which shall be the
lead manager(s) in the case of a syndicated transaction) 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) or such an organization
shall have given notice of any intended or potential downgrading or of any
review for a possible change with possible negative implications in its ratings
of such securities.
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 Section 3(a), Section 6(c), Section 9 and Section 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 Administrative Procedures, and the Company
shall also have the obligations provided in Sections 7(c) through (h) and
Section 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
provisions of Sections 7(c) through (h) and Section 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, except as
provided in Section 3(f) herein, an order or orders of the Commission pursuant
to the 1935 Act 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).
18
13. Miscellaneous. The validity and interpretation of this Agreement shall
be governed by the laws of the State of New York. This Agreement shall inure to
your benefit, the benefit of the Company and, with respect to the provisions of
Section 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 Section 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
Administrative Procedures, all communications hereunder shall be in writing and,
if to you, shall be sent by facsimile transmission, registered mail or delivered
to the address set forth under your signature below and, if to the Company,
shall be sent by facsimile transmission, registered mail or delivered to it,
attention of Treasurer, Virginia Electric and Power Company, 701 East Cary
Street, Richmond Virginia 23219 (facsimile: (804) 819-2211).
[the rest of this page is left blank intentionally]
19
Please sign and return to us a counterpart 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: /s/ James P. Carney
-------------------
Name: James P. Carney
Title: Assistant Treasurer
[the rest of this page is left blank intentionally]
20
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
GOLDMAN, SACHS & CO.
By: /s/ Goldman Sachs & Co.
-----------------------
Authorized Signatory
Name:____________________________
Title:_____________________________
Addresses for Notices:
Goldman Sachs & Co.
85 Broad Street, 22/nd/ Floor
New York, New York 10004
ATTN: Medium-Term Note Dept.
Telephone: 212-902-1482
Facsimile: 212-902-0658
And a copy to:
Adam Meshel
85 Broad Street, 22/nd/ Floor
New York, New York 10004
ATTN: Medium-Term Note Dept.
Telephone: 212-902-5572
Facsimile: 212-346-3594
[the rest of this page is left blank intentionally]
21
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
LEHMAN BROTHERS INC.
By: /s/ G. Hall
-----------
Authorized Signatory
Name:____________________________
Title:_____________________________
Address for Notices:
Lehman Brothers Inc.
745 Seventh Avenue
3rd Floor
New York, New York 10019
Attn: Fixed Income Syndicate- Medium Term Notes Desk
Telephone: (212) 526-9664
Facsimile: (212) 526-0943
[the rest of this page is left blank intentionally]
22
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Scott G. Primrose
---------------------
Authorized Signatory
Name: Scott G. Primrose
Title: Authorized Signatory
Address for Notices:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, Floor 15
New York, New York 10080
Attn: Global Transaction Management Group
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
[the rest of this page is left blank intentionally]
23
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Harold J. Hendershot III
----------------------------
Authorized Signatory
Name: Harold J. Hendershot III
Title: Executive Director
Addresses for Notices:
Morgan Stanley & Co. Incorporated
1585 Broadway- 2nd Floor
New York, New York 10036
Attn: Manager - Continuously Offered Products
Telephone: (212) 761-4000
Facsimile: (212) 761-0780
Morgan Stanley & Co. Incorporated
1585 Broadway - 29th Floor
New York, New York 10036
Attn: Investment Banking Information Center
Telephone: (212) 761-8385
Facsimile: (212) 761-0260
[the rest of this page is left blank intentionally]
24
The foregoing agreement is
hereby confirmed and accepted,
as of the date first above written.
SALOMON SMITH BARNEY INC.
By: /s/ Jeffrey Lawrence
--------------------
Authorized Signatory
Name: Jeffrey Lawrence
Title: Vice President
Address for Notices:
Salomon Smith Barney Inc.
Medium-Term Note Department
388 Greenwich Street
New York, New York 10013
Telephone: (212) 816-5831
Facsimile: (212) 816-0949
[the rest of this page is left blank intentionally]
25
SCHEDULE A
The Company will pay each Agent a commission, at the time of settlement
of each sale of Notes by the Company as a result of a solicitation made by such
Agent, in an amount equal to the following percentage of the aggregate principal
amount of such Notes sold:
PERCENTAGE OF AGGREGATE
PRINCIPAL AMOUNT
MATURITY RANGES 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
A-1
EXHIBIT A
VIRGINIA ELECTRIC AND POWER COMPANY
MEDIUM-TERM NOTES, SERIES H
FORM OF TERMS AGREEMENT
(Date)
Virginia Electric and Power Company
701 East Cary Street
Richmond, Virginia 23219
Attention: Treasurer
Re: Distribution Agreement dated September 10, 2002
The undersigned agrees to purchase the following principal amount of
Notes, subject to the following terms, where applicable:
$___________________
(or principal amount of foreign or composite currency)
Minimum Denomination:
Interest Rate or Formula:
If Fixed Rate Note,
Fixed Rate:
Interest Payment Dates:
If Floating Rate Note,
___ Regular Floating Rate Note
___ Inverse Floating Rate Note
___ Floating/Fixed Rate Note
Base Rate or formula:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Index Currency, if any:
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Calculation Agent:
A-1
If Redeemable at the Option of the Company,
Initial Redemption Date:
Initial Redemption Percentage: ____ % of par
Annual Redemption Percentage Reduction:
Limitation Date:
Refunding Rate:
If Repayment at the Option of the Holder,
Repayment Date(s):
Repayment Rate(s):
Original Issue Date:
Stated Maturity:
Purchase Price: _____% of par
Specified Currency:
Settlement Date and Time:
Requirements pursuant to Section 6(i) of the Distribution Agreement, if
any:
Additional/Other Terms:
Requirements pursuant to Sections 7(h), (c) and (d) of the Distribution
Agreement (check any that apply):
___ Officer's Certificate
___ Legal Opinion
___ Comfort Letter
_________________________________________
[Name of Agent Purchasing as Principal]
By: _____________________________________
Name:____________________________________
Title:___________________________________
Accepted:
VIRGINIA ELECTRIC AND POWER COMPANY
By: _____________________________________
Name:____________________________________
Title:___________________________________
A-2
EXHIBIT B
PROPOSED FORM OF OPINION
OF
TROUTMAN SANDERS LLP
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $1,600,000,000 Medium-Term Notes, Series H
September 10, 2002
Goldman, Sachs & Co. Lehman Brothers Inc.
85 Broad Street 745 Seventh Avenue
New York, New York 10004 New York, New York 10019
Merrill Lynch, Pierce, Fenner & Smith Morgan Stanley & Co. Incorporated
Incorporated 1585 Broadway
4 World Financial Center, Floor 15 New York, New York 10036
New York, New York 10080
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
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.
$1,600,000,000 aggregate principal amount of its Medium-Term Notes, Series H due
9 months or more from the date of issue (the Notes) under and pursuant to the
Company's Indenture, and the offering of the Notes by you pursuant to a
Distribution Agreement, dated September 10, 2002, by and between you and the
Company (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
B-1
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
McGuireWoods LLP, 901 E. Cary Street, Richmond, Virginia, at which the Company
satisfied the conditions contained in Section 7 of the Distribution Agreement
which are required to be satisfied as of the Closing Date.
Based upon the foregoing, and having regard to legal considerations which
we deem relevant, as of the date hereof, we are of the opinion that:
A. The Company is a corporation duly incorporated and existing as a
corporation in good standing under the laws of Virginia and has the corporate
power to transact its business as described in the Prospectus.
B. No approval or consent by any public regulatory body, other than the
previously obtained order of the State Corporation Commission of Virginia, is
legally required in connection with the sale of the Notes as contemplated by the
Distribution Agreement (except to the extent that compliance with the provisions
of securities or blue sky laws of certain states may be required in connection
with the sale of the Notes in such states) and the carrying out of the
provisions of the Distribution Agreement.
