-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, O7rJijAXSITpVWzp8HzPrINTYaRktELddkFKaAVPivEUFpIfTqw6MfLqUucS2CfE SU6fZAXJHpM7s2C4lB3g9w== 0000950109-95-002330.txt : 19950616 0000950109-95-002330.hdr.sgml : 19950616 ACCESSION NUMBER: 0000950109-95-002330 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19950615 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRGINIA ELECTRIC & POWER CO CENTRAL INDEX KEY: 0000103682 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 540418825 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-60271 FILM NUMBER: 95547384 BUSINESS ADDRESS: STREET 1: ONE JAMES RIVER PLAZA CITY: RICHMOND STATE: VA ZIP: 23261 BUSINESS PHONE: 8047713000 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1995 FILE NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- VIRGINIA ELECTRIC AND POWER COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) VIRGINIA 54-0418825 (I.R.S. EMPLOYER IDENTIFICATION NO.) (STATE OF INCORPORATION) ---------------- ONE JAMES RIVER PLAZA, RICHMOND, VIRGINIA 23219-3932 (804) 771-3000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ---------------- J. KENNERLY DAVIS, JR., VICE PRESIDENT, TREASURER AND CORPORATE SECRETARY PHILIP W. NICHOLS, CASH MANAGEMENT ADMINISTRATOR VIRGINIA ELECTRIC AND POWER COMPANY ONE JAMES RIVER PLAZA, RICHMOND, VIRGINIA 23219-3932 (804) 771-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------- COPIES TO: JOHN J. BEARDSWORTH, JR. RIVERFRONT ROBERT L. BURRUS, JR. ONE JAMES CENTER PLAZA, EAST TOWER RICHMOND, VIRGINIA RICHMOND, VIRGINIA 23219-4030 23219-4074 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER EFFECTIVENESS. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] ---------------- CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM MAXIMUM TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF SECURITIES TO BE TO BE PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER UNIT(*) PRICE(*) FEE - ----------------------------------------------------------------------------------- Medium-Term Notes...... U.S.$200,000,000 100% U.S.$200,000,000 $68,966
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (*) Exclusive of accrued interest and estimated solely for the purpose of calculating the registration fee. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS VIRGINIA ELECTRIC AND POWER COMPANY U.S. $200,000,000 MEDIUM-TERM NOTES, SERIES F DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE --------------- Virginia Electric and Power Company (the Company) expects to offer from time to time up to U.S. $200,000,000 aggregate principal amount, or its equivalent in foreign currencies or currency units (based upon the applicable exchange rate at the time of offering), of its unsecured Medium-Term Notes, Series F (the Notes) having maturities from 9 months to 30 years from the date of issue. The Notes may be denominated in U.S. dollars or in a foreign currency or currency unit (a Specified Currency) that the Company designates at the time of offering. The Specified Currency for each Note will be set forth in a supplement to this Prospectus (the Pricing Supplement) for such Note. Any terms relating to Notes being denominated in a Specified Currency other than U.S. dollars will also be set forth in such Pricing Supplement. The Interest Rate on each Note will be either a Fixed Rate established by the Company at the date of issue of such Note (a Fixed Rate Note), or a Floating Rate as set forth therein and specified in the applicable Pricing Supplement (a Floating Rate Note). The Company reserves the right to change at any time the interest rates at which, Specified Currencies in which, and other terms and conditions under which, Notes are offered for sale. No Note will be subject to any terms for the conversion thereof into any other security, any sinking fund, or any other rights except as expressly described in this Prospectus or in the Pricing Supplement pertaining to said Note and as provided for in the Note itself or the Indenture (as hereinafter defined) under which the Note is issued. Purchasers are required to pay for each Note in the Specified Currency for that Note, unless otherwise provided in the Pricing Supplement. The Notes will be issued in fully registered certificated or book-entry form and, unless otherwise specified in the applicable Pricing Supplement, in minimum denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof or, in the case of any Note denominated in a Specified Currency other than U.S. dollars, in minimum denominations of the equivalent of U.S. $1,000 in the Specified Currency (rounded down to an integral multiple of 1,000 units of such Specified Currency), and in any amount in excess thereof that is an integral multiple of 1,000 units of the Specified Currency, as the case may be. Beneficial interests in Notes issued in book-entry form will be shown on, and transfers thereof will be effected only through, records maintained by The Depository Trust Company (the Depositary) and its participants. Owners of beneficial interests in Notes issued in book-entry form will be entitled to physical delivery of Notes in certificated form equal in principal amount to their respective beneficial interests only under the limited circumstances described herein. See Description of the Notes--Book-Entry Notes. Notes denominated in U.S. dollars may be subject to redemption, at the option of the Company, as described under Description of the Notes. Interest on Fixed Rate Notes will accrue from their dates of issue and will be payable semiannually on the dates set forth in the applicable Pricing Supplement and at maturity or, if applicable, upon earlier redemption. Interest on Floating Rate Notes will accrue from their dates of issue and will be payable on the dates set forth herein and in the applicable Pricing Supplement, and at maturity or, if applicable, upon earlier redemption. FOR A STATEMENT OF THE RISK FACTORS ASSOCIATED WITH THE OWNERSHIP OF NOTES DENOMINATED IN NON-U.S. CURRENCIES, SEE IMPORTANT INFORMATION AND FOREIGN CURRENCY RISKS. --------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PRICE TO AGENTS' DISCOUNT AND PROCEEDS TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(2)(3) - -------------------------------------------------------------------------------------------------- Per Note............... 100% .125%-.750% 99.875%-99.250% - -------------------------------------------------------------------------------------------------- Total.................. U.S. $200,000,000 U.S. $250,000-$1,500,000 U.S. $199,750,000-$198,500,000
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) The Price to Public will not exceed, in the aggregate, U.S. $200,000,000 or its equivalent in foreign currencies or currency units based upon the applicable exchange rate at the time of offering. Notes will be issued at 100% of the stated principal amount thereof, unless otherwise provided herein or in the Pricing Supplement relating thereto. (2) The Company will pay Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated (the Agents, and each an Agent), respectively, a commission in U.S. dollars of from .125% to .750% of the principal amount of each Note sold through them, depending upon the Specified Currency and maturity of the Note sold, and may sell Notes to the Agents, as principal, at a discount equal to such commission for resale to investors and other purchasers at prevailing market prices at the time of resale as determined by such Agent or, if so agreed, at a fixed public offering price. The Company has agreed to indemnify the Agents against certain civil liabilities, including liabilities under the Securities Act of 1933. In the case of Notes sold directly to investors by the Company, no discount will be allowed or commission paid. (3) Before deduction of expenses payable by the Company estimated at U.S. $300,000. ------------------- Offers to purchase the Notes will be solicited from time to time by the Agents, who have agreed to use their best efforts to solicit offers to purchase the Notes. The Agents may also purchase Notes on their own behalf. The Company reserves the right to sell Notes directly to purchasers on its own behalf. There can be no assurance that any of the Notes offered by this Prospectus will be sold or that there will be a secondary market therefor. The Company reserves the right to withdraw, cancel or modify the offering of the Notes or cease the offering of Notes in any particular Specified Currency, without notice. The Company or the Agents may reject, in whole or in part, any order for a purchase of Notes. No termination date for the offering of Notes has been established. See Plan of Distribution. ------------------- MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. MORGAN STANLEY & CO. INCORPORATED --------------- The date of this Prospectus is June , 1995 AVAILABLE INFORMATION THE COMPANY IS SUBJECT TO THE INFORMATION REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934 (THE 1934 ACT) AND, IN ACCORDANCE THEREWITH, FILES REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE COMMISSION). REPORTS AND OTHER INFORMATION FILED BY THE COMPANY CAN BE INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE COMMISSION AT 450 FIFTH STREET, N.W., ROOM 1024, WASHINGTON, D.C. 20549-1004, AND AT THE FOLLOWING REGIONAL OFFICES: CHICAGO REGIONAL OFFICE, EVERETT NORTHWESTERN ATRIUM CENTER, 500 WEST MADISON STREET, SUITE 1400, CHICAGO, ILLINOIS 60661; AND NEW YORK REGIONAL OFFICE, 7 WORLD TRADE CENTER, 13TH FLOOR, NEW YORK, NEW YORK 10048. COPIES OF SUCH MATERIAL ALSO CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549-1004, AT PRESCRIBED RATES. CERTAIN SECURITIES OF THE COMPANY ARE LISTED ON THE NEW YORK STOCK EXCHANGE. REPORTS AND OTHER INFORMATION CONCERNING THE COMPANY CAN BE INSPECTED AT THE OFFICE OF THE NEW YORK STOCK EXCHANGE, ROOM 401, 20 BROAD STREET, NEW YORK, NEW YORK 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission pursuant to the 1934 Act, are hereby incorporated in this Prospectus by reference: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. 3. The Company's Current Reports on Form 8-K, dated February 21, 1995, March 22, 1995 and April 17, 1995. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Prospectus and prior to the termination of the offering of the Notes shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which is deemed to be incorporated by reference herein or in a Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company hereby undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of the Prospectus has been delivered, upon request of such person, a copy of any or all of the documents referred to above that have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents. Requests for such copies should be directed to Corporate Secretary, Virginia Electric and Power Company, One James River Plaza, P.O. Box 26666, Richmond, Virginia 23261-6666, telephone (804) 771-3000. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IMPORTANT INFORMATION THE INFORMATION SET FORTH IN THIS PROSPECTUS AND ANY SUPPLEMENT HERETO IS DIRECTED TO PROSPECTIVE PURCHASERS WHO ARE UNITED STATES RESIDENTS, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS WHO ARE RESIDENTS OF COUNTRIES OTHER THAN THE UNITED STATES WITH RESPECT TO ANY MATTERS THAT MAY AFFECT THE PURCHASE, HOLDING OR RECEIPT OF PAYMENTS OF PRINCIPAL OF (AND PREMIUM, IF ANY) AND INTEREST ON THE NOTES. SUCH PERSONS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISERS WITH REGARD TO SUCH MATTERS. 2 Unless otherwise specified in the applicable Pricing Supplement, purchasers are required to pay for each Note in the Specified Currency for such Note. Payments of principal of (and premium, if any) and interest on such Note will be made in that Specified Currency or, at the election and at the expense of the holder of such Note, will be converted to and made in U.S. dollars by the Company through Chemical Bank, in its capacity as exchange rate agent or such other person as appointed by the Company (the Exchange Rate Agent). At the present time there are limited facilities in the United States for the conversion of U.S. dollars into the Specified Currencies and vice versa, and banks do not offer non-U.S. dollar checking or savings account facilities in the United States. Accordingly, unless otherwise specified in the applicable Pricing Supplement or unless alternative arrangements are made with the Exchange Rate Agent, payments of principal and interest made in a Specified Currency other than U.S. dollars will be made to an account at a bank outside of the United States. See Description of the Notes. In the event that the Specified Currency (other than U.S. dollars) in which a payment of principal of or interest on a Note is payable is not available to the Company due to the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligation to the holder of such Note by making such payment in U.S. dollars on the basis of the applicable Exchange Rate (defined as the noon buying rate in New York City for cable transfers for such Specified Currency, as certified for customs purposes by the Federal Reserve Bank of New York or, in the case of European Currency Units (ECU's), the rate of exchange determined by the Commission of the European Communities or any successor thereto, as published in the Official Journal of the European Communities or any successor publication) as of the most recent date on which an Exchange Rate was available. See Foreign Currency Risks. References to "U.S. dollars", "U.S. $", "dollars" or "$" in this Prospectus or any Supplement hereto are to the legal currency of the United States of America. As used herein, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or executive order to close in New York City provided, however, that, with respect to Foreign Currency Notes the payment of which is to be made in a Specified Currency other than U.S. dollars, such day is also not a day on which banking institutions are authorized or required by law or executive order to close in the Principal Financial Center (as defined below) of the country of such Specified Currency (or, in the case of the ECU, is not a day designated as an ECU Non-Settlement Day by the ECU Banking Association or otherwise generally regarded in the ECU interbank market as a day on which payments in ECUs shall not be made); provided, further, that, with respect to Notes as to which LIBOR is an applicable Interest Rate Basis, such day is also a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined below) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association or otherwise generally regarded in the ECU interbank market as a day on which payments in ECUs shall not be made. "Principal Financial Center" will generally be the capital city of the country of the specified Index Currency or the Specified Currency, as the case may be, except that with respect to United States dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECUs, the Principal Financial Center shall be New York City, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. THE PROSPECTUS The Prospectus to be delivered in connection with the sale of any Note will consist of the following documents, which, unless the context otherwise requires, are collectively referred to herein as the "Prospectus"; (1) this Prospectus for the Medium-Term Notes, Series F, dated June , 1995; and (2) the Pricing Supplement for the Note(s) being sold, which will state the principal amount, the Specified Currency, interest rate, interest payment dates, issue date, redemption terms, if any, and maturity date of the Note(s) to which it pertains and, if any such Note is denominated in a Specified Currency other than U.S. dollars, will include information relative to the Specified Currency. 3 THE COMPANY The Company was incorporated in Virginia in 1909, and has its principal office at One James River Plaza, Richmond, Virginia 23219-3932, telephone (804) 771-3000. The Company is a wholly-owned subsidiary of Dominion Resources, Inc. (Dominion Resources). The Company is a regulated public utility engaged in the generation, purchase, transmission, distribution and sale of electric energy within a 30,000 square mile service area in Virginia and in northeastern North Carolina. It transacts business under the name Virginia Power in Virginia and under the name North Carolina Power in North Carolina. Its Virginia service area comprises about 65% of Virginia's total land area but accounts for over 80% of its population. USE OF PROCEEDS The proceeds from the sale of the Notes will be added to the general funds of the Company and will be used to meet a portion of its capital requirements. Such requirements consist principally of construction, upgrading and maintenance expenditures and refunding of outstanding securities. For a more detailed discussion of the Company's capital requirements and its financing program, see Business--Capital Requirements and Financing Program and Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's most recent Annual Report on Form 10-K (incorporated herein by reference). RATIO OF EARNINGS TO FIXED CHARGES In the ratio of earnings to fixed charges, earnings are determined by adding taxes on income and fixed charges to Net Income. Fixed charges consist of interest charges (without reduction for Allowance for Funds Used During Construction) on long-term and short-term debt, and such portion of rentals as is representative of the interest factor. These earnings are then divided by total fixed charges.