C. The Distribution Agreement has been duly authorized by all necessary
corporate action and has been duly executed and delivered by the Company.
D. The Indenture has been duly authorized, executed and delivered by the
Company and has been duly qualified under the Trust Indenture Act and
constitutes a valid and binding obligation of the Company, 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.
E. 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
B-2
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.
F. The Registration Statement with respect to the Notes filed pursuant to
the Securities Act has become effective and remains in effect at this date, and
the Prospectus may lawfully be used for the purposes specified in the Securities
Act in connection with the offer for sale and the sale of Notes in the manner
therein specified.
G. The Registration Statement and the Prospectus (except that we express no
comment or belief with respect to any historical or pro forma financial
statements and schedules and other financial or statistical information
contained or incorporated by reference in the Registration Statement or
Prospectus) comply as to form in all material respects to the requirements of
the Securities Act, and to the applicable rules and regulations of the
Commission thereunder.
H. The statements relating to the Notes under DESCRIPTION OF DEBT
SECURITIES and ADDITIONAL TERMS OF SENIOR DEBT SECURITIES in the prospectus
initially filed as part of the Registration Statement, as supplemented by the
statements under DESCRIPTION OF THE NOTES in the prospectus supplement dated
September 10, 2002, are accurate and do not omit any material fact required to
be stated therein or necessary to make such statements not misleading.
* * * * *
We have not undertaken to determine independently the accuracy or
completeness of
B-3
the statements contained or incorporated by reference in the Registration
Statement or in the Prospectus, and as to the statistical statements in the
Registration Statement (which includes statistical statements in the
Incorporated Documents), we have relied solely on the officers of the Company.
We accordingly assume no responsibility for the accuracy or completeness of the
statements made in the Registration Statement, except as stated in the preceding
paragraph in regard to the statements relating to the Notes under the captions
set forth in such preceding paragraph. We note that the Incorporated Documents
were prepared and filed by the Company without our participation. We have,
however, participated in conferences with counsel for and representatives of the
Company in connection with the preparation of the Registration Statement, the
Prospectus as it was initially issued and as it has been supplemented or
amended, and we have reviewed the Incorporated Documents and such of the
corporate records of the Company as we deemed advisable. None of the foregoing
disclosed to the lawyers in this firm who have given substantive legal attention
to the representation of the Agents in connection with the issuance and sale of
the Notes any information that gives us reason to believe that the Registration
Statement contained on the date the Registration Statement became effective, or
the Prospectus contained on the date it was issued or the date it was
supplemented or amended, or that the Registration Statement or the Prospectus
contains on the date hereof (in all cases, excepting the financial statements
and schedules and other financial information contained or incorporated therein
by reference and any pro forma financial information (and notes thereto)
included or incorporated by reference therein, as to which we express no
belief), any untrue statement of any material fact or omitted or omits on the
date hereof to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The foregoing assurance is
provided 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 prior to the date of the Distribution Agreement.
In rendering the opinions set forth in paragraphs (A) - (H) above, we do
not purport to express an opinion on any laws other than those of the
Commonwealth of Virginia, the State of New York and the United States of
America. This opinion may not be relied upon by, nor may copies be delivered to,
any person without our prior written consent.
Very truly yours,
TROUTMAN SANDERS LLP
B-4
EXHIBIT C
PROPOSED FORM OF OPINION
OF
MCGUIREWOODS LLP
VIRGINIA ELECTRIC AND POWER COMPANY
U.S. $1,600,000,000 Medium-Term Notes, Series H
September 10, 2002
Goldman, Sachs & Co. Lehman Brothers Inc.
85 Broad Street 745 Seventh Avenue
New York, New York 10004 New York, New York 10019
Merrill Lynch, Pierce, Fenner & Smith Morgan Stanley & Co. Incorporated
Incorporated 1585 Broadway
4 World Financial Center, Floor 15 New York, New York 10036
New York, New York 10080
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Ladies and Gentlemen:
The arrangements for issuance of up to U.S. $1,600,000,000 aggregate
principal amount of Medium-Term Notes, Series H due 9 months or more from the
date of issue (the Notes) of Virginia Electric and Power Company (the Company)
under the Company's Senior Indenture, dated as of June 1, 1998 between the
Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as
Trustee (the Trustee), as previously supplemented, and as further supplemented
by a Seventh Supplemental Indenture, dated as of September 1, 2002 (such Senior
Indenture, as supplemented, is referred to herein as the Indenture), pursuant to
a Distribution Agreement, dated September 10, 2002, 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.
C-1
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.
On this basis, as of the date hereof, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation under the laws of the Commonwealth of Virginia, and has the
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations under the Distribution Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing would
not result in a Material Adverse Effect.
2. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign (other than those required under the Securities Act
and the Rules and Regulations and an authorization by the State Corporation
Commission of Virginia, all of which have been obtained, or as may be required
under the securities or blue sky laws of the various states) is necessary or
required in connection with the due authorization, execution and delivery of the
Distribution Agreement or the due execution, delivery or performance of the
Indenture by the Company or for the offering, issuance, sale or delivery of the
Notes.
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 the
Company and has been duly qualified under the Trust Indenture Act and
constitutes a valid and binding obligation of the Company, 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
C-2
to applicable law or by governmental authority to limit, delay or prohibit the
making of payments outside the United States.
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. 333-96973) 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.
7. The Registration Statement and the Prospectus (except the financial
statements, any pro forma information and schedules contained or 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.
8. We are of the opinion that the statements relating to the Notes under
DESCRIPTION OF DEBT SECURITIES and ADDITIONAL TERMS OF SENIOR DEBT SECURITIES in
the prospectus initially filed as part of the Registration Statement, as all or
any of them have been supplemented by the statements under DESCRIPTION OF THE
NOTES in the prospectus supplement dated September 10, 2002, are substantially
accurate and fair.
9. With regard to the discussion in the Prospectus Supplement under the
caption CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS, we are of the
opinion that under current United States federal income tax law, although the
discussion does not purport to discuss all possible United States federal income
tax consequences of the purchase, ownership and disposition of the Notes, such
discussion constitutes a fair and accurate summary of the matters discussed
therein in all material respects. In rendering the aforementioned tax opinion,
we have considered the current provisions of the Internal Revenue Code of 1986,
as amended, proposed and final Treasury regulations promulgated thereunder,
judicial decisions and Internal Revenue
C-3
Service rulings, all of which are subject to change, which changes may be
retroactively applied. A change in the authorities upon which our opinion is
based could affect our conclusions. There can be no assurance, moreover, that
any of the opinions expressed herein will be accepted by the Internal Revenue
Service, or, if challenged, by a court.
10. There are no actions, suits or proceedings pending or, to the best of
our knowledge, threatened, to which the Company or one of its subsidiaries is a
party or to which any of the Company's or any of its subsidiaries' properties is
subject, other than any proceedings described in the Prospectus and proceedings
which we believe are not likely to have a material adverse effect on the power
or ability of the Company to perform its obligations under the Distribution
Agreement or to consummate the transactions contemplated thereby or by the
Prospectus.
We have participated in conferences with officers and other representatives
of the Company and your representatives at which the contents of the
Registration Statement and the Prospectus were discussed, and we have consulted
with officers and other employees of the Company to inform them of the
disclosure requirements of the Securities Act. We have examined various reports,
records, contracts and other documents of the Company and orders and instruments
of public officials, which our investigation led us to deem pertinent. In
addition, we attended the closing at which the Company satisfied the conditions
contained in Section 7 of the Distribution Agreement. We have not, however,
undertaken to make any independent review of other records of the Company which
our investigation did not lead us to deem pertinent. As to the statistical
statements in the Registration Statement (which includes the Incorporated
Documents), we have relied solely on the officers 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. Such conferences,
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 contained on the date the Registration Statement became
effective, or the Prospectus contained on the date it was issued, or that the
Registration Statement or the Prospectus (in each case, except with respect to
the financial statements and schedules and other financial information contained
or incorporated by reference in the Registration Statement or the Prospectus)
contains on the date hereof, any untrue statement of a material fact or omitted
on such date or omits on the date hereof to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
foregoing assurance is provided 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 prior to the date of the Purchase Agreement.
We do not purport to express an opinion on any laws other than those of the
Commonwealth of Virginia, the State of New York and the United States of
America. This opinion may not be relied upon by, nor may copies be delivered to,
any person without our prior written consent.
C-4
Very truly yours,
MCGUIREWOODS LLP
C-5
EXHIBIT D
VIRGINIA ELECTRIC AND POWER COMPANY
ADMINISTRATIVE PROCEDURES
for Fixed Rate and Floating Rate Medium-Term Notes, Series H
(Dated as of September 10, 2002)
Medium-Term Notes Due Nine Months or More From Date of Issue (the "Notes")
are to be offered on a continuous basis by VIRGINIA ELECTRIC AND POWER COMPANY,
a Virginia corporation (the "Company"), to or through Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, and Salomon Smith Barney Inc. (each, an "Agent" and,
collectively, the "Agents") pursuant to a Distribution Agreement, dated
September 10, 2002 (the "Distribution Agreement"), by and among the Company and
the Agents. The Distribution Agreement provides for the sale of Notes by the
Company to one or more of the Agents as principal for resale to investors and
other purchasers, for the sale of Notes by the Company through one or more of
the Agents who solicit offers to purchase the Notes and receive a commission (as
may from time to time be agreed to by the Company and the related Agent or
Agents) and for the sale of Notes by the Company directly to investors.
Unless otherwise agreed by the related Agent or Agents and the Company,
Notes will be purchased by the related Agent or Agents as principal. Such
purchases will be made in accordance with terms agreed upon by the related Agent
or Agents and the Company (which terms shall be agreed upon orally, with written
confirmation prepared by the related Agent or Agents and mailed to the Company).
If agreed upon by any Agent or Agents and the Company, the Agent or Agents,
acting solely as agent or agents for the Company and not as principal, will use
best efforts to solicit offers to purchase the Notes. Only those provisions in
these Administrative Procedures that are applicable to the particular role to be
performed by the related Agent or Agents shall apply to the offer and sale of
the relevant Notes.
The Notes will be issued as a series of debt securities under an Indenture,
dated as of June 1, 1998, between the Company and JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank), as trustee (together with any successor in
such capacity, the "Trustee") as previously supplemented and as further
supplemented by a Seventh Supplemental Indenture, dated as of September 1, 2002
(such Indenture as supplemented is referred to herein as the "Indenture"). The
Company has filed a Registration Statement with the Securities and Exchange
Commission (the "Commission") registering, among other securities, debt
securities (which includes the Notes) (the "Registration Statement", which term
shall include any additional registration statements filed in connection with
the Notes). The most recent base prospectus deemed part of the Registration
Statement, as supplemented with respect to the Notes, is herein referred to as
"Prospectus". The most recent supplement to the Prospectus setting forth the
purchase price, interest rate or formula, maturity date and other terms of the
Notes (as applicable) is herein referred to as the "Pricing Supplement".
D-1
The Notes will either be issued (a) in book-entry form and represented by
one or more fully registered Notes without coupons (each, a "Global Note")
delivered to the Trustee, as agent for The Depository Trust Company ("DTC"), and
recorded in the book-entry system maintained by DTC, or (b) in certificated form
(each, a "Certificated Note") delivered to the investor or other purchaser
thereof or a person designated by such investor or other purchaser.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Additionally, Notes issued in book-entry form will be issued in
accordance with the procedures set forth in Part II hereof and Certificated
Notes will be issued in accordance with the procedures set forth in Part III
hereof. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture or the Notes, as the case may be.
PART I: 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 shall
also bear an original issue date (each, an
"Original Issue Date"). The Original Issue Date
shall remain the same for all Notes subsequently
issued upon transfer, exchange or substitution of
an original Note regardless of their dates of
authentication.
Maturities: Each Note will mature on a date nine months or
more from its Original Issue Date (the "Stated
Maturity Date") selected by the investor or other
purchaser and agreed to by the Company.
Registration: Unless otherwise provided in the applicable
Pricing Supplement, Notes will be issued only in
fully registered form.
Denominations: Unless otherwise provided in the applicable
Pricing Supplement, the Notes, except for Notes
denominated in a Specified Currency other than
U.S. dollars, shall be issued only in
denominations of $25 or $1,000, as specified in
the applicable Pricing Supplement, and any
integral multiple of such denominations in excess
thereof. Notes denominated in a Specified Currency
other than U.S. dollars will be issued in
equivalent denominations, as determined by
reference to the Market Exchange Rate on the
Business Day immediately preceding the date of
issuance unless otherwise specified in the
applicable Pricing Supplement.
D-2
Base Rates applicable
to Floating Rate
Notes: Unless otherwise provided in the applicable
Pricing Supplement, Floating Rate Notes will bear
interest at a rate or rates determined by
reference to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate,
LIBOR, the Prime Rate, the Treasury Rate, or such
other Base Rate or formula as may be set forth in
applicable Pricing Supplement, or by reference to
two or more such rates, as adjusted by the Spread
and/or Spread Multiplier, if any, applicable to
such Floating Rate Notes.
Redemption/Repayment: The Notes will be subject to redemption by the
Company in accordance with the terms of the Notes,
which will be fixed at the time of sale and set
forth in the applicable Pricing Supplement. If no
Initial Redemption Date is indicated with respect
to a Note, such Note will not be redeemable prior
to its Stated Maturity Date.
The Notes will be subject to repayment at the
option of the Holders thereof in accordance with
the terms of the Notes, which will be fixed at the
time of sale and set forth in the applicable
Pricing Supplement. If no Optional Repayment Date
is indicated with respect to a Note, such Note
will not be repayable at the option of the Holder
prior to its Stated Maturity Date.
Calculation of
Interest: In case of Fixed Rate Notes, interest (including
payments for partial periods) will be calculated
and paid on the basis of a 360-day year of twelve
30-day months.
The interest rate on each Floating Rate Note will
be calculated by reference to the specified Base
Rate(s) 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
principal 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
accrued. Unless otherwise provided 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 if the
CD Rate, Commercial
D-3
Paper Rate, Federal Funds Rate, LIBOR (except for
LIBOR Notes denominated in pounds sterling) or
Prime Rate is an applicable Base Rate, by 365 in
the case of LIBOR Notes denominated in pounds
sterling if LIBOR is the applicable Base Rate, or
by the actual number of days in the year if the
CMT Rate or Treasury Rate is an applicable Base
Rate. As provided in the applicable Pricing
Supplement, the interest factor for Notes for
which the interest rate is calculated with
reference to two or more Base Rates will be
calculated in each period in the same manner as if
only the lowest, highest or average of the
applicable Base Rates applied.
Interest: General. Each Note will bear interest in
accordance with its terms. Unless otherwise
provided in the applicable Pricing Supplement,
interest on each Note will accrue from and
including the Original Issue Date of such Note for
the first interest period or from the most recent
Interest Payment Date (as defined below) to which
interest has been paid or duly provided for all
subsequent interest periods to but excluding
applicable Interest Payment Date or the Stated
Maturity Date or date of earlier redemption or
repayment, as the case may be (the Stated Maturity
Date or date of earlier redemption or repayment is
referred to herein as the "Maturity Date" with
respect to the principal repayable on such date).