12 MONTHS ENDED YEAR MARCH 31, ------------------------ 1995 1994 1993 1992 1991 1990 --------- ---- ---- ---- ---- ---- Ratio of earnings to fixed charges........... 3.08 3.19 3.36 3.02 2.93 2.69
DESCRIPTION OF THE NOTES The Notes will be issued under an Indenture, dated as of April 1, 1988, as supplemented by a First Supplemental Indenture, dated August 1, 1989, (the Indenture) between the Company and Chemical Bank, a New York banking corporation, as trustee (the Trustee). The statements under this heading do not purport to be complete and are subject to the detailed provisions of the Indenture. Wherever particular provisions of the Indenture are referred to in the following discussion, such provisions are incorporated by reference as a part of the statements made herein, and the statements herein are qualified in their entirety by such reference. Except as otherwise provided, capitalized terms used in this Prospectus shall have the meanings ascribed thereto in the Indenture. GENERAL The terms and conditions set forth hereunder will apply to each Note unless otherwise specified herein or in the applicable Pricing Supplement and in such Note. The Notes will be issued in fully registered certificated or book-entry form only and will constitute a series of Securities in the maximum aggregate principal amount of U.S. $200,000,000, or its equivalent in foreign currencies or currency units, issued under the Indenture. Notes issued in certificated form will be represented by certificates delivered to the purchasers designated by the Agent. Notes issued in book-entry form will be represented by certificates deposited with, or on behalf of, the Depositary and registered in the name of the Depositary's nominee (Book-Entry Notes). 4 The Notes will be offered on a continuing basis and each Note will mature from 9 months to 30 years from its date of issue, as selected by the purchaser and agreed to by the Company prior to the issuance thereof. Interest rates offered by the Company with respect to the Notes may differ depending upon, among other things, the aggregate principal amount of the Notes purchased in any single transaction. The Pricing Supplement for each Note will state the following: (1) the principal amount of such Note; (2) the Specified Currency in which such Note is denominated, including composite currencies such as the ECU; (3) the date on which such Note will be issued; (4) the Stated Maturity of such note; (5) the Fixed Rate if a Fixed Rate Note or, if a Floating Rate Note, the Base Rate at which such Note will bear interest (including the Spread and/or Spread Multiplier (each as defined below) applicable thereto and any Minimum and/or Maximum Interest Rates (each as defined below) applicable thereto); (6) the specified Interest Payment Date (as defined below); (7) the redemption terms, if any, of such Note; and (8) additional terms (if any) applicable to such Note. If the Note is denominated in a Specified Currency other than U.S. dollars, the Pricing Supplement will include information relative to the Specified Currency. PERSONS CONSIDERING PURCHASING NOTES DENOMINATED IN SPECIFIED CURRENCIES OTHER THAN U.S. DOLLARS ARE ADVISED TO CONSULT WITH THEIR INVESTMENT ADVISERS REGARDING EXCHANGE RATES AND CURRENCY CONTROLS IN EFFECT AT THE TIME NOTES ARE PURCHASED AND REGARDING THE RISKS OF NON-U.S. CURRENCY DENOMINATED INVESTMENTS. See Foreign Currency Risks herein. INTEREST General Unless otherwise specified in the applicable Pricing Supplement, each Note will bear interest from its date of issue at the rate per annum, in the case of a Fixed Rate Note, or pursuant to the interest rate formula, in the case of a Floating Rate Note, in each case as specified in the applicable Pricing Supplement, until the principal thereof is paid or duly made available for payment. Interest payments in respect of the Notes will equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid with respect to the applicable Note) to but excluding the related Interest Payment Date or the maturity date, or date of redemption as the case may be. Interest will be payable in arrears on each Interest Payment Date specified in the applicable Pricing Supplement on which an installment of interest is due and payable and on the maturity date or date of redemption. Unless otherwise specified in the applicable Pricing Supplement, the first payment of interest on any Note originally issued between a Record Date (as defined below) and the related Interest Payment Date or on an Interest Payment Date will be made on the Interest Payment Date immediately following the next succeeding Record Date to the Holder on such next succeeding Record Date. Unless otherwise specified in the applicable Pricing Supplement, a "Record Date" shall be the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date. Fixed Rate Notes Unless otherwise specified in the applicable Pricing Supplement, the "Interest Payment Dates" for the Fixed Rate Notes will be January 1 and July 1 of each year and the maturity date or date of redemption. Unless otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date or the maturity date (or date of redemption) of a Fixed Rate Note falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest will accrue on such payment for the period from and after such Interest Payment Date or the maturity date (or date of redemption), as the case may be, to the date of such payment on the next succeeding Business Day. 5 Floating Rate Notes Each Floating Rate Note will bear interest from the date of issuance until the principal thereof is paid or made available for payment at a rate determined by reference to an interest rate basis or formula (the Base Rate), which may be adjusted by a Spread and/or Spread Multiplier (each as defined below). The applicable Pricing Supplement will designate one or more of the following Base Rates as applicable to each Floating Rate Note: (a) the CD Rate (a CD Rate Note), (b) the Commercial Paper Rate (a Commercial Paper Rate Note), (c) the Federal Funds Rate (a Federal Funds Rate Note), (d) LIBOR (a LIBOR Note), (e) the Prime Rate (a Prime Rate Note), (f) the Treasury Rate (a Treasury Rate Note), (g) the CMT Rate (a CMT Rate Note) or (h) such other Base Rate or interest rate formula as is set forth in such Pricing Supplement and in such Floating Rate Note. The Index Maturity for any Floating Rate Note is the period of maturity of the instrument or obligation from which the Base Rate is calculated and will be specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the interest rate on each Floating Rate Note will be calculated by reference to the specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one one-hundredth of a percentage point) specified in the applicable Pricing Supplement to be added to or subtracted from the Base Rate for such Floating Rate Note, and the "Spread Multiplier" is the percentage specified in the applicable Pricing Supplement to be applied to the Base Rate for such Floating Rate Note. As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following: (i) a maximum limitation, or ceiling, on the rate of interest which may accrue during any interest period (Maximum Interest Rate); and (ii) a minimum limitation, or floor, on the rate of interest which may accrue during any interest period (Minimum Interest Rate). In addition to any Maximum Interest Rate that may be applicable to any Floating Rate Note pursuant to the above provisions, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate from time to time permitted by New York law, as the same may be modified by United States law of general application. Unless otherwise specified in the applicable Pricing Supplement, the rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the Interest Reset Period for such Note, and the first day of each Interest Reset Period being an Interest Reset Date), as specified in the applicable Pricing Supplement. Unless otherwise specified in the Pricing Supplement, the Interest Reset Date will be, in the case of Floating Rate Notes which reset daily, each Business Day, in the case of Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each week, except as provided below; in the case of Floating Rate Notes which reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes which reset quarterly, the third Wednesday of March, June, September and December, in the case of Floating Rate Notes which reset semiannually, the third Wednesday of two months of each year, as specified in the applicable Pricing Supplement; and in the case of Floating Rate Notes which reset annually, the third Wednesday of one month of each year, as specified in the applicable Pricing Supplement; provided, however, that the interest rate in effect from the date of issue to the first Interest Reset Date with respect to a Floating Rate Note will be the initial interest rate set forth in the applicable Pricing Supplement (the Initial Interest Rate). If any Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Except as provided below, unless otherwise specified in the applicable Pricing Supplement, interest on Floating Rate Notes will be payable: (i) in the case of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date, on the third Wednesday of each month or on the third Wednesday of March, June, September and December, as specified in the applicable Pricing Supplement; (ii) in the case of Floating Rate Notes with a quarterly Interest Reset Date, on the third Wednesday of March, June, September and December; (iii) in the case of Floating Rate Notes with a semiannual Interest Reset Date, on the third 6 Wednesday of the two months specified in the applicable Pricing Supplement; and (iv) in the case of Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday of the month specified in the applicable Pricing Supplement. If any Interest Payment Date for any Floating Rate Note would fall on a day that is not a Business Day with respect to such Floating Rate Note, such Interest Payment Date will be postponed to the following day that is a Business Day with respect to such Floating Rate Note, except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day with respect to such LIBOR Note. If the maturity date or any earlier redemption date of a Floating Rate Note falls on a day that is not a Business Day, the payment of principal, premium, if any, and interest will be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after such maturity or redemption date, as the case may be. With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount of such Floating Rate Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which interest is being paid. Unless otherwise specified in the applicable Pricing Supplement, the interest factor for each such day is computed by dividing the interest rate applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the actual number of days in the year, in the case of Treasury Rate Notes and CMT Rate Notes. All percentages used in or resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one- millionths of a percentage point rounded upward, and all dollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent, with one-half cent rounded upward. The interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. The interest rate applicable to any other day is the interest rate from the immediately preceding Interest Reset Date (or, if none, the Initial Interest Rate). Unless otherwise stated in the applicable Pricing Supplement, the calculation agent (the Calculation Agent) with respect to any issue of Floating Rate Notes shall be Chemical Bank. Upon the request of the holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate that will become effective on the next Interest Reset Date with respect to such Floating Rate Note. The "Interest Determination Date" pertaining to an Interest Reset Date for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate Notes and Prime Rate Notes will be the second Business Day next preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note will be the second London Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, but such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction falls on a day that is an Interest Reset Date, such Interest Reset Date will be the next following Business Day. Unless otherwise specified in the applicable Pricing Supplement, the "Calculation Date," where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date, or, if such day is not a Business Day, the next succeeding Business Day, or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity Date, as the case may be. 7 Interest rates will be determined by the Calculation Agent as follows: CD Rate Notes CD Rate Notes will bear interest at the interest rate (calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the CD Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "CD Rate" means, with respect to any Interest Determination Date, the rate on such date for negotiable certificates of deposit having the Index Maturity designated in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication of the Board of Governors of the Federal Reserve System (H.15(519)) under the heading "CDs (Secondary Market)," or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate will be the rate on such Interest Determination Date for negotiable certificates of deposit of the Index Maturity designated in the applicable Pricing Supplement as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" (the Composite Quotations) under the heading "Certificates of Deposit." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate on such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such Interest Determination Date for certificates of deposit in an amount that is representative for a single transaction at that time with a remaining maturity closest to the Index Maturity designated in the Pricing Supplement of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in New York City selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the CD Rate in effect for the applicable period will be the same as the CD Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the CD Rate Notes for which such CD Rate is being determined shall be the Initial Interest Rate). Commercial Paper Rate Notes Commercial Paper Rate Notes will bear interest at the interest rate (calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Commercial Paper Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "Commercial Paper Rate" means, with respect to any Interest Determination Date, the Money Market Yield (as defined below) of the rate on such date for commercial paper having the Index Maturity specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519), under the heading "Commercial Paper." In the event that such rate is not published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet available in either H.15(519) or Composite Quotations, then the Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on such Interest Determination Date of three leading dealers of commercial paper in New York City selected by the Calculation Agent for commercial paper of the specified Index Maturity, placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally 8 recognized statistical rating organization; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the Commercial Paper Rate in effect for the applicable period will be the same as the Commercial Paper Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Commercial Paper Rate Notes for which such Commercial Paper Rate is being determined shall be the Initial Interest Rate). "Money Market Yield" shall be a yield calculated in accordance with the following formula: D X 360 ------------- Money Market Yield = X 100 360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days for which interest is being calculated. Federal Funds Rate Notes Federal Funds Rate Notes will bear interest at the interest rate (calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Federal Funds Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Federal Funds Rate" means, with respect to any Interest Determination Date, the rate on such date for Federal funds as published in H.15(519) under the heading "Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate will be the rate on such Interest Determination Date as published in the Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight Federal funds, as of 9:00 A.M., New York City time, on such Interest Determination Date, arranged by three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the Federal Funds Rate in effect for the applicable period will be the same as the Federal Funds Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Federal Funds Rate Notes for which such Federal Funds Rate is being determined shall be the Initial Interest Rate). LIBOR Notes LIBOR Notes will bear interest at the interest rate (calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the LIBOR Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for each Interest Determination Date will be determined by the Calculation Agent as follows: (i) As of the Interest Determination Date, LIBOR will be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity 9 designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such Interest Determination Date, that appear on the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement, the rate for deposits in the Index Currency having the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such Interest Determination Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest Determination Date. If fewer than two offered rates appear (if "LIBOR Reuters" is specified in the applicable Pricing Supplement) (or no rate appears, if as aforesaid, only a single rate is required) or no rate appears (if "LIBOR Telerate" is specified in the applicable Pricing Supplement), LIBOR in respect of the related Interest Determination Date will be determined as if the parties had specified the rate described in clause (ii) below. (ii) With respect to an Interest Determination Date on which fewer than two offered rates appear (if "LIBOR Reuters" is specified in the applicable Pricing Supplement) (or on which no rate appears, if as aforesaid, only a single rate is required) or no rate appears (if "LIBOR Telerate" is specified in the applicable Pricing Supplement), the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such Interest Determination Date and in a principal amount of not less than $1,000,000 (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M. (or such other time specified in the applicable Pricing Supplement), in the applicable Principal Financial Center for the country of the Index Currency on such Interest Determination Date, by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated in the applicable Pricing Supplement and in a principal amount of not less than $1,000,000 commencing on the second London Business Day immediately following such Interest Determination Date (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR in effect for the applicable period will be the same as LIBOR for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the LIBOR Notes for which such LIBOR is being determined shall be the Initial Interest Rate). "Index Currency" means the currency (including composite currencies) specified in the applicable Pricing Supplement as the currency for which LIBOR shall be calculated. If no such currency is specified in the applicable Pricing Supplement, the Index Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in the applicable Pricing Supplement, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is designated in the applicable Pricing Supplement, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the applicable Index Currency will be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had been specified. 10 Prime Rate Notes Prime Rate Notes will bear interest at the interest rate (calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Prime Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate" means, with respect to any Interest Determination Date, the rate set forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Prime Rate for such Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Interest Determination Date as quoted on the Reuters Screen NYMF Page on such Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen NYMF Page for such Interest Determination Date, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by at least two of the three major money center banks in New York City selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean on the basis of the prime rates in New York City by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, in each case having total equity capital of at least U.S. $500 million and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to quote such rate or rates; provided, however, that if the banks or trust companies selected as aforesaid by the Calculation Agent are not quoting as set forth above, the "Prime Rate" in effect for the applicable period will be the same as the Prime Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Prime Rate Notes for which such Prime Rate is being determined shall be the Initial Rate). "Reuters Screen NYMF Page" means the display designated as Page "NYMF" on the Reuters Monitor Money Rates Services (or such other page as may replace the NYMF Page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). Treasury Rate Notes Treasury Rate Notes will bear interest at the interest rate (calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the Treasury Rate Notes and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Treasury Rate" means, with respect to any Interest Determination Date, the rate for the auction held on such date of direct obligations of the United States (Treasury Bills) having the Index Maturity designated in the applicable Pricing Supplement, as published in H.15(519) under the heading "Treasury Bills auction average (investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the auction average rate on such Interest Determination Date (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having the Index Maturity designated in the applicable Pricing Supplement are not published or reported as provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held on such Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) calculated using the arithmetic mean of the 11 secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity designated in the applicable Pricing Supplement; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, the Treasury Rate for such Interest Reset Date will be the same as the Treasury Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Treasury Rate Notes for which the Treasury Rate is being determined shall be the Initial Interest Rate). CMT Rate Notes CMT Rate Notes will bear interest at the interest rate (calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in the CMT Rate Notes and in the applicable Pricing Supplement. Unless otherwise indicated in an applicable Pricing Supplement, "CMT Rate" means, with respect to any Interest Determination Date, the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption ". . .Treasury Constant Maturities. . .Federal Reserve Board Release H.15. . .Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, such Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week or the month, as applicable, ended immediately preceding the week in which the related Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or, if not published by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for the Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a Reference Dealer) in New York City (which may include the Agents or their affiliates) selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent, after consultation with the Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States (Treasury notes) with an original maturity of approximately the Designated CMT Maturity Index and remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury notes quotations, the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date of three Reference Dealers in New York City (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of 12 at least U.S. $100,000,000. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate for such Interest Reset Date will be the same as the CMT Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the CMT Rate Notes for which the CMT Rate is being determined shall be the Initial Interest Rate). If two Treasury notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated in an applicable Pricing Supplement (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" shall be the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in an applicable Pricing Supplement with respect to which the CMT Rate will be calculated. If no such maturity is specified in the applicable Pricing Supplement, the Designated CMT Maturity Index shall be two years. PURCHASE PRICE; REGISTERED FORM; MINIMUM DENOMINATION Each Note will be issued for a purchase price equal to 100% of the principal amount thereof (unless otherwise provided in the applicable Pricing Supplement) in fully registered certificated or book-entry form. Unless otherwise specified in the applicable Pricing Supplement, each Note will be issued in a minimum denomination of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof or, in the case of a Note denominated in a Specified Currency other than U.S. dollars, a minimum denomination of the equivalent of U.S. $1,000 in said Specified Currency, as determined by application of the Exchange Rate on the Business Day immediately preceding the trade date for such Notes, rounded down to an integral multiple of 1,000 units of such Specified Currency, and in any amount in excess thereof that is an integral multiple of 1,000 units of such Specified Currency. The Pricing Supplement with respect to each Note being offered will set forth the Stated Maturity thereof and the interest rate thereon. REDEMPTION OR CONVERSION No Note will be subject to conversion, amortization, or any sinking fund, unless otherwise provided in the Pricing Supplement therefor. The Notes will be subject to redemption by the Company on and after their respective Redemption Dates, if any. Redemption Dates and the applicable Redemption Prices, if any, will be fixed at the time of sale and set forth in the applicable Pricing Supplement and on the applicable Note. If no Redemption Date or Redemption Price is indicated with respect to a Note, such Note will not be redeemable prior to Stated Maturity. On and after the Redemption Date, the applicable Note will be redeemable in whole or in part (provided that any remaining principal amount of such Note shall be equal to an authorized denomination thereof) at the option of the Company at the applicable Redemption Price, together with interest thereon payable to the date of redemption, on notice given not more than 60 nor less than 30 days prior to the date of redemption. Notwithstanding the foregoing, if a date prior to which the Company may not redeem the Note as a part of, or in anticipation of, a refunding operation (Limitation Date) is specified in the applicable Pricing Supplement, the Company may not redeem the Note prior to the Limitation Date as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of monies borrowed having an interest cost to the Company of less than the rate (Refunding Rate) specified in such Pricing Supplement. 13 PRIORITY All of the Notes will be unsecured and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. Substantially all of the Company's assets are subject to a first and prior lien in favor of holders of its First and Refunding Mortgage Bonds (the Bonds), of which approximately $2.9 billion aggregate principal amount are outstanding as of the date hereof. Additional Bonds of any series may be issued from time to time without limit in aggregate principal amount, but not in excess of the amount authorized by the Company's stockholder (presently $5 billion), subject to certain financial tests. Such tests presently would permit the issuance of approximately $.8 billion principal amount of Bonds in addition to those outstanding, for an aggregate principal amount of approximately $3.7 billion. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST Payments of principal of (and premium, if any) and interest on all Notes will be made by the Company to the registered owners of such Notes, which in the case of Book-Entry Notes is the Depositary or its nominee. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Book-Entry Note, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary, upon receipt of any payment of principal of (and premium, if any) or interest in respect of a Book-Entry Note, will credit immediately the accounts of the related participants with payment in amounts proportionate to their respective holdings in principal amount of beneficial interest in such Book-Entry Note as shown on the records of the Depositary. The Company also expects that payments by participants to owners of beneficial interests in a Book-Entry Note will be governed by standing customer instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name" and will be the responsibility of such participants. Payments of principal of (and premium, if any) and interest on all Notes will be made in the applicable Specified Currency; provided, however, that Holders of Notes denominated in a Specified Currency other than U.S. dollars may, by following the procedures described in the next paragraph, elect to have principal and interest payments converted into U.S. dollars. Payments of principal of and interest on Notes made in a Specified Currency other than U.S. dollars will be made by wire transfer to an account designated by the Holder at a bank outside of the United States. Payments of principal of (and premium, if any) and interest on Notes paid in U.S. dollars and issued in certificated form will be made by wire transfer to an account designated by the Holder or, in the absence of such designation, by check mailed to the address of the Holder as it appears on the Security Register maintained by the Trustee acting in its capacity as Security Registrar for the Notes. The Holder shall make such designation by filing the appropriate information with the Trustee at its Corporate Trust Office in New York City on or prior to the Record Date for an Interest Payment Date or at least 16 days prior to Stated Maturity (or date of redemption), or with respect to Notes denominated in a currency other than U.S. dollars, in connection with any transfer after such 16th day. Until such Note is transferred or until the Trustee receives notice to the contrary, the Trustee will make such payment and all succeeding payments to such Holders of Notes by wire transfer to the designated account. Payments of interest with respect to Notes will be made to the Holder appearing on the Security Register on the applicable Record Date (as defined below) or, in the case of interest payable at Stated Maturity or earlier redemption, to the person presenting the Note for payment of principal (and premium, if any). The Holder of a Note denominated in a Specified Currency other than U.S. dollars may elect to receive payment of the principal of and interest on the Note in U.S. dollars by transmitting a written request for such payment to the Trustee at its Corporate Trust Office in New York City on or prior to the Record Date or at least 16 days prior to Stated Maturity (or date of redemption), as the case may be. Such request may be in writing (mailed or hand delivered) or by cable, telex or other form of facsimile transmission. The Holder of a Note denominated in a Specified Currency other than U.S. dollars may elect to receive payment in U.S. dollars for all principal and interest payments and need not file a separate election for each payment. Such election will remain in effect until such Note is transferred or until such election is changed by written notice 14 to the Trustee, but written notice of any such change must be received by the Trustee on or prior to the Record Date or at least 16 days prior to the Stated Maturity (or date of redemption), as the case may be. Holders of Notes denominated in a Specified Currency other than U.S. dollars whose Notes are to be held in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in U.S. dollars may be made. The U.S. dollar amount to be received by a Holder of a Note denominated in a Specified Currency other than U.S. dollars who elects to receive one or more payments of principal and interest in U.S. dollars will be based on the highest bid quotation in New York City received by the Exchange Rate Agent as of 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holders of Notes electing to receive U.S. dollar payments and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs in respect of any such payment will be borne by the Holder of the Note to which the payment relates by deduction from such payment. The "Record Date" with respect to any Interest Payment Date shall be the fifteenth day of the month preceding such Interest Payment Date, whether or not such day is a Business Day. Notwithstanding the foregoing, in the case of a Note issued between a Record Date and the Interest Payment Date relating to such Record Date, interest for the period beginning on the date of issue and ending on such Interest Payment Date will be paid to the person to whom such Note shall have been originally issued. Payments of the principal of (and premium, if any) and interest on a Note at Stated Maturity, or earlier redemption will be made in immediately available funds (at a bank outside the United States, in the case of payments made in a Specified Currency other than U.S. dollars) in the Specified Currency, upon surrender of the Note to the Trustee. See Important Information and Foreign Currency Risks. In order for a Holder of a Note who has elected to receive payments of interest and principal in a Specified Currency other than U.S. dollars to receive such payments by wire transfer, such Holder must designate an appropriate account with a bank located in the country of such Specified Currency. Such designation shall be made by filing the appropriate information with the Trustee at its Corporate Trust Office in New York City on or prior to the Record Date for an Interest Payment Date or at least 16 days prior to Stated Maturity (or date of redemption) or in connection with any transfer after such 16th day. Until such Note is transferred or until the Trustee receives notice to the contrary, the Trustee will make such payments to such Holder by wire transfer to the designated account. If a payment cannot be made by wire transfer because the required information has not been received by the Trustee on or before the requisite date, a notice will be mailed to the Holder of such a Note at its registered address requesting such information, and no such payment shall be made until such designation is made. The Company will pay any administrative costs imposed by banks in connection with making wire transfers of payments, but any tax, assessment, governmental or other charges imposed upon such payments will be borne by the Holder of the Note in respect of which the payment is made and deducted from said payment. The Trustee maintains in the Borough of Manhattan, New York City, an office where Notes may be presented for payment and may be transferred or exchanged. Principal (and premium, if any) and interest at the Stated Maturity or upon earlier redemption will be payable, and Notes will be transferable, at the Corporate Trust Office of the Trustees, which presently is located at 450 W. 33rd Street, New York, New York 10001. UNAVAILABILITY OF PAYMENT CURRENCY If the principal of, or interest on, any Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Company for making payments thereof on the date such payments are due, because of the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligations to Holders of the Notes by making 15 such payment in U.S. dollars on the basis of the Exchange Rate as of the most recent date prior thereto on which an Exchange Rate was available. Any payment made under such circumstances in U.S. dollars where the required payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default under the Indenture. A determination made in good faith by the Company as to the unavailability of a currency shall be binding upon the Trustee and the Holders of Notes. See Foreign Currency Risks. BOOK-ENTRY NOTES The Notes may be issued in whole or in part in the form of one or more Book- Entry Notes which will be deposited with, or on behalf of, the Depositary and registered in the name of the Depositary or its nominee. Except as set forth below, a Book-Entry Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or any nominee to a successor of the Depositary or a nominee of such successor. Upon the issuance of Notes by the Company represented by Book-Entry Notes, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of beneficial interests in each Book-Entry Note to the accounts of participants. The accounts to be credited shall be designated by the Agents or underwriters of such beneficial interests, as the case may be, or by the Company, if such beneficial interests are offered and sold directly by the Company. Ownership of beneficial interests in a Book-Entry Note will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in a Book-Entry Note will be shown on, and the transfer of that ownership will be effected only through records maintained by the Depositary (with respect to interests of participants), or by participants or persons that may hold interests through participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in certificated form. Such limits and such laws may impair the ability to transfer beneficial interests in a Book-Entry Note. So long as the Depositary or its nominee is the registered owner of a Book- Entry Note, the Depositary or its nominee, as the case may be, will be considered the Holder of such Book-Entry Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Book- Entry Note will not be entitled to have Notes registered in their names, will not receive or be entitled to receive physical delivery of Notes in certificated form and will not be considered the owners or holders thereof under the Indenture. If the Depositary is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue Notes in certificated form in exchange for each Book-Entry Note. In addition, the Company may at any time determine not to have Book-Entry Notes, and, in such event, will issue Notes in certificated form in exchange for the beneficial interests in each Book-Entry Note. In either such instance, an owner of a beneficial interest in a Book-Entry Note will be entitled to physical delivery in certificated form of Notes equal in principal amount to such beneficial interest and to have such Notes registered in its name. Unless otherwise specified in the applicable Pricing Supplement, Notes so issued in certificated form will be issued in denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof and will be issued in registered form only, without coupons. The Depositary has advised the Company and the Agents that it is a limited- purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the 1934 Act. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Agents), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by the Depositary only through participants. 16 THE INDENTURE The Indenture provides that, in addition to the Notes offered hereby, additional debt securities (including both interest bearing and original issue discount securities in both bearer form and certificated or book-entry registered form) may be issued thereunder, without limitation as to the aggregate principal amount (Section 301). The Indenture does not limit the amount of other debt, secured or unsecured, which may be issued by the Company. Except as may be described in the applicable Pricing Supplement, there are no covenants or other provisions in the Indenture providing for a put or increased interest or otherwise that would afford Holders of the Notes additional protection in the event of a recapitalization transaction, a change of control of the Company or a highly leveraged transaction. However, any such transaction would require regulatory approval, and management of the Company believes such approval would be unlikely for a transaction that would result in the Company having a highly leveraged capital structure. No service charge will be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith (Section 305). The Indenture provides that the Notes may be issued at various times, may have differing Stated Maturities, may have varying redemption provisions and may bear interest at differing rates. EVENTS OF DEFAULT The following constitute Events of Default under the Indenture with respect to the Notes: (1) default in the payment of principal of (and premium, if any) on any Note when due and the continuation thereof uncured for a period of three Business Days; (2) default in the payment of interest on any Note when due and the continuation thereof uncured for a period of 30 days; (3) default in the performance or breach of any other covenant or warranty of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of one or more series of Securities other than the Notes), and the continuation thereof uncured for a period of 60 days after written notice as provided in the Indenture; (4) default in the payment of principal or interest on, or acceleration of, Securities of any other series issued under the Indenture or any other bond, debenture, note or other evidence of indebtedness for borrowed money, in an aggregate amount exceeding U.S. $5,000,000, of the Company which default is not cured or acceleration not annulled or indebtedness not discharged, within a period of 90 days after written notice as provided in the Indenture; and (5) certain events of bankruptcy, insolvency or reorganization (Section 501). No Event of Default with respect to the Notes necessarily constitutes an Event of Default with respect to other Securities issued under the Indenture. If an Event of Default with respect to the Notes occurs and is continuing, either the Trustee or the Holders of at least 33% in aggregate principal amount of the outstanding Notes may declare the principal amount of all Notes to be due and payable immediately. At any time after a declaration of acceleration with respect to Notes has been made, but before a judgment or decree based on such acceleration has been obtained, the Holders of a majority in principal amount of the outstanding Notes may, under certain circumstances, rescind and annul such acceleration (Section 502). The Indenture provides that, subject to the duty of the Trustee during the pendency of a default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity therefor (Section 603). Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in principal amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or the exercise of any trust or power conferred on the Trustee, with respect to the Notes (Section 512). The right of the Holder of a Note to institute a proceeding with respect to the Indenture is subject to certain conditions precedent, but each Holder has an absolute right to receive payment of the principal of 17 (and premium, if any) and interest on the Note held by such Holder when due and to institute suit for the enforcement of any such right of payment (Sections 507 and 508). The Indenture provides that the Trustee, within 90 days after the occurrence of a default with respect to the Notes, is required to give the Holders of the Notes notice of such default unless cured or waived, provided that, except in the case of default in the payment of principal of (and premium, if any) or interest on any Note, the Trustee may withhold such notice if it determines it is in the interest of the Holders to do so (Section 602). The Company is required under the terms of the Indenture to furnish annually to the Trustee a statement as to the performance by the Company of certain of its obligations thereunder and as to any default in such performance (Section 1008). CONCERNING THE TRUSTEE Chemical Bank, which is the Trustee under the Indenture, acts as a depository of funds of, has made or from time to time in the future may make loans to, and acts as trustee with respect to other debt of and performs certain other services for, the Company and certain of its affiliates in the normal course of its business. It has purchased, and is likely to purchase in the future, securities of the Company and its affiliates. LISTING The Notes will not be listed on any national or regional securities exchange. FOREIGN CURRENCY RISKS EXCHANGE RATES An investment in Notes denominated in a foreign currency or currency unit entails significant risks that are not associated with Notes denominated in U.S. dollars. Such risks include, but are not limited to, the possibility of significant changes in rates of exchange between the U.S. dollar and various foreign currencies and the possibility of the imposition or modification of foreign exchange controls by either the United States or foreign governments. The imposition or modification of exchange or currency controls is a sovereign right of governments. The risks associated with Notes denominated in foreign currencies or currency units also depend on economic and political events or actions over which the Company has no control. In past years, rates of exchange between the U.S. dollar and certain foreign currencies have been highly volatile and such volatility may be expected in the future. Fluctuations in any particular rate of exchange that have occurred in the past are not necessarily indicative of fluctuations that may occur during the term of any Note denominated in a Specified Currency other than U.S. dollars. Depreciation of a Specified Currency against the U.S. dollar would result in a decrease in the effective yield of such Note below its stated interest rate and could result in a loss to the investor on a U.S. dollar basis. EXCHANGE AND CURRENCY CONTROLS Governments have imposed from time to time, and may in the future impose or modify, exchange controls that would affect exchange rates as well as the availability of a Specified Currency (other than U.S. dollars) on the date interest payments are due or at a Note's maturity. The imposition or modification of exchange or currency controls may not be a matter of public knowledge prior to its occurrence. Even if there are no actual exchange controls, it is possible that a foreign currency or currency unit that is the Specified Currency for a particular Note would not be available on the date interest payments are due or at such Note's maturity. In that event, the Company will make required payments in U.S. dollars on the basis of the Exchange Rate (as defined under Important Information) as of the most recent date prior thereto for which an Exchange Rate is available. See Description of the Notes--Unavailability of Payment Currency. For holders of Notes denominated in a Specified Currency (other than U.S. dollars) who elect to receive payments of principal and interest in U.S. dollars, payments will nevertheless be made in the Specified Currency in the event bid quotations for the purchase of the Specified Currency for U.S. dollars are not available. See Description of the Notes--Payment of Principal, Premium and Interest. 18 GOVERNING LAW; JUDGMENTS The Notes will be governed by and construed in accordance with the laws of the State of New York. In the event an action based on Notes denominated in a Specified Currency other than U.S. dollars were commenced in a court in the United States, it is likely that such court would grant judgment relating to the Notes only in U.S. dollars. If an action based on Notes denominated in a Specified Currency other than U.S. dollars were commenced in a New York court, however, such court would render or enter a judgment or decree in the Specified Currency. Such judgment would then be converted into U.S. dollars at the rate of exchange prevailing on the date of entry of the judgment or decree. THIS PROSPECTUS AND ANY ACCOMPANYING PRICING SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN A FOREIGN CURRENCY OR CURRENCY UNIT, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS OR AS THEY MAY EXIST FROM TIME TO TIME. SUCH RISKS SHALL BE ASSUMED BY HOLDERS OF THE NOTES. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN A CURRENCY OR CURRENCY UNIT OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following discussion represents the opinion of Hunton & Williams, counsel to the Company, regarding certain U.S. federal income tax consequences of owning a Note. This opinion is based on current law and the facts described in this Prospectus. Counsel has not reviewed any of the particular Notes to be offered or any Pricing Supplement. Current law is subject to both prospective and retroactive change, and facts relevant to the tax consequences of holding a particular Note may differ from the facts described in this Prospectus. Prospective purchasers therefore should examine the Pricing Supplement applicable to a particular Note before purchasing any Note. THIS DISCUSSION DEALS ONLY WITH CERTAIN TAX CONSEQUENCES OF OWNING NOTES HELD AS CAPITAL ASSETS BY ORIGINAL PURCHASERS WHO ARE U.S. HOLDERS. A "U.S. HOLDER" IS A BENEFICIAL OWNER OF A NOTE THAT IS (i) A CITIZEN OR RESIDENT OF THE UNITED STATES, (ii) A CORPORATION OR PARTNERSHIP CREATED OR ORGANIZED IN THE UNITED STATES OR UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OR (iii) AN ESTATE OR TRUST THE INCOME OF WHICH IS SUBJECT TO U.S. FEDERAL INCOME TAXATION REGARDLESS OF ITS SOURCE. COUNSEL EXPRESSES NO OPINION REGARDING THE TAX CONSEQUENCES TO PERSONS IN SPECIAL SITUATIONS, SUCH AS DEALERS IN SECURITIES OR CURRENCIES, PERSONS WHOSE FUNCTIONAL CURRENCY IS NOT THE U.S. DOLLAR, OR PERSONS HOLDING NOTES AS A HEDGE AGAINST CURRENCY RISKS OR AS A PART OF A LARGER INTEGRATED FINANCIAL TRANSACTION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED BELOW TO THEIR PARTICULAR SITUATIONS, AS WELL AS THE APPLICATION OF THE TAX LAWS OF STATES, LOCALITIES AND OTHER JURISDICTIONS. PAYMENTS OF INTEREST Interest on a Note will be taxable to a U.S. Holder as ordinary interest income at the time of receipt or accrual in accordance with the U.S. Holder's tax accounting method. If interest is payable in a foreign 19 currency or currency unit, the amount of interest income to a cash-basis U.S. Holder will be the U.S. dollar value of the foreign currency or currency unit on the date of payment, based on the exchange rate in effect on that date, whether or not the payment is converted into U.S. dollars. For an accrual-basis U.S. Holder, interest payable in a foreign currency or currency unit will be includible in income, whether or not the payment is converted into U.S. dollars, based upon either (i) the average rate of exchange for the accrual period or, with respect to an accrual period that spans two taxable years, the average rate of exchange for the partial period within the taxable year (either, the Average Rate) or (ii) at the election of the holder, either (A) the spot rate on the last day of the interest accrual period, (B) with respect to a partial period, the spot rate on the last day of the taxable year, or (C) if the last day of the interest accrual period is within five business days of the date of receipt of such interest income, the spot rate on the date of such receipt (either the Elected Rate). The Average Rate for an accrual period or a partial period is the simple average of the exchange rates for each business day of such period or other average exchange rate for the period reasonably derived and consistently applied by the taxpayer. A U.S. Holder may make the election to translate foreign currency interest income on a Note into U.S. dollars at the Elected Rate by filing a statement clearly indicating that such election has been made with its first income tax return for which such election will be effective. Once a U.S. Holder properly elects the Elected Rate, such Rate must be applied consistently to all debt instruments held by such Holder in that year and thereafter and cannot be revoked without the consent of the Commissioner of the U.S. Internal Revenue Service (the Service). An accrual-basis U.S. Holder also will recognize income or loss from foreign currency-denominated interest payments (Interest Exchange Gain or Loss) equal to the difference between (i) the U.S. dollar value of the interest received with respect to an accrual period determined at the exchange rate on the date the payment is received and (ii) the U.S. dollar value of such interest determined at either the Average Rate or the Elected Rate with respect to such accrual period. The character of Interest Exchange Gain or Loss generally will be ordinary, and such ordinary income or loss generally will not be treated as interest income or expense except to the extent provided by administrative pronouncements of the Service. A U.S. Holder's tax basis in foreign currency or currency units received as interest will be the U.S. dollar value of such foreign currency or currency units on the date received. ORIGINAL ISSUE DISCOUNT Certain Notes may be issued with "original issue discount" within the meaning of section 1273(a) of the Internal Revenue Code of 1986, as amended. In general, such original issue discount will equal the difference between the Note's "stated redemption price at maturity" and its "issue price." A Note's stated redemption price at maturity is equal to the sum of all payments provided for by the Note other than "qualified stated interest" payments. Qualified stated interest payments, in general, are interest payments that are unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at (i) a single fixed rate or (ii) a variable rate that meets certain requirements set out in regulations issued by the U.S. Treasury Department that govern the federal income tax treatment of debt instruments issued with original issue discount. The issue price of a Note generally will equal the initial price at which a substantial amount of the Notes of the same class are sold to the public. A U.S. Holder of a Note as to which there is original issue discount should be aware that it generally must include original issue discount in income for federal income tax purposes on an annual basis under a constant yield accrual method that reflects compounding regardless of whether it uses a cash-basis or an accrual-basis method of accounting. Original issue discount accruals on a Note denominated in a foreign currency are computed in the first instance in that foreign currency and are then translated into U.S. dollars in the same manner that foreign currency interest accruals for accrual-basis U.S. Holders are translated into U.S. dollars. See Summary of United States Federal Income Tax Considerations--Payments of Interest above. U.S. Holders of Notes issued with original issue discount also will recognize income or loss from foreign currency-denominated original issue discount payments (OID Exchange Gain or Loss). OID Exchange Gain or Loss with respect to a foreign currency-denominated original issue discount payment is 20 computed and treated in the same manner as Interest Exchange Gain or Loss with respect to a foreign currency-denominated interest payment received by an accrual-basis U.S. Holder. For that purpose, original issue discount is deemed to be received when the U.S. Holder receives the associated principal payment. See Summary of United States Federal Income Tax Considerations--Payments of Interest above. PURCHASE AND DISPOSITION OF NOTES A U.S. Holder's tax basis in a Note generally will be its cost in U.S. dollars or the U.S. dollar value on the purchase date of any foreign currency exchanged for such Note. However, a U.S. Holder's tax basis in a Note that is redeemed in part prior to maturity will be reduced proportionately based on the amount of principal that is redeemed. Upon the sale, exchange, redemption or retirement of a Note, a U.S. Holder generally will recognize gain or loss equal to any difference between (i) the tax basis of the Note and (ii) the sum of the U.S. dollars or the U.S. dollar value of any foreign currency or other property received. If the U.S. Holder has held the Note for more than one year, such gain or loss generally will be long-term capital gain or loss. To the extent that such gain or loss is attributable to fluctuations in foreign currency exchange rates, however, it typically will be ordinary income or loss. Such ordinary income or loss generally will not be treated as interest income or expense except to the extent provided by administrative pronouncements of the service. The amount of gain or loss attributable to fluctuations in foreign currency exchange rates will equal the difference between (i) the sum of (A) the U.S. dollar value of the foreign currency principal amount of a Note, determined on the date the Note is disposed of, (B) in the case of a Note issued with original issue discount, the U.S. dollar value of any accrued original issue discount received, determined on the date the Note is disposed of, and (C) in the case of an accrual-basis Holder, the U.S. dollar value of any accrued interest received, determined on the date the Note is disposed of and (ii) the sum of (A) the U.S. dollar value of the foreign currency principal amount of the Note, determined on the date the Holder acquired the Note, (B) in the case of a Note issued with original issue discount, the U.S. dollar value of any accrued original issue discount received, determined at the Average Rate or the Elected Rate for the applicable accrual period, and (C) in the case of an accrual-basis Holder, the U.S. dollar value of any accrued interest received, determined at the Average Rate or the Elected Rate for the applicable accrual period. For purposes of the foregoing determination, the foreign currency principal amount of a Note generally equals, in the case of the original purchaser, the issue price in foreign currency of such Note, and in the case of a subsequent purchaser, the adjusted issue price in foreign currency of the Note on the date of acquisition by such purchaser. Gain or loss attributable to fluctuations in foreign currency exchange rates will be recognized only to the extent of the total gain or loss recognized by the Holder on the sale, exchange, redemption, or retirement of the Note. A U.S. Holder's tax basis in foreign currency or currency units received in exchange for a Note will be the U.S. dollar value of such foreign currency or currency units on the date received. EXCHANGE OF FOREIGN CURRENCIES A U.S. Holder that disposes of foreign currency or currency units (for example, by using foreign currency to buy a Note or converting foreign currency-denominated payments to U.S. dollars) will recognize gain or loss equal to any difference between (i) the sum of the U.S. dollars and the fair market value on the exchange date of any property received in the exchange and (ii) the tax basis of the foreign currency or currency units. That gain or loss generally will be ordinary income or loss. BACKUP WITHHOLDING Payments of interest, principal or gross proceeds from disposition of a Note made to individuals or certain other non-corporate U.S. Holders generally will be subject to a 31% backup withholding tax if the U.S. Holder fails to furnish the payor with its correct taxpayer identification number and meet certain other requirements. Any such tax withheld generally will be allowable as a refund or a credit against the U.S. Holder's federal income tax liability. 21 PLAN OF DISTRIBUTION The Notes are being offered on a continuing basis for sale by the Company through the Agents, who have agreed to use their best efforts to solicit purchases of the Notes. The Company will pay an Agent a commission in U.S. dollars ranging from .125% to .750% of the principal amount of each Note sold through such Agent depending on the Specified Currency and maturity of the Note. The Company may also sell Notes to any Agent at a discount from the principal amount thereof equal to such commission and such Agent may later resell such Notes to investors and other purchasers at varying prices related to prevailing market prices at the time of resale, as determined by such Agent or, if so agreed, at a fixed public offering price. The Company has reserved the right to appoint other agents from time to time to or through whom the Notes may be sold. The Notes may also be sold by the Company directly to purchasers. No commission will be payable to the Agents on Notes sold directly to purchasers by the Company. In addition, the Agents may offer the Notes they have purchased as principal to other dealers. The Agents may sell Notes to any dealer at a discount and, unless otherwise specified in the applicable Pricing Supplement, such discount allowed to any dealer may include all or part of the discount to be received from the Company. Unless otherwise indicated in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage equal to the commission applicable to any agency sale of a Note of identical maturity. After the initial public offering of Notes to be resold to investors and other purchasers, the public offering price (in the case of Notes to be resold at a fixed public offering price), concession and discount may be changed. The Company reserves the right to withdraw, cancel or modify the offering of Notes at any time without notice and may reject orders in whole or in part whether placed directly with the Company or through the Agents. Each Agent will have the right, exercisable in its reasonable discretion, to reject any proposed purchase of Notes in whole or in part. The Notes are a new issue of securities with no established trading market. The Agents have informed the Company that they intend to make a market in the Notes, but are under no obligation to do so and any Agent may cease making a market in the Notes at any time. Therefore, no assurance can be given that a trading market for the Notes will exist in the future. Each of the Agents from time to time has acted as a financial advisor to the Company and has underwritten certain of the Company's public securities offerings. The Agents may be deemed to be "underwriters" within the meaning of the Securities Act of 1933. The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under such Act. EXPERTS The financial statements in the Company's Annual Report on Form 10-K filed with the Commission, which is incorporated in this Prospectus by reference, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report included in such Form 10-K. Such financial statements have been so incorporated in reliance upon the report of Deloitte & Touche LLP, also incorporated herein by reference, which report is given upon their authority as experts in accounting and auditing. Legal conclusions relating to the Company's franchises and title to its properties in the Company's Annual Report on Form 10-K and legal conclusions under Description of the Notes, including limitations upon the Company's issuance of bonds, herein have been reviewed by Hunton & Williams, Richmond, Virginia, except that, insofar as matters relating to title to properties are governed by the laws of West Virginia, they have been reviewed by Jackson & Kelly, Charleston, West Virginia. The statements are included on the authority of such firms, respectively, as experts. 22 LEGAL OPINIONS Certain legal matters in connection with the Notes will be passed upon for the Company by Hunton & Williams, Richmond, Virginia, and, as to West Virginia law, by Jackson & Kelly, Charleston, West Virginia, and for any underwriters, dealers or agents, by McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia, which also performs certain legal services for Dominion Resources and its affiliates on other matters. 23 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA- TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR ANY SUPPLEMENT HERETO, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE AGENTS. THIS PROSPECTUS AND ANY SUPPLEMENT HERETO DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITA- TION OF AN OFFER TO BUY, THE NOTES IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SUPPLEMENT HERETO SHALL CREATE, UNDER ANY CIRCUMSTANCES, ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF- FAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF, OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR OF SUCH SUPPLEMENT. ---------------- CONTENTS
PAGE ---- Available Information...................................................... 2 Incorporation of Certain Documents by Reference............................ 2 Important Information...................................................... 2 The Prospectus............................................................. 3 The Company................................................................ 4 Use of Proceeds............................................................ 4 Ratio of Earnings to Fixed Charges......................................... 4 Description of the Notes................................................... 4 Foreign Currency Risks..................................................... 18 Summary of United States Federal Income Tax Considerations................. 19 Plan of Distribution....................................................... 22 Experts.................................................................... 22 Legal Opinions............................................................. 23
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTES SERIES F U.S. $200,000,000 ---------------- PROSPECTUS ---------------- MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. MORGAN STANLEY & CO. INCORPORATED JUNE , 1995 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART II ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission Fee.............................. $ 68,966 Fees and Expense of Trustee......................................... 30,000 Printing Expenses................................................... 35,000 Counsel Fees........................................................ 90,000 Rating Organization Fees............................................ 35,000 Accountant Fees..................................................... 25,000 Miscellaneous....................................................... 16,034 -------- Total............................................................. $300,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VI of the Restated Articles of Incorporation, as amended, of the registrant provides that the registrant shall indemnify its directors and officers to the fullest extent permitted by law. Article 10, Chapter 9, Title 13.1 of the Code of Virginia of 1950, as amended, permits indemnification of directors and officers, but does not permit indemnification against willful misconduct or a knowing violation of the criminal law. The registrant maintains director and officer liability insurance protecting the registrant's directors and officers against certain claims resulting from their service in such capacities, and the registrant from the liability assumed by it in accordance with Article VI of its Restated Articles of Incorporation, as amended. The current policy covers all occurrences during the period ended September 1, 1995, and is expected to be renewed in the ordinary course of business. In general, the policy provides coverage for any misstatement, misleading statement, act, omission, neglect or breach of duty committed or attempted by a director or officer, but excludes, among other things, acts of deliberate dishonesty, and acts for personal profit or advantage to which the director or officer was not entitled. ITEM 16. EXHIBITS. 1 --Form of Distribution Agreement for the Notes between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated (filed herewith). 4(i) --Trust Indenture, dated as of April 1, 1988, Exhibit 4(i), File No. 33-21319, incorporated by reference; First Supplemental Indenture, dated August 1, 1989, Exhibit 4(ii), File No. 33-30532, incorporated by reference. 4(ii) --Form of Fixed Rate Medium-Term Note, Series F (filed herewith). 4(iii) --Form of Floating Rate Medium-Term Note, Series F (filed herewith). 5 --Legality Opinion of Hunton & Williams (filed herewith). 8 --Tax Opinion of Hunton & Williams (filed herewith). 12 --Statements regarding computation of ratios (filed herewith). 23(i) --Consents of Hunton & Williams (contained in Exhibits 5 and 8). 23(ii) --Consent of Jackson & Kelly (filed herewith). 23(iii) --Consent of Deloitte & Touche LLP (filed herewith). 24 --Power of Attorney (included herein). 25 --Statement of eligibility of Trustee (filed herewith).