If an Interest Payment Date or the Maturity Date
with respect to any Fixed Rate Note falls on a day
that is not a Business Day (as defined below), the
required payment to be made on such day need not
be made on such day, but may be made on the next
succeeding Business Day with the same force and
effect as if made on such day, and no interest
shall accrue on such payment for the period from
and after such day to the next succeeding Business
Day. If an Interest Payment Date other than the
Maturity Date 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
postponed to the next succeeding Business Day,
except that in the case of a Note for which LIBOR
is an applicable Base Rate, if such Business Day
falls in the next succeeding calendar month, such
Interest Payment Date will be the immediately
preceding Business Day. If the Maturity Date with
respect to any Floating Rate Note falls on a day
that is not a Business Day, the required payment
to be made on such day need not be made on such
day, but may be made on the next succeeding
Business Day with the same force and effect as if
made on such day, and no interest shall accrue
D-4
on such payment for the period from and after the
Maturity Date to the next succeeding Business Day.
Unless otherwise provided in the applicable
Pricing Supplement, "Business Day" means with
respect to any Note, any day, other than a
Saturday or Sunday, that is neither (a) a legal
holiday nor (b) a day on which banking
institutions are authorized or required by law,
regulation or executive order to close in New York
City; provided, however, that for Notes
denominated in a Specified Currency other than
United States dollars that day is also not a day
on which commercial banking institutions are
authorized or required by law, regulation or
executive order to close in the Principal
Financial Center of the country issuing the
Specified Currency (or for Notes denominated in
euros, that day is also a day on which the
Trans-European Automated Real-time Gross
Settlement Express Transfer System, commonly
referred to as "TARGET," is operating); provided,
further, that with respect to a LIBOR Note, the
day must also be a London Business Day.
"London Business Day" means any day on which
commercial banks are open for business (including
for dealings in deposits in the relevant Index
Currency) in London.
"Principal Financial Center" means as applicable,
the capital city of the country issuing the
Specified Currency; or the capital city of the
country to which the Index Currency relates;
provided, however, that the Principal Financial
Center will be New York City for United States
dollars, Sydney for Australian dollars, Toronto
for Canadian dollars, Johannesburg for South
African rand and Zurich for Swiss francs.
Regular Record Dates. Unless otherwise provided in
the applicable Pricing Supplement, the "Regular
Record Date" for a Note shall be the close of
business on the fifteenth calendar day (whether or
not a Business Day) preceding the applicable
Interest Payment Date.
Interest Payment Dates. Interest payments will be
made on each Interest Payment Date commencing with
the first Interest Payment Date following the
Original Issue Date; provided, however, the first
payment of interest on any Note originally issued
between a Regular Record Date and an Interest
Payment Date will occur on the Interest Payment
Date following the next succeeding Regular Record
Date.
D-5
Unless otherwise provided in the applicable Pricing
Supplement, interest payments on Fixed Rate Notes
will be made semiannually in arrears on May 1 and
November 1 of each year and on the Maturity Date,
while interest payments on Floating Rate Notes will
be made as specified in the applicable Pricing
Supplement.
Acceptance and
Rejection of Offers
from Solicitation
as Agents: If agreed upon by any Agent and the Company, then
such Agent acting solely as agent for the Company and
not as principal will solicit purchases of the Notes.
Each Agent will communicate to the Company, orally or
in writing, each reasonable offer to purchase Notes
solicited by such Agent on an agency basis, other
than those offers rejected by such Agent. Each Agent
has the right, in its discretion reasonably
exercised, to reject any proposed purchase of Notes,
as a whole or in part, and any such rejection shall
not be a breach of such Agent's agreement contained
in the Distribution Agreement. The Company has the
sole right to accept or reject any proposed purchase
of Notes, in whole or in part, and any such rejection
shall not a breach of the Company's agreement
contained in the Distribution Agreement. Each Agent
has agreed to make best efforts to assist the Company
in obtaining performance by each purchaser whose
offer to purchase Notes has been solicited by such
Agent and accepted by the Company.
Preparation of
Pricing Supplement: If any offer to purchase a Note is accepted by the
Company, the Company will promptly prepare a Pricing
Supplement reflecting the terms of such Note.
Information to be included in the Pricing Supplement
shall include:
1. the name of the Company;
2. the title of the Notes;
3. the date of the Pricing Supplement and the date of
the Prospectus to which the Pricing Supplement
relates;
4. the name of the Offering Agent (as defined below);
D-6
5. whether such Notes are being sold to the Offering
Agent as principal or to an investor or other
purchaser through the Offering Agent acting as
agent for the Company;
6. with respect to Notes sold to the Offering Agent
as principal, whether such Notes will be resold
by the Offering Agent to investors and other
purchasers at (i) a fixed public offering price
of a specified percentage of their principal
amount or (ii) at varying prices related to
prevailing market prices at the time of resale to
be determined by the Offering Agent;
7. with respect to Notes sold to an investor or
other purchaser through the Offering Agent acting
as agent for the Company, whether such Notes will
be sold at (i) 100% of their principal amount or
(ii) a specified percentage of their principal
amount;
8. the Offering Agent's discount or commission;
9. the net proceeds to the Company;
10. the Principal Amount, Specified Currency,
Original Issue Date, Stated Maturity Date,
Interest Payment Date(s), Authorized
Denomination, Initial Redemption Date, if any,
Initial Redemption Percentage, if any, Annual
Redemption Percentage Reduction, if any, Optional
Repayment Date(s), if any, Exchange Rate Agent,
if any, Default Rate, if any, and, in the case of
Fixed Rate Notes, the Interest Rate, and whether
such Fixed Rate Note is an Original Issue
Discount Note (and, if so, the Issue Price), and,
in the case of Floating Rate Notes, the Interest
Category, the Base Rate or Bases, the Day Count
Convention, Index Maturity (if applicable),
Initial Interest Rate, if any, Maximum Interest
Rate, if any, Minimum Interest Rate, if any,
Initial Interest Reset Date, Interest Reset
Dates, Spread and/or Spread Multiplier, if any,
and Calculation Agent; and
11. any other additional provisions of the Notes
material to investors or other purchasers of the
Notes not otherwise specified in the Prospectus.
The Company shall use its best efforts to send such
Pricing Supplement by email, facsimile or overnight
express (for delivery by the close of business on the
applicable trade date, but in no event later than
11:00 a.m. New York City time, on
D-7
the Business Day following the applicable trade date)
to the Agent which made or presented the offer to
purchase the applicable Note (in such capacity, the
"Offering Agent") and the Trustee at the following
applicable address: if to:
Goldman, Sachs & Co., to:
Goldman, Sachs & Co.
85 Broad Street, 27/th/ Floor
New York, New York 10004
Attn: Medium-Term Note
Telephone: (212) 902-1482
Facsimile: (212) 902-0658
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Attn: Medium Term Note Desk
Telephone: (212) 526-9664
Facsimile: (212) 526-0943
With a copy to:
ADP Prospectus Services
For Lehman Brothers Inc.
1155 Long Island Avenue
Edgewood, New York 11717
Attention: Client Services Desk
Facsimile: (631) 254-7268
Merrill Lynch, to:
Merrill Lynch & Co.
Merrill Lynch Production Technologies
4 Corporate Place
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Diane Waller
Telephone: (732) 878-6536
Facsimile: (732) 878-6481/6547
Email: mtnsuppl@na2.us.ml.com
Morgan Stanley, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attn: Medium-Term Note Trading Desk
Telephone: (212) 761-1248
Facsimile: (212) 761-8846
D-8
Salomon Smith Barney, to:
Salomon Smith Barney Inc.