II-1 ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) If the registrant is a foreign private issuer, to file a post- effective amendment to the registration statement to include any financial statements required by Rule 3-19 of Regulation S-X at the start of any delayed offering or throughout a continuous offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. POWER OF ATTORNEY Each person whose signature appears below hereby authorizes each Agent for Service named in the registration statement, as attorney-in-fact, to sign on his behalf individually and in each capacity stated below and file all amendments and post-effective amendments to the registration statement, and the registrant hereby confers like authority to sign and file on its behalf. II-2 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, HEREUNTO DULY AUTHORIZED, IN THE CITY OF RICHMOND, COMMONWEALTH OF VIRGINIA, ON THE 14TH DAY OF JUNE, 1995. Virginia Electric and Power Company /s/ John B. Adams, Jr. By __________________________________ (JOHN B. ADAMS, JR.CHAIRMAN OF THE BOARD OF DIRECTORS) PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE 14TH DAY OF JUNE, 1995. SIGNATURES TITLE /s/ John B. Adams, Jr. Chairman of the Board of - ------------------------------------- Directors and Director JOHN B. ADAMS, JR. /s/ J. T. Rhodes President (Chief - ------------------------------------- Executive Officer) and J. T. RHODES Director /s/ Tyndall L. Baucom Director - ------------------------------------- TYNDALL L. BAUCOM /s/ James F. Betts Director - ------------------------------------- JAMES F. BETTS Director - ------------------------------------- BENJAMIN J. LAMBERT, III /s/ Richard L. Leatherwood Director - ------------------------------------- RICHARD L. LEATHERWOOD /s/ Harvey L. Lindsay, Jr. Director - ------------------------------------- HARVEY L. LINDSAY, JR. /s/ William T. Roos Director - ------------------------------------- WILLIAM T. ROOS /s/ Richard L. Sharp Director - ------------------------------------- RICHARD L. SHARP /s/ Robert H. Spilman Director - ------------------------------------- ROBERT H. SPILMAN /s/ William G. Thomas Director - ------------------------------------- WILLIAM G. THOMAS /s/ R. E. Rigsby Senior Vice President-- - ------------------------------------- Finance and Controller R. E. RIGSBY (Chief Financial Officer and Principal Accounting Officer) II-3 INDEX TO EXHIBITS
PAGE NO. IN SEQUENTIALLY NUMBERED REGISTRATION STATEMENT ------------ 1 --Form of Distribution Agreement for the Notes between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated (filed herewith). 4(i) --Trust Indenture, dated as of April 1, 1988, Exhibit 4(i), File No. 33-21319, incorporated by reference; First Supplemental Indenture, dated August 1, 1989, Exhibit 4(ii), File No. 33-30532, incorporated by reference. 4(ii) --Form of Fixed Rate Medium-Term Note, Series F (filed herewith). 4(iii) --Form of Floating Rate Medium-Term Note, Series F (filed herewith). 5 --Legality Opinion of Hunton & Williams (filed herewith). 8 --Tax Opinion of Hunton & Williams (filed herewith). 12 --Statements regarding computation of ratios (filed herewith). 23(i) --Consents of Hunton & Williams (contained in Exhibits 5 and 8). 23(ii) --Consent of Jackson & Kelly (filed herewith). 23(iii) --Consent of Deloitte & Touche LLP (filed herewith). 24 --Power of Attorney (included herein). 25 --Statement of eligibility of Trustee (filed herewith).
EX-1 2 DISTRIBUTION AGREEMENT EXHIBIT 1 U.S. $200,000,000 VIRGINIA ELECTRIC AND POWER COMPANY Medium-Term Notes Series F DISTRIBUTION AGREEMENT ---------------------- July __, 1995 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Inc. Merrill Lynch World Headquarters World Financial Center, North Tower New York, New York 10281-1310 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10020 The undersigned, Virginia Electric and Power Company (the Company), hereby confirms its agreement with each of you with respect to the issuance and sale by the Company of the below-described Notes. Subject to the terms and conditions stated herein, the Company (i) hereby appoints each of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill), Goldman, Sachs & Co. (Goldman) and Morgan Stanley & Co. Incorporated (Morgan), as an agent of the Company, for the purpose of soliciting offers to purchase such Notes from the Company by others, and (ii) hereby agrees that whenever the Company determines to sell such Notes directly to one or more of you as principal for resale to others it will, if requested by any of you to whom such Notes are to be sold, enter into a Terms Agreement relating to such sale in accordance with the provisions of paragraph 3(b) hereof. The Company reserves the right to sell such Notes directly on its own behalf to investors, and to or through any of you or any other person whom the Company may appoint as agent in the future. As used herein, the terms "you", "your" and the like shall refer to each of Merrill, Goldman and Morgan, 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. $200,000,000* aggregate principal amount of its Medium-Term Notes, Series F due from 9 Months to - -------------------- * Or the equivalent in certain foreign currencies or currency units specified in a pricing supplement. 30 Years from the date of issue (the Notes). The Notes will have the maturity ranges, interest rates per annum and other terms specified from time to time in the Prospectus referred to below. The Notes are to be issued pursuant to an Indenture, dated as of April 1, 1988, as amended and supplemented by the First Supplemental Indenture, dated as of August 1, 1989 (such Indenture, as amended and supplemented, hereafter referred to as the Indenture) between the Company and Chemical Bank, as trustee (the Trustee). All capitalized terms not defined herein have the meanings ascribed to them in the Indenture. 2. Representations and Warranties of the Company. The Company --------------------------------------------- represents and warrants to you that: (a) The Registration Statement on Form S-3 for the registration of the Notes under the Securities Act of 1933, as amended (the Securities Act), heretofore filed with the Securities and Exchange Commission (the Commission), a copy of which as so filed has been delivered to you, has been declared effective. Unless the context otherwise requires, such Registration Statement is hereinafter called the "Registration Statement" and such Prospectus, as the same may be amended or supplemented, is hereinafter called the "Prospectus". Whenever the term "Registration Statement", "prospectus" or "Prospectus" is used herein, it shall be deemed to include all documents or portions thereof incorporated therein by reference (the Incorporated Documents) pursuant to the requirements of Form S-3 under the Securities Act, including documents filed or to be filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the Securities Exchange Act) and incorporated by reference into the Prospectus. The Company will not file any amendment or supplement to the Registration Statement unless you shall have been advised of the proposed amendment or supplement and the same shall not have been disapproved as to substance by you or as to form by McGuire, Woods, Battle & Boothe, L.L.P., who are acting as counsel for you. (b) No order suspending the effectiveness of the Registration Statement or otherwise preventing or suspending the use of the Prospectus has been issued by the Commission and is in effect and no proceedings for that purpose are pending before or, to the knowledge of the Company, threatened by the Commission. The Registration Statement and the Prospectus comply in all material respects with the provisions of the Securities Act and rules, regulations and releases of the Commission thereunder and the Securities Exchange Act, and the rules, regulations and releases of the Commission thereunder, and neither the Registration Statement nor the Prospectus contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the -------- ------- 3 foregoing representations and warranties in this subparagraph (b) shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon information furnished herein or in writing to the Company by you or on behalf of any of you for use in the Registration Statement or Prospectus; and provided, further, that the foregoing representations and warranties are given on the basis that any statement contained in an Incorporated Document shall be deemed not to be contained in the Registration Statement or Prospectus if the statement has been modified or superseded by any statement in a subsequently filed Incorporated Document or in the Registration Statement or Prospectus. (c) The Indenture qualifies under, and conforms in all material respects to the requirements of, the Trust Indenture Act of 1939, as amended (the Trust Indenture Act). (d) Deloitte & Touche LLP have examined certain of the financial statements filed with the Commission and incorporated by reference in the Registration Statement, are independent public accountants as required by the Securities Act and the rules, regulations and releases of the Commission thereunder. (e) Except as reflected in, or contemplated by, the Registration Statement, since the respective most recent dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change in the condition of the Company, financial or otherwise. The Company has no material contingent financial obligation which is not disclosed in the Registration Statement and Prospectus. (f) The Company has taken all corporate action necessary to be taken by it to authorize the execution by it of this Agreement and the performance by it of all obligations on its part to be performed hereunder; and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, or other agreement or instrument to which the Company is now a party, or the charter of the Company, as amended, or any order, rule, regulation or release applicable to the Company of any federal or state regulatory board or body or administrative agency having jurisdiction over the Company or its property. (g) The Notes, upon issuance thereof, will conform in all respects to the terms of the relevant order or orders of the State Corporation Commission of Virginia (the Virginia 4 Commission) now or hereafter in effect with respect to the Notes. 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, suspend solicitation of offers to purchase Notes from the Company until such time as the Company has advised you that such solicitation may be resumed. The Company agrees to pay you a commission, at the time of settlement of each sale of Notes by the Company as a result of a solicitation made by you, in an amount in U.S. dollars (which, in the case of Notes denominated in currency units or in currencies other than U.S. dollars, shall be based on the Exchange Rate (as defined below)) equal to the following percentage of the principal amount of such Notes sold (unless a lower or higher commission is agreed to, in writing, by the Agent and the Company): Commission (percentage of aggregate principal amount Range of Maturities of Notes sold) - ------------------- -------------- More than 9 months to less than 1 year .125% From 1 year to less than 18 months .150% From 18 months to less than 2 years .200% From 2 years to less than 3 years .250% From 3 years to less than 4 years .350% From 4 years to less than 5 years .450% From 5 years to less than 6 years .500% From 6 years to less than 7 years .550% From 7 years to less than 10 years .600% From 10 years to less than 15 years .625% From 15 years to less than 20 years .700% From 20 years to 30 years .750% Unless otherwise agreed to, as agent, you are authorized to solicit orders for the Notes at the principal amount thereof only in denominations of U.S. $1,000 or any amount 5 in excess thereof which is an integral multiple of U.S. $1,000*. 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. The "Exchange Rate" on a given date for a given foreign currency means ------------- the noon buying rate in New York City for cable transfers in such currency as certified for customs purposes by the Federal Reserve Bank of New York on such date; provided, however, that in the case of European Currency Units, Exchange Rate means, unless otherwise agreed by the Company and the Agents, the rate of exchange determined by the Council of European Communities (or any successor thereto) as published on such date or on the most recently available date in the Official Journal of the European Communities (or any successor publication). (b) Purchases as Principal. Each sale of Notes to you as principal ---------------------- shall be made in accordance with the terms of this Agreement and, if requested by you, a separate agreement which will provide for the sale of such Notes to, and the purchase and reoffering thereof by, you. Each such separate agreement (which may be oral (subsequently confirmed in writing) or written, and which may be substantially in the form of Exhibit A hereto and which may take the form of an exchange of any standard form of written telecommunication between you and the Company) is herein referred to as a "Terms Agreement". Your commitment to purchase Notes as principal, whether pursuant to a Terms Agreement or otherwise, shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each agreement by you to purchase Notes as principal (whether or not set forth in a Terms Agreement) shall specify the principal amount of Notes to be purchased by you pursuant thereto, the price to be paid to the Company for such Notes, and such other terms, conditions and requirements as may be agreed upon between us. Each such agreement shall also specify any requirements for officers' certificates, opinions of counsel and letters from the independent public accountants of the Company pursuant to paragraph 7 hereof. A Terms Agreement may also - --------------------- * Or the equivalent of U.S. $1,000 (rounded down to an integral multiple of 1,000 units of the currency or currency unit specified in a supplement to the Prospectus) in the relevant foreign currency or currency unit, or such larger amount in integral multiples of 1,000 units of such currency or currency unit. 6 specify certain provisions relating to the reoffering of such Notes by you. You may utilize a selling or dealer group in connection with the resale of the Notes purchased by you as principal. 4. Procedures. Procedural details relating to the issue and delivery ---------- of Notes, the solicitation of offers to purchase by others, and purchase by you as principal of, Notes, and the payment in each case therefor, are set forth in the Medium-Term Note Administrative Procedures and the Multi-Currency Procedures Supplement attached hereto as Exhibit B and are hereby incorporated herein by reference (the Procedures). Each of you and the Company agree to perform the respective duties and obligations specifically provided to be performed by each in the Procedures, as they may be amended from time to time. The Procedures may only be amended by written agreement of the Company and you. 5. Time and Place of Closing. The documents required to be delivered ------------------------- pursuant to paragraph 7 hereof shall be delivered at the office of Hunton & Williams, 200 Park Avenue, New York, New York, at 10:00 a.m., New York City time, on July __, 1995, or at such other time as you and the Company may agree upon in writing, the time and date of such delivery being herein called the "Closing Date". 6. Covenants of the Company. The Company agrees that: ------------------------ (a) The Company, at or prior to the Closing Date, will deliver to you conformed copies of the Registration Statement as originally filed and of all amendments or supplements thereto, including any post-effective amendment (in each case including all exhibits filed therewith and including copies of each consent and certificate included therein or filed as an exhibit thereto, except exhibits incorporated by reference unless specifically requested). As soon as the Company is advised thereof, it will advise you orally of the issuance of any stop order under the Securities Act with respect to the Registration Statement, or the institution of any proceedings therefor of which the Company shall have received notice, and will use its best efforts to prevent the issuance of any such stop order and to secure the prompt removal thereof, if issued. The Company will deliver to you as many copies of the Registration Statement and Prospectus and of all amendments thereto (in each case without exhibits) as you may reasonably request for the purposes contemplated by the Securities Act or the Securities Exchange Act. (b) The Company will pay all expenses in connection with (i) the preparation and filing by it of the 7 Registration Statement and Prospectus, (ii) the preparation, issue and delivery of the Notes and (iii) the reproduction and delivery to you in accordance with this Agreement of copies of this Agreement, the Registration Statement and Prospectus (each as originally filed and as subsequently amended or supplemented). The Company also will pay all taxes, if any, except transfer taxes, on the issuance of the Notes. In addition, the Company will pay the reasonable fees and disbursements of your counsel, McGuire, Woods, Battle & Boothe, L.L.P., 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. (c) The Company will furnish you with copies of each further amendment and supplement to the Prospectus in such quantities as you may from time to time reasonably request. If at any time when the delivery of a prospectus shall be required by law in connection with the sale of any Note, any event relating to or affecting the Company, or of which the Company shall be advised in writing by you, shall occur, which in the opinion of the Company or of your counsel should be set forth in a supplement to or an amendment of the Prospectus in order to make the Prospectus not misleading in the light of the circumstances when it is delivered, or if for any other reason it shall be necessary during such period to amend or supplement the Prospectus or any document incorporated by reference in the Prospectus in order to comply with the Securities Act, the Securities Exchange Act or the Trust Indenture Act, the Company forthwith will (i) notify you to suspend solicitation of purchases of Notes and (ii) at its expense, prepare and furnish to you a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Prospectus which will supplement or amend the Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered, not misleading or which will effect any other necessary compliance. During the period specified in the preceding sentence, the Company will continue to prepare and file with the Commission on a timely basis all documents or amendments required under the Securities Exchange Act and the applicable rules, regulations, and releases of the Commission thereunder; provided, that the Company shall not file such documents or amendments without also furnishing copies thereof to you and McGuire, 8 Woods, Battle & Boothe, L.L.P. Notwithstanding any other provision of this paragraph 6(c), until the distribution of any Notes you may own as principal has been completed, if any event described above in this subsection (c) occurs, the Company will, at its own expense, forthwith prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or Prospectus, as then amended or supplemented, satisfactory in all respects to you; will supply such amended or supplemented Prospectus to you in such quantities as you may reasonably request; and will furnish to you pursuant to paragraph 7(b) and (c) such documents, certificates, opinions and letters as you may request in connection with the preparation and filing of such amendment or supplement. (d) The Company will make available to its security holders, as soon as it is practicable to do so, an earnings statement of the Company (which need not be audited) in reasonable detail, covering a period of at least 12 months beginning within three months after the effective date of the Registration Statement, which earnings statement shall satisfy the requirements of Section 11(a) of the Securities Act. (e) During any period when delivery of a prospectus shall be required by law in connection with the sale of any Note, and for a period of five years following the termination of such period, the Company will deliver to you, as soon as practicable after the end of each fiscal year, a balance sheet of the Company as of the end of such year and statements of income and earnings reinvested in business for such year, all as certified by independent public or certified public accountants, and will deliver to you upon request, as soon as practicable after the end of each quarterly period, statements of income and earnings reinvested in business for the 12-month period ending with the end of such quarterly period. (f) The Company will use its best efforts promptly to do and perform all things to be done and performed by it hereunder prior to the Closing Date and to satisfy all conditions precedent to the delivery by it of the Notes. (g) The Company will furnish such proper information as may be lawfully required and otherwise cooperate in qualifying the Notes for offer and sale under the securities or blue-sky laws of such states as you may designate; provided, however, that the Company shall not be required in any state to qualify as a foreign corporation, or to file a general consent to service of process, or to submit to any requirements that it deems unduly burdensome. 