Attn: Annabelle Avila
Brooklyn Army Terminal
140 58/th/ Street, 8/th/ Floor
Brooklyn, New York 11220
Telephone: (718) 765-6725
Facsimile: (718) 765-6734
and if to the Trustee, to:
JPMorgan Chase Bank
450 West 33/rd/ Street
New York, New York 10001
Attn: Institutional Trust Services
Telephone: (212) 946-7867
Facsimile: (212) 946-8159
and to:
Troutman Sanders LLP
1111 East Main Street
Richmond, Virginia 23219
Attn: F. Claiborne Johnston, Jr., Esquire
Telephone: (804) 697-1214
Facsimile: (804) 697-1339
In each instance that a Pricing Supplement is
prepared, the Offering Agent will provide a copy of
such Pricing Supplement to each investor or purchaser
of the relevant Notes or its agent. Pursuant to Rule
434 ("Rule 434") of the Securities Act of 1933, as
amended, the Pricing Supplement may be delivered
separately from the Prospectus. Outdated Pricing
Supplements (other than those retained for files)
will be destroyed.
Settlement: The receipt of immediately available funds by the
Company in payment for a Note and the authentication
and delivery of such Note shall, with respect to such
Note, constitute "settlement". Offers accepted by the
Company will be settled in three Business Days, or at
such time as the purchaser, the applicable Agent and
the Company shall agree, pursuant to the timetable
for settlement set forth in Parts II and III hereof
under "Settlement Procedure Timetable" with respect
to Global Notes and Certificated Notes, respectively
(each such date fixed for settlement is hereinafter
referred to as a "Settlement Date"). If procedures A
and B of the applicable Settlement Procedures with
respect to a particular offer are not completed on or
before the time set forth under the applicable
"Settlement Procedures
D-9
Timetable", such offer shall not be settled
until the Business Day following the completion
of settlement procedures A and B or such later
date as the purchaser and the Company shall
agree.
The foregoing settlement procedures may be
modified with respect to any purchase of Notes
by an Agent as principal if so agreed by the
Company and such Agent.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been reached to change the
interest rate or any other variable term on any
Notes being sold by the Company, the Company
will promptly advise the Agents and the Trustee
by facsimile transmission and the Agents will
forthwith suspend solicitation of offers to
purchase such Notes. The Agents will telephone
the Company with recommendations as to the
changed interest rates or other variable terms.
At such time as the Company notifies the Agents
and the Trustee of the new interest rates or
other variable terms, the Agents may resume
solicitation of offers to purchase such Notes.
Until such time, only "indications of interest"
may be recorded. Immediately after acceptance
by the Company of an offer to purchase Notes at
a new interest rate or new variable term, the
Company, the Offering Agent and the Trustee
shall follow the procedures set forth under the
applicable "Settlement Procedures".
Suspension of Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to suspend
solicitation of offers to purchase Notes at any
time. Upon receipt of such instructions, the
Agents will forthwith suspend solicitation of
offers to purchase from the Company until such
time as the Company has advised the Agents that
solicitation of offers to purchase may be
resumed. If the Company decides to amend or
supplement the Registration Statement or the
Prospectus (other than to establish or change
interest rates or formulas, maturities, prices
or other similar variable terms with respect to
the Notes), it will promptly advise the Agents
and will furnish the Agents and their counsel
with copies of the proposed amendment or
supplement. Copies of such amendment or
supplement will be delivered or mailed to the
Agents, their counsel and the Trustee in
quantities which such parties may reasonably
request at the following respective addresses:
if to
D-10
Goldman, Sachs & Co., to:
Goldman, Sachs & Co.
85 Broad Street, 27/th/ Floor
New York, New York 10004
Attn: Medium-Term Note
Telephone: (212) 902-1482
Facsimile: (212) 902-0658
Lehman Brothers, to:
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Attn: Medium Term Note Desk
Telephone: (212) 526-9664
Facsimile: (212) 526-0943
Merrill Lynch, to:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, Floor 15
New York, New York 10080
Attn: Mr. Scott Primrose
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
Morgan Stanley, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attn: Medium-Term Note Trading Desk
Telephone: 212) 761-1248
Facsimile: 212) 761-8846
Salomon Smith Barney, to:
Salomon Smith Barney Inc.
Medium-Term Note Department
388 Greenwich Street
New York, New York 10013
Telephone: (212) 816-5381
Facsimile: (212) 816-0949
D-11
and if to the Trustee, to:
JPMorgan Chase Bank
450 West 33/rd/ Street
New York, New York 10001
Attn: Institutional Trust Services
Telephone: (212) 946-7867
Facsimile: (212) 946-8159
and to:
Troutman Sanders LLP
1111 East Main Street
Richmond, Virginia 23219
Attention: F. Claiborne Johnston, Jr., Esquire
Telephone: (804) 697-1214
Facsimile: (804) 697-1339
In the event that at the time the solicitation
of offers to purchase from the Company is
suspended (other than to establish or change
interest rates or formulas, maturities, prices
or other similar variable terms with respect to
the Notes) there shall be any offers to
purchase Notes that have been accepted by the
Company which have not been settled, the
Company will promptly advise the Offering Agent
and the Trustee whether such offers may be
settled and whether copies of the Prospectus as
theretofore amended and/or supplemented as in
effect at the time of the suspension may be
delivered in connection with the settlement of
such offers. 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 offers
may not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus
and applicable
Pricing Supplement: A copy of the most recent Prospectus and the
applicable Pricing Supplement, which pursuant
to Rule 434 may be delivered separately from
the Prospectus, must accompany or precede the
earlier of (a) the written confirmation of a
sale sent to an investor or other purchaser or
its agent and (b) the delivery of Notes to an
investor or other purchaser or its agent.
Authenticity of
Signatures: 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.
D-12
Documents Incorporated
by Reference: The Company shall supply the Agents with an
adequate supply of all documents incorporated
by reference in the Registration Statement and
the Prospectus.
D-13
PART II: PROCEDURES FOR NOTES ISSUED IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry form for
eligibility in the book-entry system maintained by DTC, JPMorgan Chase Bank
("Chase") will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under a
Letter of Representations from the Company and Chase to DTC, dated September 10,
2002, and a Certificate Agreement, dated December 2, 1988, between Chase and
DTC, as amended (the "Certificate Agreement"), and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in book-entry form having the
same Original Issue Date, Specified Currency, Interest Rate,
Default Rate, Interest Payment Dates, redemption and/or
repayment terms, if any, and Stated Maturity Date
(collectively, the "Fixed Rate Terms") will be represented
initially by a single Global Note; and all Floating Rate
Notes issued in book-entry form having the same Original
Issue Date, Specified Currency, Interest Category, formula
for the calculation of interest (including the Base Rate or
Bases, which may be the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the
Prime Rate or the Treasury Rate or any other Base Rate or
formula, and Spread and/or Spread Multiplier, if any), Day
Count Convention, Initial Interest Rate, Default Rate, Index
Maturity (if applicable), Minimum Interest Rate, if any,
Maximum Interest Rate, if any, redemption and/or repayment
terms, if any, Interest Payment Dates, Initial Interest
Reset Date, Interest Reset Dates and Stated Maturity Date
(collectively, the "Floating Rate Terms") will be
represented initially by a single Global Note.
For other variable terms with respect to the Fixed Rate
Notes and Floating Rate Notes, see the Prospectus and the
applicable Pricing Supplement.
Owners of beneficial interests in Global Notes will be
entitled to physical delivery of Certificated Notes equal in
principal amount to their respective beneficial interests
only upon certain limited circumstances described in the
Prospectus.
Identification: The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau")
for the reservation of one series of CUSIP numbers, which
series consists of approximately 900 CUSIP numbers which
have been reserved for and relating to Global Notes and the
D-14
Company has delivered to each of Chase and DTC such list of
such CUSIP numbers. The Company will assign CUSIP numbers to
Global Notes as described below under Settlement Procedure
B. DTC will notify the CUSIP Service Bureau periodically of
the CUSIP numbers that the Company has assigned to Global
Notes. Chase will notify the Company at any time when fewer
than 100 of the reserved CUSIP numbers remain unassigned to
Global Notes, and, if it deems necessary, the Company will
reserve and obtain additional CUSIP numbers for assignment
to Global Notes. Upon obtaining such additional CUSIP
numbers, the Company will deliver a list of such additional
numbers to Chase and DTC. Notes issued in book-entry form in
excess of $500,000,000 (or the equivalent thereof in one or
more foreign or composite currencies) aggregate principal
amount and otherwise required to be represented by the same
Global Note will instead be represented by two or more
Global Notes which shall all be assigned the same CUSIP
number.