9 (h) From the date of any agreement by you to purchase Notes as principal and continuing to and including the earlier of (i) the termination of the trading restrictions for the Notes purchased thereunder, as notified to the Company by you, and (ii) the related settlement date, the Company will not, without your prior written consent, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company in a public offering which are substantially similar to the Notes. (i) If the Company enters into any amendment to this Agreement, then such amendment shall be entered into by each of you; provided, however, that this Agreement may be terminated in accordance with paragraphs 7 or 12 as to any one of you without being terminated as to the others of you. (j) If the Company adds a new agent with respect to the Notes, then such agent shall enter into an agreement substantially similar to this Agreement, as such may be amended from time to time. 7. Conditions of Your Obligations. Your obligations as agent of the ------------------------------ Company to initiate solicitations of offers to purchase the Notes and to continue such solicitations, as the case may be, and your obligations to purchase Notes as principal pursuant to any Terms Agreement or otherwise, shall be subject to the continuing accuracy of the representations and warranties on the part of the Company contained herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein on its part to be performed and observed and to the following additional conditions: (a) An order or orders of the Virginia Commission permitting the issuance and sale of the Notes substantially in accordance with the terms and conditions hereof shall be in full force and effect and shall contain no provision unacceptable to you or the Company (but all provisions of such order or orders heretofore entered, copies of which have heretofore been delivered to you, are deemed acceptable to you and the Company and all provisions of such order or orders hereafter entered shall be deemed acceptable to you and the Company unless within 24 hours after receiving a copy of any such order any party to this Agreement shall give notice to the other parties to the effect that such order contains an unacceptable provision). (b) You shall receive on the Closing Date the opinion of McGuire, Woods, Battle & Boothe, L.L.P., dated the Closing Date, substantially in the form attached hereto as Exhibit C. You shall receive on the Closing Date, on any date that the Prospectus shall be amended or supplemented (other than by an amendment or supplement relating solely to 10 a change in the Specified Currency or in the interest rate offered on the Notes), each time a document filed under the Securities Act or the Securities Exchange Act is incorporated by reference into the Prospectus (other than Current Reports on Form 8-K filed exclusively to incorporate exhibits, required to be filed as Exhibits 1, 4 and 12 under Item 601 of Regulation S-K of the Securities Exchange Act, in registration statements on Form S-3), and each time, if so indicated in the applicable Terms Agreement or otherwise, the Company sells Notes to you as principal, the legal opinion of Messrs. Hunton & Williams or other counsel satisfactory to you in your reasonable judgment, dated the date of delivery thereof, substantially in the form attached hereto as Exhibit D or 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). (c) You shall receive (i) on the Closing Date, (ii) each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement relating solely to a change in the Specified Currency or in the interest rate offered on the Notes) and each time a document filed under the Securities Act or the Securities Exchange Act is incorporated by reference in the Prospectus (other than Current Reports on Form 8-K filed exclusively to incorporate exhibits, required to be filed as Exhibits 1, 4 and 12 of Item 601 under Regulation S-K of the Securities Exchange Act, in registration statements on Form S-3), in each such case to set forth financial information included in or derived from the Company's financial statements, and (iii) each time, if so indicated in the applicable Terms Agreement or otherwise, the Company sells Notes to you as principal, from Deloitte & Touche LLP, or another independent public accounting firm satisfactory to you, a letter addressed to you, dated the Closing Date, the date of such amendment, supplement, incorporation or settlement date relating to a sale pursuant to a Terms Agreement or otherwise, as the case may be, (1) confirming that they are independent public accountants as required by the Securities Act; (2) stating in effect that, in their opinion, the financial statements included in or incorporated by reference in the Registration Statement and the Prospectus and examined by them as stated in their report incorporated by reference in the Registration Statement, comply as to form in all material respects with the applicable accounting requirements adopted pursuant to the Securities Exchange 11 Act; (3) stating, in effect, that on the basis of a reading of the minutes of the meetings of the Board of Directors of the Company and of committees of the Board since the end of the most recent fiscal year with respect to which an audit report has been issued and inquiries of officials of the Company responsible for financial and accounting matters (which procedures did not constitute an examination made in accordance with generally accepted auditing standards) nothing came to their attention that caused them to believe that the most recent unaudited financial statements included in or incorporated by reference in the Registration Statement and the Prospectus are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included or incorporated by reference therein; and (4) stating, in effect, that on the basis of more limited procedures than those set forth in the foregoing clause (3), consisting merely of the reading of the minutes referred to in said clause and inquiries of officials of the Company responsible for financial and accounting matters, nothing came to their attention at a date not more than five business days prior to the date of such letter that caused them to believe that (i) at such date there was any decrease in the common stockholders equity or any increase in long-term debt (including amounts classified as due within one year, but excluding unamortized discount (net of premium)) of the Company or any decrease in net assets as compared with the amounts shown in the most recent audited balance sheet incorporated by reference in the Registration Statement, or (ii) for the period from the date of the most recent unaudited financial statements included in or incorporated by reference in the Registration Statement and the Prospectus to a date not more than five business days prior to the date of such letter there were any decreases, as compared with the corresponding period in the preceding year, in the operating revenues, in operating income, or net income except (with respect to (i) or (ii)) in all instances for changes or decreases which the Registration Statement discloses have occurred or may occur; provided, however, that said letters may vary from the requirements specified in clause (4) hereof in such manner as you in your sole discretion may deem to be acceptable. Said letters shall also state that the unaudited dollar amounts, percentages and other financial information (in each case to the extent that such dollar amounts, percentages and other financial information, either directly or by analysis or computation, are derived from the general accounting records of the Company) which appear (i) in the Prospectus under the caption Ratio of Earnings to Fixed Charges, or (ii) in the Company's most recent Annual Report on Form 10-K under the caption "Selected Financial Data" have been compared with the general accounting records of the Company and such dollar amounts, percentages and financial information have been found to be in agreement with the accounting records of the Company and the computations have been found to be 12 arithmetically correct. Each such letter shall relate to the Registration Statement and Prospectus as amended or supplemented to the date of each such letter. (d) Since the date of the most recent audited or unaudited financial statements included in or incorporated by reference in the Registration Statement and Prospectus, and up to (in the case of your obligation to solicit offers to purchase Notes) the time of such solicitations or since the date of any agreement by you to purchase Notes as principal and up to (in the case of your obligation to purchase Notes as principal) the settlement date relating to such purchase pursuant to a Terms Agreement or otherwise, there shall not have been any material adverse change in the condition of the Company, financial or otherwise. 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. On the Closing Date or any applicable date referred to in paragraph 7(b) hereof, as the case may be, 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; and at the Closing Date or any applicable date referred to in paragraph 7(b) hereof, as the case may be, you shall have received a certificate to such effect, signed by the Chairman of the Board, the President or any Vice President of the Company, it being understood that such certificate shall relate to the Registration Statement and Prospectus as amended or supplemented to the date of such certificate. (e) All legal proceedings to be taken in connection with the transactions contemplated by this Agreement shall have been satisfactory to McGuire, Woods, Battle & Boothe, L.L.P. In case any of the conditions specified above in this paragraph 7 shall not have been fulfilled, this Agreement may be terminated by any of you, as to yourself only, upon mailing or delivering written notice thereof to the Company. Any such termination shall be without liability of the terminating party and the Company to each other, except as otherwise provided in paragraphs 6(b), 9(e) and 10 hereof. 13 8. Additional Covenant of the Company. The Company agrees that each ---------------------------------- acceptance by it of an offer for the purchase of Notes hereunder shall be deemed to be an affirmation to you that the representations and warranties of the Company contained in this Agreement are true and correct as of the date of such acceptance as though made at and as of such time, and a covenant that such representations and warranties will be true and correct as of the date of delivery to the purchaser or the purchaser's agent of the Note or Notes relating to such acceptance and (in the case of your obligation to purchase Notes as principal) as of the settlement date relating to such purchase pursuant to a Terms Agreement or otherwise, as though made at and as of each such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to each such date). 9. Indemnification. --------------- (a) The Company agrees to indemnify and hold harmless you, your officers and directors and each person who controls you within the meaning of Section 15 of the Securities Act, or Section 20(a) of the Securities Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Securities Exchange Act or any other statute or common law and to reimburse you and each of your officers, directors and controlling persons for any legal or other expenses (including, to the extent hereunder provided, reasonable counsel fees) incurred by you or them in connection with investigating any such losses, claims, damages, liabilities, or in connection with defending any actions that arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, as originally filed or as amended or supplemented from time to time (if such amendments or supplements thereto shall have been furnished pursuant to paragraph 2(a) hereof), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that the indemnity agreement contained in this paragraph shall not apply to any such losses, claims, damages, liabilities, expenses or actions arising out of or based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, if such statement or omission was made in reliance upon information furnished in writing to the Company by any of you or on behalf of any of you for use in the Registration Statement or any amendment thereto, in the Prospectus or in any supplement thereto. 14 (b) Each of you agree to indemnify and hold harmless the Company, its officers and directors and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Securities Exchange Act or any other statute or common law and to reimburse each of them for any legal or other expenses (including, to the extent hereinafter provided, reasonable counsel fees) incurred by them in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions, insofar as such losses, claims, damages, liabilities, expenses or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, as originally filed or as amended or supplemented from time to time (if such amendments or supplements thereto shall have been furnished pursuant to paragraph 2(a) hereof) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished in writing to the Company by you or on your behalf for use in the Registration Statement or the Prospectus or any amendment or supplement to either thereof. (c) Each of you and the Company agree that, upon the receipt of notice of the commencement of any action against the Company or any of its officers or directors, or any person controlling the Company, or against you, your officers, directors or any controlling person as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, you or the Company, as the case may be, will promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought hereunder, but the omission so to notify such indemnifying party or parties of any such action shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party or parties otherwise 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 15 defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; provided that, if the defendants in any such action include both the indemnified party and the indemnifying party (or parties) and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party (or parties), the indemnified party shall have the right to select separate counsel to assert such legal defenses and to participate otherwise in the defense of such action on behalf of such indemnified party. The indemnifying party shall bear the reasonable fees and expenses of counsel retained by the indemnified party if (i) the indemnified party shall have retained such counsel in connection with the assertion of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, representing the indemnified parties under (a) or (b), as the case may be, of this paragraph 9 who are parties to such action), (ii) the indemnifying party shall elect not to assume the defense of such action, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the commencement of the action, or (iv) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this paragraph 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable to such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and of any of you participating in the transaction at issue, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable 16 considerations, including relative benefit. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading relates to information supplied by the Company on the one hand or by you on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each of you agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if all of you were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), none of you shall be required to contribute any amount in excess of the amount by which the total price at which the Notes purchased by or through you were sold exceeds the amount of any damages which you have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligation of each of you under this subparagraph (d) to contribute are several in proportion to the respective purchases made by or through you to which such loss, claim, damage or liability (or action in respect thereof) relates and are not joint. (e) The agreements contained in this paragraph 9 shall remain operative and in full force and effect regardless of any termination of this Agreement, any investigation made by or on behalf of such party, or any person controlling such party, and shall survive each delivery of the Notes. 10. Representations, Warranties and Agreements to Survive Delivery. All -------------------------------------------------------------- representations, warranties and agreements contained in this Agreement or contained in certificates of officers of the Company submitted pursuant hereto shall remain operative and in full force and effect regardless of any investigation made by you or on your behalf or on behalf of any controlling person of you, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Notes. 11. Status as Agent. In soliciting offers by others to purchase Notes --------------- from the Company, you are acting solely as agent for the Company, and not as principal. You will make reasonable efforts to assist the Company in obtaining performance by each 17 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 30 days' written notice of such termination to the other parties hereto. Each of you may also terminate any agreement by you to purchase Notes as principal, immediately upon notice to the Company, at any time prior to the settlement date relating thereto if during such period (a) there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis the effect of which is such as to make it, in your judgment, impracticable or inadvisable to market the Notes or enforce contracts for the sale of Notes on the terms and in the manner contemplated in the Prospectus, or (b) if trading in any securities of the Company has been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared either by federal or New York authorities or by the relevant authorities in the country or countries of origin of any foreign currency or currencies in which the Notes are denominated or payable, or (c) after the acceptance by you of such agreement to purchase Notes as principal and at or prior to the settlement date relating thereto, the Company shall have sustained a substantial loss by fire, flood, accident or other calamity which in your judgment renders it inadvisable to consummate the sale of the Notes and the delivery of the Notes upon the terms set forth in such agreement, regardless of whether or not such loss shall have been insured, or (d) there shall have occurred a downgrading in the rating accorded the Company's unsecured debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act. In the event of any such termination, neither the terminating party nor the terminated party shall have any liability to the other except as provided in the third full paragraph of paragraph 3(a), paragraph 6(b), paragraph 9 and paragraph 10 and except that, if at the time of termination you shall own any of the Notes with the intention of reselling them or an offer for the purchase of Notes 18 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, the Company shall also have the obligations provided in paragraphs 7 and 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 paragraphs 7(b) through (d) and paragraph 8 hereof as set forth in the immediately preceding clause of this sentence shall be subject to the conditions set forth in the first sentence of paragraph 7(a) hereof. 13. Miscellaneous. The validity and interpretation of this Agreement ------------- shall be governed by the laws of the State of New York. This Agreement may be executed in two or more counterparts. This Agreement shall inure to your benefit, the benefit of the Company and, with respect to the provisions of paragraph 9 hereof, each person who controls you and each of your officers and directors and each controlling person and each officer and director of the Company referred to in said paragraph 9, and their respective successors, assigns, executors and administrators. Nothing in this Agreement is intended or shall be construed to give to any person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. The term "successors" as used in this Agreement shall not include any of the purchasers, as such, of any of the Notes. 14. Notices. Except as otherwise specifically provided herein or in ------- the Procedures, all communications hereunder shall be in writing or by telegram and, if to you, shall be sent by telex, facsimile transmission, registered mail or delivered to the address set forth under your signature below and, if to the Company, shall be sent by telex, facsimile transmission, registered mail or delivered to it, attention of Treasurer, One James River Plaza, Richmond, Virginia 23219 (fax: (804)771-4066). 19 Please sign and return to us eight copies of this letter, whereupon this letter will become a binding agreement between the Company and you in accordance with its terms. Very truly yours, VIRGINIA ELECTRIC AND POWER COMPANY By: -------------------------------- Vice President The foregoing agreement is hereby confirmed and accepted, as of the date first above written. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: ---------------------------------- Authorized Signatory Address for Notices: Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center, North Tower 23rd Floor New York, New York 10281-1323 Attention: MTN Product Management Telephone: (212) 499-7582 Telecopy: (212) 449-2234 By: ---------------------------------- GOLDMAN, SACHS & CO. Address for Notices: Goldman, Sachs & Co. 85 Broad Street 27th Floor New York, New York 10004 Attention: MTN Desk Telephone: (212) 902-1482 Telecopy: (212) 902-0658 or (212) 902-4409 MORGAN STANLEY & CO. INCORPORATED By: ---------------------------------- Authorized Signatory Address for Notices: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas 4th Floor New York, New York 10020 Attention: Manager Continuously Offered Products Telephone: (212) 296-6700 Telecopy: (212) 764-7490 With copy to: Morgan Stanley & Co. Incorporated 1251 Avenue of the Americas 28th Floor New York, New York 10020 Attention: Peter Cooper - IBD Information Center Telephone: (212) 703-8385 Telecopy: (212) 703-6476 EXHIBIT A VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTES, SERIES F TERMS AGREEMENT --------------- July __, 1995 Virginia Electric and Power Company, One James River Plaza, Richmond, Virginia 23219 Attention: Treasurer Re: Distribution Agreement dated July __, 1995 The undersigned agrees to purchase the following principal amount of Securities: $_______________ Interest Rate: Stated Maturity: Purchase Price: _____% of par Specified Currency: Original Issue Date: Redemption Terms: (i) Initial Redemption Date (ii) Initial Redemption Percentage (% of par) (iii) Annual Redemption Percentage Reduction (iv) Limitation Date (v) Refunding Rate Settlement Date and Time: Exceptions, if any, to paragraph 6(h) of the Distribution Agreement: [Insert the certificates, opinions and accountants' letters to be required pursuant to paragraph 7 of the Distribution Agreement.] [Name of Agent Purchasing as Principal] By: --------------------------------------- Title: Accepted: Virginia Electric and Power Company By: ------------------------------- Title: EXHIBIT B VIRGINIA ELECTRIC AND POWER COMPANY Medium-Term Note Administrative Procedures Medium-Term Notes, Series F due from 9 Months to 30 Years from the date of issue (the Notes) in the aggregate principal amount at any time outstanding not to exceed U.S. $200,000,000 or the equivalent thereof in Specified Currencies are offered on a continuing basis by Virginia Electric and Power Company (the Company) through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., and Morgan Stanley & Co. Incorporated, as agents (the Agents), who have agreed to use their best efforts to solicit offers to purchase the Notes and who may also purchase Notes, as principals, for resale. The Notes are being sold pursuant to Distribution Agreements, dated July __, 1995 between the Company and each of the Agents (the Distribution Agreements). The Company has reserved the right to sell Notes directly on its own behalf. The Notes will be senior, unsecured debt and have been registered with the Securities and Exchange Commission (the Commission). Chemical Bank is the trustee (the Trustee) under the Indenture, dated as of April 1, 1988, as supplemented by the First Supplemental Indenture, dated as of August 1, 1989, between the Company and the Trustee (such Indenture, as amended and supplemented, hereafter referred to as the Indenture) covering the Notes. Chemical Bank shall also act as a paying agent, pursuant to an appointment by the Company, for payment of the principal of (and premium, if any) and interest on the Notes when due. In the case of purchases of Notes by any of the Agents, as principal, the relevant terms and settlement details related thereto, including the settlement date referred to in paragraph 3(b) of each Distribution Agreement, will be set forth in a Terms Agreement or otherwise entered into between such Agent and the Company pursuant to the relevant Distribution Agreement. The Notes will either be issued (i) in book-entry form and represented by one or more fully registered Notes (each, a Global Security) delivered to Chemical Bank or its successor (Chemical Bank), as agent for The Depository Trust Company (DTC), and recorded in the book-entry system maintained by DTC, or (ii) in certificated form delivered to the purchaser thereof or a person designated by such purchaser (Certificated Note). Owners of beneficial interests in a Global Security will be entitled to physical delivery of Notes in certificated form equal in principal amount to their respective beneficial interests only upon certain limited circumstances described in the Prospectus. Administrative responsibilities, document control and record-keeping functions will be handled for the Company by its Treasurer's Department. The Company will advise the Agents in writing of those persons handling administrative responsibilities with whom the Agents are to communicate regarding offers to purchase Notes and the details of their delivery. General procedures relating to the issuance and administration of all Notes are set forth in Part I hereof. Additionally, Global Securities and beneficial interests therein will be issued and administered in accordance with the procedures set forth in Part II hereof and Notes issued in certificated form will be issued and administered in accordance with the procedures set forth in Part III hereof. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Indenture or the Notes, as the case may be. Part I: Administrative Procedures of General Applicability Date of Issuance; Each Note will be dated as of the date of its authentication Authentication: by the Trustee. Each Note will also bear an original issue date (the Original Issue Date). Except for the consolidation of two or more Global Securities, the Original Issue Date shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of such original Note regardless of their dates of authentication. Maturity; Each Note will mature on a date selected by the purchaser Redemption: and agreed to by the Company, which will be at least 9 months but not more than 30 years from the Original Issue Date. The Notes will be subject to redemption by the Company on and after the Redemption Date, if any, at the respective Redemption Prices. Redemption Dates and the applicable Redemption Prices, if any, will be agreed to by the Company and the purchaser at the time of sale and set forth on the applicable Note and in the applicable Pricing Supplement. If no Redemption Date is indicated with respect to a Note, such Note will not be redeemable prior to Stated Maturity. If the applicable Pricing Supplement so provides, the terms of a Note which is subject to redemption prior to Stated Maturity may specify that the Company B-2 may not redeem such Note prior to a specified date (the Limitation Date) as a part of, or in anticipation of, a refunding operation by the application of monies borrowed having an interest cost to the Company of less than a specified rate (the Refunding Rate). The Notes will not be subject to amortization or a sinking fund. Denominations: Unless otherwise determined by the Company, Notes will be issued and payable in U.S. dollars in the denomination of U.S. $1,000 and any larger denomination which is an integral multiple of U.S. $1,000. Registration: Notes will be issued only in fully registered certificated or book-entry form. Base Rates applic- Unless otherwise provided in the applicable Pricing able to Floating Supplement, Floating Rate Notes (except for certain Original Rate Notes: Issue Discount Notes) will bear interest at a rate determined by reference to the CD Rate (CD Rate Notes), the Commercial Paper Rate (Commercial Paper Rate Notes), LIBOR (LIBOR NOTES), the Prime Rate (Prime Rate Notes), the Federal Funds Rate (Federal Funds Rate Notes), the Treasury Rate (Treasury Rate Notes), the CMT Rate (CMT Rate Notes), or such other interest rate basis or formula as may be set forth in the applicable Pricing Supplement, as adjusted by the Spread and/or Spread Multiplier, if any, applicable to such Floating Rate Notes. Interest Unless otherwise provided in an applicable Fixed Rate Note, Payments: interest payments on Fixed Rate Notes (except defaulted interest) will be made on each January 1 and July 1 and at Stated Maturity or upon earlier redemption, as the case may be. Interest payments on Floating Rate Notes will be made as specified in the related Floating Rate Note and Pricing Supplement. Interest payments will be made on the interest payment dates established as set forth above (the Interest Payment Dates) to the registered owners at the close of business on the immediately preceding record dates, which shall, unless otherwise indicated in the applicable Pricing Supplement, be the dates 15 calendar days (whether or not a Business Day) preceding such Interest Payment Dates, respectively (the Record Dates); except that where a Note is issued between a Record Date and the Interest Payment Date relating thereto, interest for the period beginning on the Original Issue Date and ending on such Interest Payment Date will be paid on the second Interest Payment Date following the Original Issue Date to the person in whose name such Note was registered on the Record Date immediately preceding such Interest Payment Date. Interest payable at Stated Maturity or upon earlier redemption, as the case may be, will be paid to the same person to whom principal is payable. Interest will begin to accrue on the Original Issue Date of a Note for the first interest period and from the most recent Interest Payment Date to which interest has been paid for all subsequent interest periods. Each payment of interest shall include interest accrued through the day before the Interest Payment Date, Stated Maturity or earlier redemption, as the case may be (each Stated Maturity or Redemption Date is referred to herein as Maturity). If an Interest Payment Date with respect to any Fixed Rate Note falls on a day that is not a Business Day, the payment of interest required to be made on such Interest Payment Date need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date and no interest shall accrue on such payment for the period from and after such Interest Payment Date. If an Interest Payment Date (other than at Maturity) with respect to any Floating Rate Note would otherwise fall on a day that is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, except that in the case of a LIBOR Note (or a Note for which LIBOR is an applicable Base Rate), if such day falls in the next succeeding calendar month, such Interest Payment Date will be the preceding day that is a Business Day. If the date of Maturity of a Note is not a Business Day, the payment of principal and interest due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Maturity. For additional special provisions relating to Floating Rate Notes, see the Prospectus and the applicable Pricing Supplement. B-3 Computation In the case of Fixed Rate Notes, interest (including of Interest: payments for partial periods) will be calculated on the basis of a 360-day year of twelve 30-day months. (Examples of interest calculations are as follows: 6-15-95 to 12-15-95 equals six months, zero days or 180 days; thus the interest paid equals 180/360 x the annual rate of interest x face value. The period from 6-17-95 to 11-15-95 equals four months, 28 days or 148 days; thus the interest paid equals 148/360 x the annual rate of interest x face value.) Interest does not accrue on the 31st day of any month. The interest rate on each Floating Rate Note will be calculated by reference to the specified Base Rate in either case plus or minus the applicable Spread, if any, and/or multiplied by the applicable Spread Multiplier, if any. Unless otherwise provided in the applicable Pricing Supplement, interest on each Floating Rate Note will be calculated by multiplying its face amount by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day in the period for which accrued interest is being calculated. Unless otherwise specified in the applicable Pricing Supplement, the interest factor for each such day is computed by dividing the interest rate applicable to such day by 360 in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes or Prime Rate Notes, or by the actual number of days in the year in the case of Treasury Rate Notes and CMT Rate Notes. Acceptance and The Company will have the right to accept or reject in whole Rejection of or in part offers to purchase Notes. Each Agent shall Offers: communicate to the Company, orally or in writing, each offer to purchase Notes received by it, other than those rejected by it as unreasonable. Each Agent may reject any offer in whole or in part. Payment: The Company, prior to the first sale of any of the Notes hereunder, shall deliver to each Agent standing wire transfer instructions for funds payable by such Agent to the Company for Notes sold by such Agent hereunder. Such instructions may be changed at any time by the Company. Settlement: The receipt of immediately available funds by the Company in payment for a Note and the authentication and issuance of such Note shall constitute "settlement" with respect to such Note. All offers accepted by the Company will be settled not later than the third Business Day next following such acceptance pursuant to the timetable for settlement set forth in Parts II and III hereof unless the Company and the purchaser agree to settlement on a later date; provided, however, that in the case of a delayed settlement the Company will notify the Trustee at least 24 hours prior to the time of settlement. In the event of a purchase of Notes by an Agent, as principal, appropriate settlement details will be set forth in the applicable Terms Agreement or otherwise to be entered B-4 into between the Agent and the Company pursuant to the Distribution Agreements. Procedure for When a decision has been reached to set the interest rates Rate: of Notes being sold by the Company, the Company will promptly advise the Agents, who will forthwith suspend solicitation of offers to purchase Notes. At that time, the Agents may recommend and the Company may establish new or revised "posted" rates. Immediately thereafter, the Agents may solicit offers to purchase Notes at the posted rates. Immediately following acceptance of any such offers, the Company will prepare Pricing Supplements reflecting such posted rates and will arrange to have ten Pricing Supplements filed with, or mailed for filing to, the Commission pursuant to Rule 424(b)(3) of the Securities Act of 1933, as amended. In each instance that a Pricing Supplement is prepared, the Agents will affix the Pricing Supplements to the Prospectuses prior to its use. Outdated Pricing Supplements (other than those retained for files) will be destroyed. The Company will provide to the Agent the necessary quantity of Pricing Supplements. Preparation of Information to be included in the Pricing Supplement shall Pricing include: Supplement: 1. the name of the Company; 2. the title of the securities, including series designation, if any; 3. the date of the Pricing Supplement and the dates of the Prospectus and Prospectus Supplement to which the Pricing Supplement relates; 4. the name of the Presenting Agent (as defined below); 5. whether such Notes are being sold to the Presenting Agent as principal or to an investor or other purchaser through the Presenting Agent acting as agent for the Company; 6. with respect to Notes sold to the Presenting Agent as principal, whether such Notes will be resold by the Presenting Agent to investors and other purchasers (i) at a fixed public offering price of a specified percentage of their principal amount, (ii) at varying prices related to prevailing market prices at the time of resale to be determined by the Presenting Agent or (iii) at 100% of their principal amount; 7. with respect to Notes sold to an investor or other purchaser through the Presenting Agent acting as agent for the Company, whether such Notes will be sold at (i) 100% of their principal amount or (ii) at a specified percentage of their principal amount; 8. the Presenting Agent's commission or underwriting discount; 9. Net proceeds to the Company; 10. the Principal Amount, Original Issue Date, Stated Maturity, Redemption Date, if any, Initial Redemption Percentage, if any, Annual Redemption Percentage Reduction, if any, and Optional Repayment Date or Dates, if any, and, in the case of Fixed Rate Notes, the Interest Rate, the Interest Payment Date or Dates (if other than July 1 and January 1 of each year) and the Record Date or Dates (if other than June 15 and December 15 of each year), and, in the case of Floating Rate Notes, the Base Rate or Rates, the Index Maturity (if applicable), the Initial Interest Rate, the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Interest Payment Date or Dates, the Record Date or Dates, the Interest Reset Date or Dates, the Spread and/or Spread Multiplier, if any, and the Calculation Agent; and any other information needed to complete a Floating Rate Note or a Fixed Rate Note; 11. the information with respect to the terms of the Notes set forth below (whether or not the applicable Note is a Book-Entry Note or a Certificated Note) under "Administrative Procedures Relating to Global Securities - Settlement Procedures", items (A)1, 2, 3 and 10; and 12. any other provisions of the Notes material to investors or other purchasers of the Notes not otherwise specified in the Prospectus or Pricing Supplement. Pricing The Company shall have delivered a completed Pricing Supplement Supplement, via next day mail or telecopy to arrive no later Instructions: than 11:00 A.M. on the Business Day following the trade date, to the Agent which made or presented the offer to purchase the applicable Note (in such capacity, the Presenting Agent) at the following locations: Merrill Lynch & Co.: Merrill Lynch & Co. - Tritech Services 4 Corporate Place Corporate Park 287 Piscataway, NJ 08854 Attn: Final Prospectus Unit/Nachman Telephone: (908) 878-6525/26/27 Telecopy: (908) 878-6530 also, for record keeping purposes, please send a copy to: B-5 Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters World Financial Center, North Tower 23rd Floor New York, NY 10281-1323 Attn: MTN Product Management Telephone: (212) 449-7582 Telecopy: (212) 449-2234 Morgan Stanley & Co. Incorporated: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas 4th Floor New York, NY 10020 Attn: Medium-Term Note Trading Desk/Carlos Cabrera Telephone: (212) 296-5830 Telecopy: (212) 764-7490 Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas 4th Floor New York, NY 10020 Attn: Debt Syndicate Department Goldman, Sachs & Co.: Goldman, Sachs & Co. 85 Broad Street 27th Floor New York, NY 10004 Attn: MTN Desk Telephone: (212) 902-1482 Telecopy: (212) 902-0658 or (212) 902-4409 Suspension of Subject to its representations, warranties and covenants Solicitation; contained in the Distribution Agreements, the Company may Amendment or instruct the Agents to suspend solicitation of offers to Supplement: purchase at any time. Upon receipt of such instructions, each Agent forthwith will suspend solicitation until such time as the Company has advised it that solicitation of offers to purchase may be resumed. If the Company decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes (other than to change rates), it will promptly advise the Agents and will furnish them and the Trustee with copies of the proposed amendment or supplement, all consistent with its B-6 obligations under the Distribution Agreements. In the event that at the time the solicitation of offers to purchase is suspended (other than to change interest rates) there shall be any orders outstanding which have not been settled, the Company will, consistent with its obligations under the Distribution Agreements, promptly advise the Agents and the Trustee whether such orders may be settled and whether copies of the Prospectus as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus may not be so delivered. Delivery of A copy of the Prospectus as most recently amended or Prospectus: supplemented must be sent by the Agent to a customer or a customer's agent prior to or together with the earlier of delivery of (i) each written confirmation of a sale sent to such customer or agent or (ii) each Note delivered to such customer or agent. If notice of a change in the terms of the Note is received by the Agents between the time an order for Notes is placed and the time written confirmation thereof is sent to a customer or a customer's agent, such confirmation shall be accompanied by a Prospectus bearing a supplement setting forth the rates in effect when the order was placed and a supplement setting forth the revised rates. Authenticity The Company will cause the Trustee to furnish the Agents of Signatures: from time to time with the specimen signatures of each of the officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but the Agents will have no obligation or liability to the Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company or the Trustee on any Note. Advertising Costs: The Company will determine with the Agents the amount of advertising that may be appropriate in connection with the B-7 solicitation of offers to purchase the Notes. Advertising expenses approved by the Company in connection with the solicitation of offers to purchase Notes from the Company will be paid by the Company. Chemical Bank Nothing herein will be deemed to require Chemical Bank to Not to Risk risk or expend its own funds in connection with any payment Funds: to the Company, the Agent, the Depositary or any Holder, it being understood by all parties that payments made by Chemical Bank to any party will be made only to the extent that funds are provided to Chemical Bank for such purpose. Part II: Administrative Procedures Relating to Global Securities In connection with the qualification of Global Securities for eligibility in the book-entry system maintained by the Depositary, Chemical Bank will perform the custodial, document control and administrative functions described below, in accordance with the obligations of Chemical Bank under a Letter of Representations from the Company and Chemical Bank to the Depositary, dated June __, 1995, and a Medium-Term Note Certificate Agreement, dated December 2, 1988, between Chemical Bank and the Depositary (the Certificate Agreement), and Chemical Bank's obligations as a participant in the Depositary, including the Depositary's Same-Day Funds Settlement System (SDFS). It is understood that the ownership interests of purchasers in Global Securities will be credited to the book-entry accounts of one or more participants in the Depositary (each a Participant) in accordance with the Depositary's customary practices and reflected in the records of such Participants or one or more indirect participants in the Depositary designated by such purchasers in accordance with the arrangements between such purchasers and such Participants and indirect participants. Issuance: All Fixed Rate Notes issued in book-entry form having the same Original Issue Date, redemption terms, Interest Payment Dates, interest rate, Specified Currency, original issue discount provisions, if any, and Stated Maturity (collectively, the Fixed Rate Terms) will be represented initially by a single Global Security in fully registered form without coupons, and all Floating Rate Notes issued in book-entry form having the same Original Issue Date, Base Rate, which may be the CD Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate, the CMT Rate or any other interest rate basis or formula set forth by the Company, Initial Interest Rate, Index Maturity, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate, if any, redemption and/or repayment terms, if any, and Stated Maturity (collectively, Floating Rate Terms) will be represented initially by a single Global Security in fully registered form without coupons. Each Global Security will bear an Original Issue Date, which will be (i) with respect to an original Global Security (or any portion B-8 thereof), its issue date, and (ii) following a consolidation of Global Securities, the most recent date to which interest has been paid or duly provided for on the predecessor Global Securities, regardless of the date of authentication of such subsequently issued Global Security. No Global Security will represent any Note issued in certificated form. Identification: The Company has arranged with the CUSIP Service Bureau of Standard & Poor's Corporation (the CUSIP Service Bureau) for the reservation of approximately 900 CUSIP numbers which have been reserved for future assignment to Global Securities, and the Company has delivered to Chemical Bank and the Depositary an initial written list of such CUSIP numbers. The Company will assign CUSIP numbers to Global Securities as described below under Settlement Procedure B. The Depositary will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Company has assigned to Global Securities. Chemical Bank will notify the Company at any time when fewer than 100 of the reserved CUSIP numbers remain assigned to Global Securities, and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Securities. Upon obtaining such additional CUSIP numbers, the Company will deliver a list of such additional numbers to Chemical Bank and the Depositary. Ownership interests of purchasers having an aggregate principal amount in excess of U.S. $200,000,000 will be represented by two or more Global Securities which shall all be assigned the same CUSIP number. Registration: Each Global Security will be registered in the name of the nominee for the Depositary, Cede & Co. or such other nominee as requested by an authorized representative of the Depositary (Cede & Co.), on the register maintained by Chemical Bank under the Indenture. Transfers: Transfers of interests in a Global Security will be effected in accordance with arrangements in effect between Participants (and in certain cases, one or more indirect B-9 participants in the Depositary) and the beneficial transferors and beneficial transferees of such interests, which will be reflected as appropriate by book entries made by the Depositary. Exchanges; Chemical Bank may deliver to the Depositary and the CUSIP Consolidation: Service Bureau at any time a written notice specifying (i) the CUSIP numbers of two or more Global Securities having the same Fixed Rate Terms or Floating Rate Terms (except that Original Issue Dates need not be the same) and for which interest (if any) has been paid to the same date; (ii) a date, occurring at least 30 days after such written notice is delivered and at least 30 days before the next Interest Payment Date (if any) for such Global Securities, on which such Global Securities shall be exchanged for a single replacement Global Security; and (iii) a new CUSIP number to be assigned to such replacement Global Security. A copy of such notice will be attached to such replacement Global Security. Upon receipt of such a notice, the Depositary will send to its Participants (including Chemical Bank) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, Chemical Bank will deliver to the CUSIP Service Bureau written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Securities to be exchanged will no longer be valid. On the specified exchange date, the Trustee and Chemical Bank will exchange such Global Securities for a single Global Security bearing the new CUSIP number and a new Original Issue Date, and the CUSIP numbers of the exchanged Global Securities will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Global Securities to be exchanged exceed U.S. $200,000,000 in aggregate principal amount, one replacement Global Security will be authenticated and issued to represent each U.S. $200,000,000 of principal amount of the exchanged Global Securities and an additional Global Security will be authenticated and issued to represent any B-10 remaining principal amount of such Global Securities (see "Denominations" below). Denominations: All Global Securities will currently be denominated in U.S. dollars. Unless otherwise determined by the Company, beneficial interests in such Securities will be issued in denominations of U.S. $1,000 and any larger denomination which is an integral multiple of U.S. $1,000. Global Securities will be denominated in principal amounts not in excess of U.S. $200,000,000. If one or more such beneficial interests having an aggregate principal amount in excess of U.S. $200,000,000 would, but for the preceding sentence, be represented by a single Global Security, then one Global Security will be issued to represent each U.S. $200,000,000 principal amount of such interest or interests and an additional Global Security will be issued to represent any remaining principal amount of such interest or interests. In such a case, each of the Global Securities representing such interest or interests shall be assigned the same CUSIP number. Interest: General. The Depositary will arrange for each pending ------- deposit message described under Settlement Procedure C below to be transmitted to Standard & Poor's Corporation, which will use the message to include certain information regarding the related Global Security in the appropriate daily bond report published by Standard & Poor's Corporation. Regular Record Date. Unless otherwise specified in the ------------------- related Pricing Supplement, the Record Dates with respect to any Global Security bearing interest at a Fixed Rate will be the December 15 and June 15 next preceding the January 1 and July 1 Interest Payment Dates. Unless otherwise specified in the related Pricing Supplement, the Record Date