Registration: Unless otherwise specified by DTC, each Global Note will be
registered in the name of Cede & Co., as nominee for DTC, on
the register maintained by Chase under the Indenture. The
beneficial owner of a Note issued in book-entry form (i.e.,
an owner of a beneficial interest in a Global Note) (or one
or more indirect participants in DTC designated by such
owner) will designate one or more participants in DTC (with
respect to such Note issued in book-entry form, the
"Participants") to act as agent for such beneficial owner in
connection with the book-entry system maintained by DTC, and
DTC will record in book-entry form, in accordance with
instructions provided by such Participants, a credit balance
with respect to such Note issued in book-entry form in the
account of such Participants. The ownership interest of such
beneficial owner in such Note issued in book-entry form will
be recorded through the records of such Participants or
through the separate records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of beneficial ownership interests in a Global Note
will be accomplished by book entries made by DTC and, in
turn, by Participants (and in certain cases, one or more
indirect participants in DTC) acting on behalf of beneficial
transferors and transferees of such Global Note.
Exchanges: Chase may deliver to DTC and the CUSIP Service Bureau at any
time a written notice specifying (a) the CUSIP numbers of
two or more Global Notes outstanding on such date that
D-15
represent Global Notes having the same Fixed Rate Terms or
Floating Rate Terms, as the case may be (other than Original
Issue Dates), and for which interest has been paid to the
same date; (b) a date, occurring at least 30 days after such
written notice is delivered and at least 30 days before the
next Interest Payment Date for the related Notes issued in
book-entry form, on which such Global Notes shall be
exchanged for a single replacement Global Note; and (c) a
new CUSIP number, obtained from the Company, to be assigned
to such replacement Global Note. Upon receipt of such a
notice, DTC 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 Notes to be exchanged
will no longer be valid. On the specified exchange date,
Chase will exchange such Global Notes for a single Global
Note bearing the new CUSIP number and the CUSIP numbers of
the exchanged Notes will, in accordance with CUSIP Service
Bureau procedures, be canceled and not immediately
reassigned. Notwithstanding the foregoing, if the Global
Notes to be exchanged exceed $500,000,000 (or the equivalent
thereof in one or more foreign or composite currencies) in
aggregate principal amount, one replacement Note will be
authenticated and issued to represent each $500,000,000 (or
the equivalent thereof in one or more foreign or composite
currencies) in aggregate principal amount of the exchanged
Global Notes and an additional Global Note or Notes will be
authenticated and issued to represent any remaining
principal amount of such Global Notes (See "Denominations"
below).
Denominations: Unless otherwise provided in the applicable Pricing
Supplement, Notes issued in book-entry form will be issued
in denominations of $25 or $1,000 and integral multiples of
such denominations in excess thereof. Global Notes will not
be denominated in excess of $500,000,000 (or the equivalent
thereof in one or more foreign or composite currencies)
aggregate principal amount. If one or more Notes are issued
in book-entry form in excess of $500,000,000 (or the
equivalent thereof in one or more foreign or composite
currencies) aggregate principal amount and would, but for
the preceding sentence, be represented by a single Global
Note, then one Global Note will be issued to represent each
$500,000,000 (or the equivalent thereof in one or more
foreign or composite
D-16
currencies) in aggregate principal amount of such Notes
issued in book-entry form and an additional Global Note
or Notes will be issued to represent any remaining
aggregate principal amount of such Note or Notes issued
in book-entry form. In such a case, each of the Global
Notes representing Notes issued in book-entry form shall
be assigned the same CUSIP number.
Payments of Principal
and Interest: Payments of Interest Only. Promptly after each Regular
Record Date, Chase will deliver to the Company and DTC a
written notice specifying by CUSIP number the amount of
interest to be paid on each Global Note on the following
Interest Payment Date (other than an Interest Payment
Date coinciding with the Maturity Date) and the total of
such amounts, to the extent then ascertainable. DTC will
confirm the amount payable on each Global Note 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 in immediately available funds an amount
sufficient to pay the interest then due and owing on the
Global Notes, and upon receipt of such funds from the
Company, Chase in turn will pay to DTC such total amount
of interest due on such Global Notes (other than on the
Maturity Date) which is payable in U.S. dollars, at the
times and in the manner set forth below under "Manner of
Payment". Chase shall make payment of that amount of
interest due and owing on any Global Notes that
Participants have elected to receive in foreign or
composite currencies directly to such Participants.
Notice of Interest Rates. Promptly after each Interest
Determination Date or Calculation Date, as the case may
be, for Floating Rate Notes issued in book-entry form,
Chase will notify each of Moody's Investors Service,
Inc. and Standard & Poor's Corporation of the interest
rates determined as of such Interest Determination Date.
Payments at Maturity. On or about the first Business Day
of each month, Chase will deliver to the Company and DTC
a written list of principal, premium, if any, and
interest to be paid on each Global Note maturing or
otherwise becoming due in the following month, to the
extent then ascertainable. Chase, the Company and DTC
will confirm the amounts of such principal, premium, if
any, and interest payments with respect to each such
Global Note on or about the fifth Business Day preceding
the Maturity Date of such Global Note. On the
D-17
Maturity Date, the Company will pay to
Chase in immediately available funds an
amount sufficient to make the required
payments, and upon receipt of such funds
Chase in turn will pay to DTC the
principal amount of Global Notes,
together with premium, if any, and
interest due on the Maturity Date, which
are payable in U.S. dollars, at the
times and in the manner set forth below
under "Manner of Payment". Chase shall
make payment of the principal, premium,
if any, and interest to be paid on the
Maturity Date of each Global Note that
Participants have elected to receive in
foreign or composite currencies directly
to such Participants. Promptly after (i)
payment to DTC of the principal,
premium, if any, and interest due on the
Maturity Date of such Global Note which
are payable in U.S. dollars and (ii)
payment of the principal, premium, if
any, and interest due on the Maturity
Date of such Global Note to those
Participants who have elected to receive
such payments in foreign or composite
currencies, the Trustee will cancel such
Global Note and deliver it to the
Company with an appropriate debit
advice. On the first Business Day of
each month, the Trustee will deliver to
the Company a written statement
indicating the total principal amount of
outstanding Global Notes as of the close
of business on the immediately preceding
Business Day.
Manner of Payment. The total amount of
any principal, premium, if any, and
interest due on Global Notes on any
Interest Payment Date or the Maturity
Date, as the case may be, which is
payable in U.S. dollars shall be paid by
the Company to Chase in funds available
for use by Chase no later than 10:00
a.m., New York City time, on such date.
The Company will make such payment on
such Global Notes to an account
specified by Chase. Upon receipt of such
funds, Chase will pay by separate wire
transfer (using Fedwire message entry
instructions in a form previously
specified by DTC) to an account at the
Federal Reserve Bank of New York
previously specified by DTC, in funds
available for immediate use by DTC, each
payment in U.S. dollars of principal,
premium, if any, and interest due on
Global Notes on such date. Thereafter on
such date, DTC 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
Notes are recorded in the book-entry
system maintained by DTC. Neither the
Company nor Chase shall have any
responsibility or liability for the
payment in U.S. dollars by DTC of the
principal of, or premium, if any, or
interest on, the Global Notes.
D-18
Chase shall make all payments of principal,
premium, if any, and interest on each Global
Note that Participants have elected to
receive in foreign or composite currencies
directly to such Participants.
Withholding Taxes. The amount of any taxes
required under applicable law to be withheld
from any interest payment on a Global Note
will be determined and withheld by the
Participant, indirect participant in DTC or
other Person responsible for forwarding
payments and materials directly to the
beneficial owner of such Global Note.
Settlement
Procedures: Settlement Procedures with regard to
each Note in book-entry form sold by an
Agent, as agent of the Company, or purchased
by an Agent, as principal, will be as
follows:
A. The Offering Agent will advise the
Company by telephone:, confirmed by
facsimile, of the following settlement
information:
1. Principal amount, Authorized
Denomination, and Specified
Currency.
2. Exchange Rate Agent, if any.
3. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment Dates.
(iii) Whether such Note is
being issued with
Original Issue Discount
and, if so, the terms
thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Base Rate(s).
(iii) Initial Interest Rate.
D-19
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest Reset Date
or Interest Reset Dates.
(vi) Interest Payment Dates.
(vii) Index Maturity, if any.
(viii) Maximum and/or Minimum
Interest Rates, if any.
(ix) Day Count Convention.
(x) Calculation Agent.
4. Price to public, if any, of such Note
(or whether such Note is being offered
at varying prices relating to prevailing
market prices at time of resale as
determined by the Offering Agent).
5. Trade Date.
6. Settlement Date (Original Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if any.
9. Repayment provisions, if any.
10. Default Rate, if any.
11. Net proceeds to the Company.
12. The Offering Agent's discount or
commission.
13. Whether such Note is being sold to the
Offering Agent as principal or to an
investor or other purchaser through the
Offering Agent acting as agent for the
Company.
14. Such other information specified with
respect to such Note (whether by
Addendum or otherwise).
D-20
B. The Company will assign a CUSIP
number to the Global Note
representing such Note and then
advise the Trustee by facsimile
transmission or other electronic
transmission (promptly confirmed in
writing) of the above settlement
information received from the
Offering Agent, such CUSIP number and
the name of the Offering Agent. The
Company will also advise the Offering
Agent of the CUSIP number assigned to
the Global Note.
C. Chase will communicate to DTC and the
Offering Agent through DTC's
Participant Terminal System a pending
deposit message specifying the
following settlement information:
1. The information set forth in the
Settlement Procedure A.
2. Identification numbers of the
participant accounts maintained by
DTC on behalf of Chase and the
Offering Agent.
3. Identification of the Global Note
as a Fixed Rate Global Note or
Floating Rate Global Note.
4. Initial Interest Payment Date for
such Note, number of days by which
such date succeeds the related
record date for DTC 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, if
then calculable, the amount of
interest payable on such Interest
Payment Date (which amount shall
have been confirmed by Chase).
5. CUSIP number of the Global Note
representing such Note.
6. Whether such Global Note
represents any other Notes issued
or to be issued in book-entry
form.
DTC will arrange for each pending
deposit message described above to
be transmitted to Standard & Poor's
Corporation, which will use the
information in the message to
include certain terms of the related
Global Note in the appropriate daily
bond report published by Standard &
Poor's Corporation.
D-21
D. The Trustee will complete and
authenticate the Global Note
representing such Note.
E. DTC will credit such Note to the
participant account of Chase
maintained by DTC.
F. Chase will enter an SDFS deliver
order through DTC's Participant
Terminal System instructing DTC (i)
to debit such Note to Chase's
participant account and credit such
Note to the participant account of
the Offering Agent maintained by DTC
and (ii) to debit the settlement
account of the Offering Agent and
credit the settlement account of
Chase maintained by DTC, in an amount
equal to the price of such Note less
such Offering Agent's discount or
underwriting commission, as
applicable. Any entry of such a
deliver order shall be deemed to
constitute a representation and
warranty by the Trustee to DTC that
(i) the Global Note representing such
Note has been issued and
authenticated and (ii) Chase is
holding such Global Note pursuant to
the Certificate Agreement.
G. In the case of Notes in book-entry
form sold through the Offering Agent,
as agent, the Offering Agent will
enter an SDFS deliver order through
DTC's Participant Terminal System
instructing DTC (i) to debit such
Note to the Offering Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of the
Offering Agent maintained by DTC in
an amount equal to the initial public
offering price of such Note.
H. Transfers of funds in accordance with
SDFS deliver orders described in
Settlement Procedures F and G will be
settled in accordance with SDFS
operating procedures in effect on the
Settlement Date.
I. Upon receipt, Chase will pay the
Company, by wire transfer of
immediately available funds to an
account specified by the Company to
Chase from time to time, the amount
transferred to Chase in accordance
with Settlement Procedure F.
D-22
J. Chase will send a copy of the Global
Note by first class mail to the
Company together with a statement
setting forth the principal amount of
Notes Outstanding as of the related
Settlement Date after giving effect
to such transaction and all other
offers to purchase Notes of which the
Company has advised Chase but which
have not yet been settled.
K. If such Note was sold through the
Offering Agent, as agent, the
Offering Agent will confirm the
purchase of such Note to the investor
or other purchaser either by
transmitting to the Participant with
respect to such Note a confirmation
order through DTC's Participant
Terminal System or by mailing a
written confirmation to such investor
or other purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes accepted by
the Company, Settlement Procedures A
through K set forth above shall be
completed as soon as possible following
the trade 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 or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
C No later than the close
of business on the trade
date
D 9:00 a.m. on Settlement
Date
E 10:00 a.m. on Settlement
Date
F-G No later than 2:00 p.m.
on Settlement Date
H 4:00 p.m. on Settlement
Date
I-K 5:00 p.m. on Settlement
Date
D-23
Settlement Procedure H 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 Note issued in
book-entry form is rescheduled or
canceled, Chase will deliver to DTC,
through DTC's Participant Terminal
System, a cancellation message to such
effect by no later than 5:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If Chase fails to enter an SDFS deliver
order with respect to a Note issued in
book-entry form pursuant to Settlement
Procedure F, Chase may deliver to DTC,
through DTC's Participant Terminal
System, as soon as practicable a
withdrawal message instructing DTC to
debit such Note to the participant
account of Chase maintained at DTC. DTC
will process the withdrawal message,
provided that such participant account
contains a principal amount of the
Global Note representing such Note that
is at least equal to the principal
amount to be debited. If withdrawal
messages are processed with respect to
all the Notes represented by a Global
Note, the Trustee will mark such Global
Note "canceled", make appropriate
entries in its records and send
certification of cancellation of such
canceled Global Note to the Company. The
CUSIP number assigned to such Global
Note shall, in accordance with CUSIP
Service Bureau procedures, be canceled
and not immediately reassigned. If
withdrawal messages are processed with
respect to a portion of the Notes
represented by a Global Note, the
Trustee will exchange such Global Note
for two Global Notes, one of which shall
represent the Global Notes for which
withdrawal messages are processed and
shall be canceled immediately after
issuance and the other of which shall
represent the other Notes previously
represented by the surrendered Global
Note and shall bear the CUSIP number of
the surrendered Global Note.
In the case of any Note in book-entry
form sold through the Offering Agent, as
agent, if the purchase price for any
such Note is not timely paid to the
Participants with respect thereto by the
beneficial investor or other purchaser
thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such investor or other
purchaser), such Participants and, in
turn, the related Offering Agent may
enter SDFS
D-24
deliver orders through DTC's Participant
Terminal System reversing the orders
entered pursuant to Settlement
Procedures F and G, respectively.