with respect to any Interest Payment Date for any Global Security bearing interest at a Floating Rate shall be the date 15 calendar days (whether or not a Business Day) preceding such Interest Payment Date. Payments of Prin- Payments of Interest Only. Promptly after each Record Date, cipal, Premium and ------------------------- Interest: Chemical Bank will deliver to the Company and the Depositary a written notice specifying by CUSIP number the amount of interest, if then known, to be paid on each Global Security on the following Interest Payment Date (other than an Interest Payment Date coinciding with Stated Maturity) and the total of such amounts. The Company will B-11 confirm with Chemical Bank the amount payable on each Global Security on such Interest Payment Date. The Depositary will confirm the amount payable on each Global Security on such Interest Payment Date by reference to the daily bond reports published by Standard & Poor's Corporation. On such Interest Payment Date, the Company will pay to Chemical Bank, and Chemical Bank in turn will pay to the Depositary, such total amount of interest due (other than at Stated Maturity), at the times and in the manner set forth below under "Manner of Payment". Payments at Stated Maturity or upon Redemption. On or about ---------------------------------------------- the first Business Day of each month, Chemical Bank will deliver to the Company and the Depositary a written list of principal (and premium, if any) and interest to be paid, if then known, on each Global Security maturing either at Stated Maturity or upon earlier redemption in the following month. Chemical Bank, the Company and the Depositary will confirm the amounts of such principal (and premium, if any) and interest payments with respect to each such Global Security on or about the fifth Business Day preceding Stated Maturity or earlier redemption of such Global Security. At such Stated Maturity or earlier redemption, the Company will pay to Chemical Bank, and Chemical Bank in turn will pay to the Depositary, the principal amount of such Global Security, together with interest and premium, if any, due on such Stated Maturity or upon such earlier redemption, at the times and in the manner set forth below under "Manner of Payment". Promptly after payment to the Depositary of the principal (and premium, if any) and interest due at Stated Maturity or upon earlier redemption of such Global Security, the Trustee will cancel and dispose of such Global Security, make appropriate entries in its records and deliver a certificate of disposition with respect thereto. Manner of Payment. The total amount of any principal (and ----------------- premium, if any) and interest due on Global Securities on any Interest Payment Date or at Stated Maturity or upon earlier redemption shall be paid by the Company to Chemical Bank in funds immediately B-12 available for use by Chemical Bank as of 9:30 a.m., New York City time, on such date. The Company will make such payment on such Global Securities by instructing Chemical Bank to withdraw funds from the account (number 322-012120) maintained by the Company with Chemical Bank. The Company will confirm such instructions in writing by facsimile or other acceptable means to Chemical Bank. For maturity and redemption, prior to 10:00 a.m., New York City time, on each Stated Maturity or upon earlier redemption or as soon as possible thereafter, Chemical Bank, following receipt of such funds from the Company, will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by the Depositary) to an account at the Federal Reserve Bank of New York previously specified by the Depositary, in funds available for immediate use by the Depositary, each payment of principal (and premium, if any) and interest due on Global Securities on such date; and for interest payments, Chemical Bank will pay the Depositary in same-day funds on the Interest Payment Date in accordance with existing arrangements between Chemical Bank and the Depositary. Thereafter on each such date, the Depositary will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the beneficial interests in such Global Securities are recorded in the book-entry system maintained by the Depositary. Once payment has been made to the Depositary, neither the Company, Chemical Bank nor the Trustee shall have any responsibility or liability for the payment by the Depositary of the principal of (and premium, if any) or interest on such beneficial interests to such Participants. Withholding Taxes. The amount of any taxes required under ----------------- applicable law to be withheld from any interest payment on a beneficial interest in a Global Security will be determined and withheld by the Participant, indirect participant in the Depositary or other Person responsible for forwarding payments and materials directly to the B-13 beneficial owner of such interest, or as applicable law may otherwise require. Settlement Settlement Procedures with regard to each beneficial Procedures: interest in a Global Security purchased by the Agent, as principal, or sold by the Agent, as agent of the Company, will be as follows: A. After the acceptance of an offer by the Company with respect to a beneficial interest in a Global Security, the Agent will communicate the following details of the terms of such offer (the Book-Entry Sale Information) to the Company by telephone or other acceptable means: 1. Principal amount of the beneficial interest to be purchased; 2. (a) Fixed Rate Notes: (i) Interest Rate (ii) Interest Payment Dates (b) Floating Rate Notes: (i) Base Rate or Rates (ii) Initial Interest Rate (iii) Spread and/or Spread Multiplier, if any (iv) Interest Reset Date or Dates (v) Interest Reset Period (vi) Interest Payment Dates (vii) Record Dates (viii) Index Maturity (ix) Maximum and Minimum Interest Rates, if any (x) Calculation Agent 3. Stated Maturity; 4. Specified Currency (presently, only U.S. dollars); 5. If the Specified Currency is other than U.S. dollars (see 4, above), the applicable Exchange Rate (as hereinafter defined) for such Specified Currency, and the authorized denominations (including the minimum denomination); 6. Original Issue Date; 7. Commission due to Agent; 8. Net proceeds to the Company; 9. Settlement date; 10. If the Note is redeemable by the Company, such of the following as are applicable: (i) Initial Redemption Date, (ii) Initial Redemption Percentage (% of par), B-14 (iii) Annual Redemption Percentage Reduction, (iv) Limitation Date, and (v) Refunding Rate; 11. Denomination of Global Securities to be delivered at settlement; and 12. Current interest rate of U.S. Treasury security with comparable maturity. 13. Any other information needed to complete the transaction or the applicable form of Note. B. The Company will assign a CUSIP number to the Global Security relating to the beneficial interest sold by the Agent, and upon receiving the Book-Entry Sale Information from the Agent, the Company will advise Chemical Bank in writing, including facsimile or electronic transmission, of the Book-Entry Sale Information received from the Agent and the CUSIP number. C. Chemical Bank will communicate to the Depositary, and the Agent, through the Depositary's Participant Terminal System, a pending deposit message specifying the following settlement information: 1. The applicable Book-Entry Sale Information; 2. Identification numbers of the Participant accounts maintained by the Depositary on behalf of Chemical Bank and the Agent; 3. Identification of the book-entry note as a Fixed Rate Note or Floating Rate Note. 4. Initial Interest Payment Date for the Global Security, number of days by which such date succeeds the related Record Date for Depositary purposes (or, in the case of Floating Rate Notes which reset daily or weekly, the date five calendar days preceding the Interest Payment Date), and the amount of interest payable on such Interest Payment Date per $1,000 principal amount of such Security; 5. CUSIP number of the Global Security; and 6. Whether the Global Security will represent any other beneficial interests in such Security issued or to be issued (to the extent then known). B-15 D. The Company will deliver to the Trustee a Global Security representing such interest or interests, and the Company will instruct the Trustee by facsimile transmission or other acceptable written means to authenticate such Global Security, to register such Global Security in the name of Cede & Co., as nominee of the Depositary, and to effect delivery thereof to the Depositary by Chemical Bank's possession of such authenticated Global Security as agent for the Depositary. E. Chemical Bank will complete and the Trustee will authenticate the Global Security representing such interest or interests, and Chemical Bank will register such Global Security in the name of Cede & Co., as nominee of the Depositary, and take delivery thereof as agent for the Depositary. F. The Depositary will credit such interest or interests to the Participant account of Chemical Bank maintained by the Depositary. G. Chemical Bank will enter an SDFS deliver order through the Depositary's Participant Terminal System instructing the Depositary (i) to debit such interest or interests to Chemical Bank's Participant account and credit such interest or interests to the Participant account of the Agent maintained by the Depositary and (ii) to debit the settlement account of the Agent and credit the settlement account of Chemical Bank maintained by the Depositary, in an amount equal to the price of such interest or interests less the Agent's commission (or discount, as the case may be). Any entry of such a deliver order shall be deemed to constitute a representation and warranty by Chemical Bank to the Depositary that (i) the Global Security representing such interest or interests has been executed and authenticated and (ii) Chemical Bank is holding such Global Security pursuant to the Certificate Agreement. H. The Agent will enter an SDFS deliver order through the Depositary's Participant Terminal System instructing the Depositary (i) to debit each interest to the Participant B-16 account of the Agent and credit each interest to the Participant account of each Participant maintained by the Depositary with respect to each interest and (ii) to debit the settlement account of each Participant and credit the settlement account of the Agent maintained by the Depositary in an amount equal to the price of each interest. I. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures G and H will be settled in accordance with SDFS operating procedures in effect on the settlement date. J. Chemical Bank will wire to the Company, in accordance with the standing instructions of the Company theretofore delivered to Chemical Bank, the amount transferred to Chemical Bank in accordance with Settlement Procedure G in funds available for immediate use, subject to later confirmation of the receipt of such funds. K. The Agent will confirm the purchase of each beneficial interest to the purchaser either by transmitting to the Participant with respect to such interest a confirmation order through the Depositary's Participant Terminal System or by mailing a written confirmation to such purchaser. Settlement For orders of beneficial interests in a Global Security Procedures accepted by the Company, Settlement Procedures "A" through Timetable: "K" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time ---------- ---- A 11:00 a.m. on the trade date B 12:00 Noon on the trade date C 2:00 p.m. on the trade date D 3:00 p.m. on the Business Day before settlement date E 9:00 a.m. on settlement date F 10:00 a.m. on settlement date G-H 2:00 p.m. on settlement date I 4:45 p.m. on settlement date J-K 5:00 p.m. on settlement date B-17 If a sale is to be settled more than one Business Day after the trade date, Settlement Procedures A, B and C may, if necessary, be completed at any time prior to the specified times on the first Business Day after such sale date. Settlement Procedure I is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. If settlement of a beneficial interest in a Global Security is rescheduled or cancelled, the Company will as soon as practicable give Chemical Bank notice to such effect. Chemical Bank will deliver to the Depositary, through the Depositary's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled settlement date (provided Chemical Bank has received such notice from the Company by noon on the Business Day immediately preceding the settlement date) and in any case as soon as practicable. A copy of such message will be routed through the facilities of the Depositary to the Agent by Chemical Bank and to Standard & Poor's Corporation by the Depositary. Fails: If Chemical Bank fails to enter an SDFS deliver order in timely fashion with respect to any purchase of a beneficial interest in the Global Security pursuant to Settlement Procedure G, Chemical Bank may deliver to the Depositary, through the Depositary's Participant Terminal System, as soon as practicable a withdrawal message instructing the Depositary to debit such Global Security to the Participant account of Chemical Bank, as applicable, maintained at the Depositary. A copy of such message will be routed through the facilities of the Depositary to the Agent. The Depositary will process the withdrawal message, provided that such Participant account contains beneficial interests having the same Fixed Rate Terms or Floating Rate Terms, and having an aggregate principal amount that is at least equal to the principal amount to be debited. If withdrawal messages are processed with respect to all the beneficial B-18 interests represented by a particular Global Security, the Trustee will immediately cancel such Global Security, make appropriate entries in its records and, unless otherwise instructed by the Company, dispose of the Global Security and deliver a certificate of disposition with respect thereto. The CUSIP number assigned to such Global Security shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If withdrawal messages are processed with respect to only a portion of the beneficial interests represented by a particular Global Security, the Trustee will exchange such Global Security for two Global Securities, one of which shall represent the beneficial interest or interests for which withdrawal messages are processed and shall be cancelled and disposed of immediately after issuance, and the other of which shall represent the other beneficial interest or interests previously represented by the surrendered Global Security and shall bear the CUSIP number of the surrendered Global Security. The Company will reimburse the Agent on an equitable basis for its loss of the use of funds during any period when the funds were credited to the account of the Company in connection with such attempted settlement. If the purchase price for any beneficial interest in a Global Security is not timely paid to the Participants with respect to such interest by the purchaser thereof or by a Person, including an indirect participant in the Depositary, acting on behalf of such purchaser (other than the Agent, if any), such Participants and, in turn, the Agent, may enter SDFS deliver orders through the Depositary's Participant Terminal System debiting such interest free to the Agent's Participant account maintained by the Depositary and crediting such interest free to the Participant account of Chemical Bank maintained by the Depositary and shall notify Chemical Bank and the Company thereof. Thereafter, Chemical Bank will (i) promptly confirm that such Note has been credited to its Participant account and (ii) immediately notify the Company, and the Company will immediately transfer by Fedwire immediately B-19 available funds to the Agent an amount equal to the price of such interest which was previously transferred from the account of the Agent under Settlement Procedure G. Immediately thereafter, Chemical Bank will deliver the withdrawal message and take the related actions described in the preceding paragraph. The debits and credits described in the previous sentence will be made on the settlement date, if possible, and in any event not later than 5:00 p.m. on the following Business Day. The Company will reimburse the Agent on an equitable basis for its loss of the use of funds during any period when the funds were credited to the account of the Company in connection with such attempted settlement. Notwithstanding the foregoing, upon any failure to settle with respect to any portion of a Global Security, the Depositary may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to any beneficial interest in a Global Security that was to have been represented by a Global Security also representing other beneficial interests, the Trustee and Chemical Bank will provide, in accordance with Settlement Procedures D and E, for the authentication and issuance of a Global Security representing the remaining principal amount to have been represented by such Global Security and will make appropriate entries in its records. Part III: Administrative Procedures Relating to Notes in Certificated Form Denominations: The Company may determine, upon agreement with a purchaser of Notes, that such Notes will be denominated and payable in a currency or currency unit to be specified in a Pricing Supplement as the Specified Currency. Where the Specified Currency is not U.S. dollars, unless otherwise specified in such supplement, the authorized minimum denominations of such Notes will be the foreign currency or currency unit equivalent, as determined by the noon (New York City time) buying rate for such Specified Currency B-20 for cable transfers quoted in New York City as certified for customs purposes by the Federal Reserve Bank of New York (the Exchange Rate) on the Business Day immediately preceding the date of settlement (as defined below) for such Notes, of U.S. $1,000 (rounded down to an integral multiple of 1,000 units of such Specified Currency); provided, however, that in the case of European Currency Units, Exchange Rate means, unless otherwise agreed by the Company and the Agents the rate of exchange determined by the Council of European Communities (or any successor thereto) as published on such date or the most recently available date in the Official Journal of the European Communities (or any successor publication). A Note may also be issued in any higher denomination which is an even multiple of U.S. $1,000 or 1,000 units of the Specified Currency, as the case may be. Payments of The Trustee will pay the principal of (and premium, if any) Principal, Premium and interest on each Note at Stated Maturity or earlier and Interest: redemption, as the case may be, upon presentment of the Note to the Trustee. Such payment will be made in immediately available funds by the Trustee, provided the Trustee has timely received (i) from or on behalf of the Company funds available to the Trustee before such payment and (ii) appropriate wire transfer instructions from the Holder. Notes presented to the Trustee at Stated Maturity or earlier redemption, as the case may be, for payment will be cancelled by the Trustee; the Trustee will deliver Notes presented to it for payment at Stated Maturity or earlier redemption, as the case may be, to the Company with an appropriate debit advice. All interest payments (other than interest due at Stated Maturity or earlier redemption, as the case may be) will be made by the Trustee by wire transfer to an account designated by the Holder or, in the absence of such a designation, by check drawn on the Trustee and mailed by the Trustee to the Person entitled thereto, or, in the case of interest payments to be made in the Specified Currency other than U.S. dollars, by wire transfer to a bank account designated by the Holder of such Note in the country of the B-21 Specified Currency (see Multi-Currency Procedures Supplement), as provided in the Indenture and the Note. Following each Record Date, the Trustee will furnish the Company with a list of interest payments to be made on the following Interest Payment Date, each stated in the currency in which payment is to be made for each Note theretofore issued. The Trustee will provide monthly to the Company's Treasurer's Department a list of the principal (and premium, if any) and interest to be paid on Notes maturing in the next succeeding month. The Trustee will assume responsibility for U.S. withholding taxes on interest paid to non-residents of the United States. Settlement Settlement Procedures with regard to each Note purchased by Procedures: an Agent, as principal, or through an Agent, as agent, shall be as follows: A. The Agent will advise the Company of the following settlement information: 1. Exact name in which Note is to be registered (Registered Owner); 2. Exact address of the Registered Owner and address for payment of principal (premium, if any) and interest; 3. Taxpayer identification number of the Registered Owner; 4. Principal amount(s) (and denomination(s)) of the Note(s); 5. (a) Fixed Rate Notes: (i) Interest Rate (ii) Interest Payment Dates (b) Floating Rate Notes: (i) Base Rate or Rates (ii) Initial Interest Rate (iii) Spread and/or Spread Multiplier, if any (iv) Interest Reset Date or Dates (v) Interest Reset Period (vi) Interest Payment Dates (vii) Record Dates (viii) Index Maturity (ix) Maximum and Minimum Interest Rates, if any (x) Calculation Agent 6. Stated Maturity; 7. Specified Currency of the Notes; 8. If the Note is to be denominated in a Specified Currency other than U.S. dollars, the applicable Exchange Rate and the denomination of the Note (including the minimum denomination); 9. Original Issue Date; 10. Commission due to Agent; B-22 11. Net proceeds to the Company; 12. Settlement date; 13. Date of delivery of the Note to the Agent if different from the settlement date; 14. If the Note is redeemable by the Company, such of the following as are applicable: (i) Initial Redemption Date, (ii) Initial Redemption Percentage (% of par), (iii) Annual Redemption Percentage Reduction, (iv) Limitation Date, and (v) Refunding Rate; 15. Current interest rate of U.S. Treasury security with comparable maturity; 16. Wire transfer information, if any (including overseas bank account in the country of the Specified Currency, if any); and 17. Any other information needed to complete the Transaction or the applicable form of Note. B. The Company will advise the Trustee of the above settlement information received from such Agent. The Company shall promptly confirm such advice in writing to the Trustee. C. The Trustee will complete the preprinted multi-ply Note packet containing the following documents in forms approved by the Company, the Agent and the Trustee: 1. Note with Agent's customer confirmation; 2. Stub 1 - for the Agent; 3. Stub 2 - for the Trustee; 4. Stub 3 - for the Company; and 5. Stub 4 (if any) - not designated. B-23 D. The Trustee will authenticate the Note and deliver the Note (with the confirmation) and Stub 1 to the Agent or to a representative designated in writing by the Agent (the Representative), and the Agent or its Representative will acknowledge receipt of the Note by stamping the delivery receipt with the date and time received and returning it to the Trustee. Such delivery will be made only against such time stamp. Upon receipt the Agent or its Representative shall verify that the Notes delivered have been correctly completed and shall as promptly as possible notify the Trustee of any discrepancies which shall as promptly as possible be remedied by the delivery to the Agent or its Representative of a corrected Note by the Trustee. Promptly following such delivery, the Agent or its Representative shall wire to the Company, in accordance with the standing instructions of the Company theretofore delivered to the Agent, in funds available for immediate use, an amount equal to the principal amount of the Note in the Specified Currency, less the applicable commission in U.S. dollars or discount determined as provided in paragraph 3 of the Distribution Agreement. In the event that the instructions given by the Agent for payment to the account of the Company are revoked and such