Thereafter, the Trustee will deliver the
withdrawal message and take the related
actions described in the preceding
paragraph. If such failure shall have
occurred for any reason other than
default by the applicable Offering Agent
to perform its obligations hereunder or
under the Distribution Agreement, the
Company will reimburse such Offering
Agent on an equitable basis for its
reasonable loss of the use of funds
during the period when the funds were
credited to the account of the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Note
in book-entry form, DTC 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 a Note that was to have been
represented by a Global Note also
representing other Notes, the Trustee
will provide, in accordance with
Settlement Procedure D, for the
authentication and issuance of a Global
Note representing such remaining Notes
and will make appropriate entries in its
records.
D-25
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Unless otherwise provided in the applicable
Pricing Supplement, the Certificated Notes will
be issued in denominations of $25 or $1,000 and
integral multiples of such denominations in
excess thereof.
Payments of Principal,
Premium, if any,
and Interest: Upon presentment and delivery of the Certificated
Note, the Trustee upon receipt of immediately
available funds from the Company will pay the
principal of, premium, if any, and interest on,
each Certificated Note on the Maturity Date in
immediately available funds. All interest
payments on a Certificated Note, other than
interest due on the Maturity Date, will be made
by check mailed to the address of the person
entitled thereto as such address shall appear in
the Security Register at the applicable Regular
Record Date; provided, however, that Holders
shall be entitled to receive such interest
payments by wire transfer of immediately
available funds if appropriate wire transfer
instructions have been received in writing by the
Trustee not less than 15 calendar days prior to
the applicable Interest Payment Date.
The Trustee will provide monthly to the Company a
list of the principal, premium, if any, and
interest to be paid on Certificated Notes
maturing in the next succeeding month. The
Trustee will be responsible for withholding taxes
on interest paid as required by applicable law.
Certificated Notes presented to the Trustee on
the Maturity Date for payment will be canceled by
the Trustee. All canceled Certificated Notes held
by the Trustee shall be disposed of in accordance
with its customary procedures, and the Trustee
shall furnish to the Company a certificate with
respect to such disposition.
Settlement
Procedures: Settlement Procedures with regard to each
Certificated Note purchased by an Agent, as
principal, or through an Agent, as agent, shall
be as follows:
D-26
A. The Offering Agent will advise the Company
by telephone of the following Settlement
information with regard to each
Certificated Note:
1. Exact name in which the Certificated
Note(s) is to be registered (the
"Registered Owner").
2. Exact address or addresses of the
Registered Owner for delivery,
notices and payments of principal,
premium, if any, and interest.
3. Taxpayer identification number of the
Registered Owner.
4. Principal amount, Authorized
Denomination and Specified Currency.
5. Exchange Rate Agent, if any.
6. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment
Dates.
(iii) Whether such Note is
being issued with
Original Issue
Discount and, if so,
the terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Base Rate or Bases.
(iii) Initial Interest
Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest
Reset Date and
Interest Reset
Dates.
(vi) Interest Payment
Dates.
D-27
(vii) Index Maturity, if
any.
(viii) Maximum and/or
Minimum Interest
Rates, if any.
(ix) Day Count Convention.
(x) Calculation Agent.
7. Price to public of such Certificated
Note (or whether such Note is being
offered at varying prices relating to
prevailing market prices at time of
resale as determined by the Offering
Agent).
8. Trade Date.
9. Settlement Date (Original Issue
Date).
10. Stated Maturity Date.
11. Redemption provisions, if any.
12. Repayment provisions, if any.
13. Default Rate, if any.
14. Net proceeds to the Company.
15. The Offering Agent's discount or
commission.
16. Whether such Note is being sold to
the Offering Agent as principal or to
an investor or other purchaser
through the Offering Agent acting as
agent for the Company.
17. Such other information specified
with respect to such Note (whether by
Addendum or otherwise).
B. After receiving such settlement
information from the Offering Agent, the
Company will advise the Trustee of the
above settlement information by facsimile
transmission confirmed by telephone (and
promptly confirmed in writing as well).
The Company will cause the Trustee to
issue, authenticate and deliver the
Certificated Note.
D-28
C. The Trustee will complete the Certificated
Note in the form approved by the Company and
the Offering Agent, and will make three copies
thereof (herein called "Stub 1", "Stub 2" and
"Stub 3"):
1. Certificated Note with the Offering
Agent's confirmation, if traded on a
principal basis, or the Offering Agent's
customer confirmation, if traded on an
agency basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering Agent.
4. Stub 3 for the Company.
D. With respect to each trade, the Trustee will
deliver the Certificated Note and Stub 2
thereof to the Offering Agent at the following
applicable address: if to
Goldman, Sachs & Co. to:
85 Broad Street, 22/nd/ Floor
New York, New York 10004
ATTN: Registration Department
Lehman Brothers, to:
Lehman Brothers Inc.
745 7th Avenue
New York, New York 10019
Attn: Medium Term Note Desk
Telephone: (212) 526-9664
Facsimile: (212) 526-0943
Merrill Lynch, to:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch Money Markets Clearance
55 Water Street, Third Floor Plaza Level
DTC New York Window
New York, New York 10041
Attn: Morna Noel
Telephone: (212) 855-2403
Facsimile: (212) 855-2457
D-29
Morgan Stanley, to:
Bank of New York
Dealer Clearance Department
1 Wall Street, 3/rd/ Floor
Window 3B
New York, New York 10005
Attn: For the Account of
Morgan Stanley & Co. Incorporated
Salomon Smith Barney, to:
New York Window
The Depository Trust Company
Mezzanine Level, 3/rd/ Floor
For the Account of SSB
55 Water Street
New York, New York 10001
and the Trustee will keep Stub 1. The Offering
Agent will acknowledge receipt of the
Certificated Note through a broker's receipt
and will keep Stub 2. Delivery of the
Certificated Note will be made only against
such acknowledgment of receipt. Upon
determination that the Certificated Note has
been authorized, delivered and completed as
aforementioned, the Offering Agent will wire
the net proceeds of the Certificated Note
after deduction of its applicable commission
to the Company pursuant to standard wire
instructions given by the Company.
E. In the case of a Certificated Note sold
through the Offering Agent, as agent, the
Offering Agent will deliver such Certificated
Note (with the confirmation) to the purchaser
against payment in immediately available
funds.
F. The Trustee will send Stub 3 to the Company.
Settlement
Procedures
Timetable: For offers to purchase Certificated Notes accepted
by the Company, Settlement Procedures A through F
set forth above shall be completed as soon as
possible following the trade but not later than
the respective times (New York City time) set
forth below:
D-30
Settlement
Procedure Time
A 11:00 a.m. on the trade date or
within one hour following the trade
B 12:00 noon on the trade date or
within one hour following the trade
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the case of Certificated Notes sold through the
Offering Agent, as agent, if an investor or other
purchaser of a Certificated Note from the Company
shall either fail to accept delivery of or make
payment for such Certificated Note on the date
fixed for settlement, the Offering Agent will
forthwith notify the Trustee and the Company by
telephone, confirmed in writing, and return such
Certificated Note to the Trustee.
The Trustee, upon receipt of such Certificated
Note from the Offering Agent, will immediately
advise the Company and the Company will promptly
arrange to credit the account of the Offering
Agent in an amount of immediately available funds
equal to the amount previously paid to the Company
by such Offering Agent in settlement for such
Certificated Note. Such credits will be made on
the Settlement Date if possible, and in any event
not later than the Business Day following the
Settlement Date; provided that the Company has
received notice on the same day. If such failure
shall have occurred for any reason other than
failure by such Offering Agent to perform its
obligations hereunder or under the Distribution
Agreement, the Company will reimburse such
Offering Agent on an equitable basis for its
reasonable loss of the use of funds during the
period when the funds were credited to the account
of the Company. Immediately upon receipt of the
Certificated Note in respect of which the failure
occurred, the Trustee will cancel and dispose of
such Certificated Note in accordance with its
customary procedures, make appropriate entries in
its records to reflect the fact that such
Certificated Note was never issued, and
accordingly notify in writing the Company.
D-31