payment is received by the Company, the Company will as promptly as possible remit such payment to the Agent in an amount of immediately available funds equal to the amount of such payment. The Agent will return to the Trustee any Notes previously delivered in connection with such revoked payment. E. The Agent or its Representative will deliver the Note (with confirmation) to the customer against payment in immediately available funds. In all cases, receipt by the customer of the Prospectus must accompany or precede any written offer of the Note, delivery of the Note, and confirmation and payment by the customer for the Note. If instructed by its customer to deliver the Note and confirmation to different locations, the Note and the confirmation will each be B-24 accompanied or preceded by the Prospectus then in effect. F. The Agent or its Representative will obtain the acknowledgement of receipt of the Note by the customer through a time-stamped delivery receipt of the Agent. G. The Trustee will retain Stub 2 and will send Stub 3 to the Company's Treasurer by first class mail. Periodically, the Trustee will also send to the Company's Treasurer a statement to the Company setting forth the principal amount of the Notes outstanding as of that date after giving effect to such transaction and all other orders of which the Company has advised the Trustee but which have not yet been settled. Settlement For offers accepted by the Company, Settlement Procedures Procedures "A" through "G" set forth above shall be completed on or Timetable: before the respective times set forth below. Settlement Procedure Time ---------- ---- A 2:30 p.m. on Business Day prior to settlement or delivery B 3:00 p.m. on Business Day prior to settlement or delivery C-D 2:15 p.m. on day of settlement or delivery E-F 3:00 p.m. on settlement date G 5:00 p.m. on settlement date Fails: In the event that a purchaser of a Note shall fail to either accept delivery of or make payment for any Note on the date fixed by the Company for settlement, the Agent or its Representative will forthwith notify the Trustee and the Company's Treasurer by telephone, confirmed in writing, of such failure. If the Note has been delivered to the Agent or its Representative on behalf of the purchaser, the Agent or its Representative will immediately return the Note to the Trustee. If funds have been advanced to the Company for the purchase of the Note, the Company will as promptly as practicable following such notification wire to the account of the Agent an amount of immediately available funds equal to the B-25 amount previously advanced by the Agent or its Representative in respect of the Note. Such wire transfer will be made on the day of settlement, if possible, and in any event not later than the Business Day following the day of settlement. If such fail shall have occurred for any reason other than default by the Agent in the performance of its obligations hereunder and under the Distribution Agreement, the Company will reimburse the Agent on an equitable basis for its loss of the use of the funds during the period when they were credited to the account of the Company. Immediately upon receipt of the Note in respect of which the fail occurred, the Trustee will mark the Note "cancelled", and will make appropriate entries in its records and deliver to the Company an appropriate certificate of disposition. B-26 Multi-Currency Procedures Supplement ------------------------------------ The principal of and interest on Notes denominated in a foreign currency or currency unit specified on the Note and in an applicable Pricing Supplement setting forth the terms of each issuance of Notes ("Pricing Supplement") will be payable by the Company in such Specified Currency. Payments in Specified Currency other than U.S. Dollars: If so designated on the Note and in the applicable Pricing Supplement, payments of principal and interest on such Note will be made in such Specified Currency by wire transfer to a bank account maintained by the Holder of such Note in the country of the Specified Currency ("overseas account"). Such Holder may elect to receive payments of principal and interest on such Note in U.S. dollars by transmitting a written request for such payment to the Trustee at its Corporate Trust Office in The City of New York on or prior to the Record Date relating to such payment of interest or at least 16 days prior to Stated Maturity, as the case may be. Such request may be in writing (mailed or hand delivered) or by cable, telex or other form of facsimile transmission. Such Holder may elect to receive payments in U.S. dollars for any or all principal and interest payments and need not file a separate election for each such payment. Such election shall remain in effect until the Note is transferred or until such election is changed by written notice to the Trustee, but written notice of any such change must be received by the Trustee on or prior to such Record Date or at least 16 days prior to Stated Maturity, as the case may be. In the event of such an election, Chemical Bank in its capacity as exchange rate agent, or such other person appointed by the Company ("Exchange Rate Agent"), will convert all payments of principal and interest on such Note to U.S. dollars. The U.S. dollar amount to be received by a Holder of such Note electing to receive payments in U.S. dollars will be based on B-27 the highest bid quotation in New York City received by the Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holders of Notes denominated in such Specified Currency electing to receive U.S. dollar payments and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs will be borne by the Holders of such Notes, pro rata, by deductions from such payments. Payments of principal and interest made in a Specified Currency other than U.S. dollars will be made by wire transfer to a Holder's overseas account as designated by the Holder by filing the appropriate information with the Trustee at its Corporate Trust Office in The City of New York on or prior to the Record Date relating to such payment of interest or at least 16 days prior to Stated Maturity, as the case may be, or in connection with any transfer after such 16th day. The Trustee will, subject to applicable laws and regulations, and until it receives notice to the contrary or until such Note is transferred, make such payment and all succeeding payments to such Holder by wire transfer to the designated overseas account. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but any tax, assessment or government charge imposed upon payments will be borne by the Holders of such Notes in respect of which payments are made. If a Specified Currency is not available for the payment of principal or interest with respect to a Note due to the imposition of exchange controls or other circumstances beyond the B-28 control of the Company, the Company will be entitled to satisfy its obligations to Holders of such Notes by making such payment in U.S. dollars on the basis of the Exchange Rate two days prior to such payment, or if such rate is not then available, as of the most recent date prior thereto on which an Exchange Rate was available. Notwithstanding the foregoing, if a payment cannot be made by wire transfer because the required information has not been received by the Trustee on or before the requisite date, a notice will be mailed to the Holder of a Note at its registered address requesting such information. B-29 EXHIBIT C PROPOSED FORM OF OPINION OF McGUIRE, WOODS, BATTLE & BOOTHE, L.L.P. VIRGINIA ELECTRIC AND POWER COMPANY U.S. $200,000,000 Medium-Term Notes, Series F July __, 1995 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower, 23rd Floor New York, New York 10281 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10020 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. $200,000,000 aggregate principal amount of its Medium-Term Notes, Series F due from 9 months to 30 years from the Date of Issue (the Notes) under and pursuant to an Indenture, dated as of April 1, 1988, as supplemented by the First Supplemental Indenture, dated as of August 1, 1989 (the Indenture, as amended and supplemented, hereafter referred to as the Indenture) between the Company and Chemical Bank, as trustee (the Trustee), and the offering of the Notes by you pursuant to a Distribution Agreement dated July ___, 1995 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 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 Hunton & Williams, 200 Park Avenue, New York, N.Y., at which the Company satisfied the conditions contained in Section 7 of the Distribution Agreement which are required to be satisfied as of the Closing Date. Based upon the foregoing, and having regard to legal considerations which we deem relevant, we are of the opinion that: A. The Company is a corporation duly incorporated and existing under the laws of Virginia and is duly qualified as a foreign corporation in West Virginia and North Carolina, and has corporate power to transact its business as described in the Prospectus. B. The Distribution Agreement has been duly authorized by all necessary corporate action and has been duly executed and delivered by the Company. C. The Indenture has been duly authorized, executed and delivered by, and constitutes a valid and binding obligation of, the Company and has been duly qualified under the Trust Indenture Act, except that we express no opinion as to the validity or enforceability of any covenant to pay interest on defaulted interest. D. The Notes have been duly authorized by the Company and, when executed by the Company and completed and authenticated by the Trustee in accordance with the Indenture and delivered and paid for as provided in the Distribution Agreement, will have been duly issued under the Indenture and will constitute valid and binding obligations of the Company entitled to the benefits provided by the Indenture, except that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally from time to time in force and general principles of equity. E. 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 in the form filed as part of the Registration Statement, including all Incorporated Documents constituting a part thereof may lawfully be used for the purposes specified in the Securities Act in connection with the offer for sale and the sale of Notes in the manner therein specified. The Registration Statement and the Prospectus (except the financial statements incorporated by reference therein, as to which we express no opinion) appear on their face to be appropriately responsive in all material respects to the requirements of the Securities Act, and to the applicable rules and regulations of the Commission thereunder. As to the statements under DESCRIPTION OF THE NOTES, subject to the concluding paragraph of this opinion, we are of C-2 the opinion that the statements are accurate and do not omit any material fact required to be stated therein or necessary to make such statements not misleading. As to the statistical statements in the Registration Statement (which includes the Incorporated Documents), we have relied solely on the officers of the Company. As to other matters, we have not undertaken to determine independently the accuracy or completeness of the statements contained or incorporated by reference in the Registration Statement or in the Prospectus. We have, however, participated in conferences with counsel for and representatives of the Company in connection with the preparation of the Registration Statement and the Prospectus, and we have reviewed all Incorporated Documents and such of the corporate records of the Company as we deemed advisable. None of the foregoing disclosed to us any information which gives us reason to believe that the Registration Statement or the Prospectus contained (except the financial statements incorporated by reference therein, as to which we express no opinion) on the date the Registration Statement became effective or now contains any untrue statement of a material fact or omitted on said date or now omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The foregoing opinion is given on the basis that any statement contained in an Incorporated Document shall be deemed not to be contained in the Registration Statement or Prospectus if the statement has been modified or superseded by any statement in a subsequently filed Incorporated Document or in the Registration Statement or Prospectus. F. An appropriate order of the Virginia Commission with respect to the sale of the Notes on the terms and conditions set forth in the Distribution Agreement has been issued, and said order remains in effect at this date and constitutes valid and sufficient authorization for the sale of the Notes as contemplated by the Distribution Agreement. We understand said order does not contain any provision unacceptable to you under the Distribution Agreement. No approval or consent by any public regulatory body, other than such order and notification of effectiveness by the Commission, is legally required in connection with the sale of the Notes as contemplated by the Distribution Agreement (except compliance with the provisions of securities or blue-sky laws of certain states in connection with the sale of the Notes in such states) and the carrying out of the provisions of the Distribution Agreement. G. The Notes conform to their description in the Distribution Agreement and to the statements with respect thereto contained in the Registration Statement and the Prospectus. C-3 To the extent that the foregoing opinions involve matters governed by the laws of North Carolina and West Virginia, we have relied upon the opinion of Messrs. Hunton & Williams concurrently delivered to you and we believe that you are justified in relying thereon. Very truly yours. McGUIRE, WOODS, BATTLE & BOOTHE, L.L.P. C-4 EXHIBIT D PROPOSED FORM OF OPINION OF HUNTON & WILLIAMS VIRGINIA ELECTRIC AND POWER COMPANY U.S. $200,000,000 Medium-Term Notes, Series F July ___, 1995 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower, 23rd Floor New York, New York 10281 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10020 Virginia Electric and Power Company Richmond, Virginia 23261 Sirs: The arrangements for issuance of up to U.S. $200,000,000 aggregate principal amount of Medium-Term Notes, Series F due from 9 months to 30 years from the date of issue (the Notes) of Virginia Electric and Power Company (the Company) under an Indenture, dated as of April 1, 1988, as amended and supplemented by the First Supplemental Indenture, dated as of August 1, 1989, (the Indenture, as amended and supplemented, hereafter referred to as the Indenture) between the Company and Chemical Bank, as trustee (the Trustee), pursuant to a Distribution Agreement dated July ___, 1995 by and between you and the Company (the Distribution Agreement), have been taken under our supervision as counsel for the Company. Terms not otherwise defined herein have the meanings set forth in the Distribution Agreement. We have examined originals, or copies certified to our satisfaction, of such corporate records of the Company, indentures, agreements and other instruments, certificates of public officials, certificates of officers and representatives of the Company and of the Trustee, and other documents, as we have deemed it necessary to require as a basis for the opinions hereinafter expressed. As to various questions of fact material to such opinions, we have, when relevant facts were not independently established, relied upon certifications by officers of the Company, the Trustee and other appropriate persons and statements contained in the Registration Statement hereinafter mentioned. All legal proceedings taken as of the date hereof in connection with the transactions contemplated by the Distribution Agreement have been satisfactory to us. In regard to the title of the Company to its properties, we have made no independent investigation of original records but our opinion is based (a) with respect to land and rights of way for electric lines of 69,000 volts or more, solely on reports and opinions by counsel in whom we have confidence and (b) with respect to rights of way for electric lines of less than 69,000 volts and various matters of fact in regard to all other properties, solely on information from officers of the Company. On this basis we are of the opinion that: 1. The Company is a corporation duly organized and existing under the laws of Virginia, is duly qualified as a foreign corporation in West Virginia and North Carolina. Neither the nature of the Company's business nor the properties it owns or holds under lease makes necessary qualification as a foreign corporation in any state where it is not now so qualified, and the Company has corporate power to conduct its business and to issue the Notes. 2. All requisite corporate and governmental authorizations have been given for the issuance of the Notes under the Indenture. 3. The Distribution Agreement is a valid and legally enforceable obligation of the Company. 4. The Indenture has been duly authorized, executed and delivered by, and constitutes a valid and binding obligation of, the Company and has been duly qualified under the Trust Indenture Act, except that we express no opinion as to the validity or enforceability of any covenant to pay interest on defaulted interest. 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 and the Other Agreements, 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 that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally from time to time in force and general principles of equity. 6. 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 D-2 in connection with the offer for sale and the sale of the Notes in the manner therein specified. The statements in regard to our firm made under the caption EXPERTS in the Prospectus relating to the Notes are correct, and we are of the opinion that, so far as governed by the laws of the United States, North Carolina or Virginia, the legal conclusions relating to franchises, title to properties, rates, environmental and other regulatory matters and litigation in the Company's Annual Report on Form 10-K incorporated in the Prospectus by reference and the description of the provisions of the Indenture and the terms of the Notes contained in the Prospectus under DESCRIPTION OF THE NOTES are substantially accurate and fair. As to the statistical statements in the Registration Statement (which includes the Incorporated Documents), we have relied solely on the officers of the Company. As to other matters of fact, we have consulted with officers and other employees of the Company to inform them of the disclosure requirements of the Securities Act and facilitated the assembly of relevant data. We have examined various reports, records, contracts and other documents of the Company and orders and instruments of public officials, which our investigation led us to deem pertinent. In addition, we attended the due diligence meetings with representatives of the Company and the closing at which the Company satisfied the conditions contained in Paragraph 7 of the Distribution Agreement. We have not, however, undertaken to make any independent review of the other records of the Company. We accordingly assume no responsibility for the accuracy or completeness of the statements made in the Registration Statement except as stated above in regard to the aforesaid captions. But such consultation, examination and attendance disclosed to us no information with respect to such other matters that gives us reason to believe that the Registration Statement or the Prospectus contained on the date the Registration Statement became effective or contains now any untrue statement of a material fact or omitted on said date or omits now to state a material fact required to be stated therein or necessary to make the statements therein not misleading. We are of the opinion that the Registration Statement (excepting the financial statements incorporated therein by reference, as to which we express no opinion) complies as to form in all material respects with all legal requirements and is now effective. The Registration Statement and the Prospectus (except the financial statements incorporated by reference therein, as to which we express no opinion) appear on their face to be appropriately responsive in all material respects to the requirements of the Securities Act, and to the applicable rules and regulations of the Commission thereunder. 7. The titles and interests of the Company in and to its properties are reasonably adequate to enable the Company to D-3 carry on its business and the Company holds such franchises, permits and licenses as are reasonably adequate to enable the Company to carry on its business, and, as to any franchises, permits and licenses that the Company does not hold, the absence thereof will not materially adversely affect the operations, business and properties of the Company as a whole. 8. Except as set forth in the Registration Statement, there are no pending legal, administrative or judicial proceedings with respect to the Company that are required to be described in Form S-3. The opinions in paragraphs 6 and 8 hereof are given on the basis that any statement contained in an Incorporated Document shall be deemed not to be contained in the Registration Statement or Prospectus if the statement has been modified or superseded by any statement in a subsequently filed Incorporated Document or in the Registration Statement or Prospectus. Yours very truly, HUNTON & WILLIAMS D-4 EX-4.II 3 FORM OF FIXED RATE MEDIUM TERM NOTE, SERIES F Exhibit 4(ii) REGISTERED REGISTERED No. CUSIP No. VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTE, SERIES F (Fixed Rate) [Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by The Depository Trust Company (the Depositary) (55 Water Street, New York, New York) to a nominee of the Depositary or by a nominee of the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such Depositary. Unless (i) this certificate is presented by an authorized representative of the Depositary to the issuer or its agent for registration of transfer, exchange or payment, (ii) any certificate issued is registered in the name of Cede & Co. or in such other names as requested by an authorized representative of the Depositary and (iii) any payment is made to Cede & Co. or such other name ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof has an interest herein.]* Principal Amount: Interest Rate: Maturity Date: Original Issue Date: Initial Redemption Annual Redemption Percentage Percentage: Reduction: Initial Redemption Limitation Date: Authorized Denomination (if other Date: than U.S. $1,000 and integral multiples thereof): Refunding Rate: Specified Currency: Additional Terms (if any): Interest Payment Date: Regular Record Date: Virginia Electric and Power Company, a corporation duly organized and existing under the laws of the Commonwealth of Virginia (the Company, which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns, the principal sum of on the Maturity Date shown above (or upon earlier redemption), and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on each Interest Payment Date as specified above in each year, commencing on the Interest Payment Date next succeeding the Original Issue Date shown above and on the Maturity Date shown above (or upon earlier redemption) at the rate per annum shown above until the principal hereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) on any overdue principal and on any overdue installment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment Date that is the Maturity Date or Redemption Date) will, as provided in such Indenture, be paid to the Person in whose name this Medium-Term Note, Series F (the Note), or one or more predecessor Notes, is registered at the close of business on the Regular Record Date for such interest, which shall be the Regular Record Date as specified above (whether or not a Business Day, as hereinafter defined), as the case may be, next preceding such Interest Payment Date, provided, however, that, if the Original Issue Date shown above is between a Regular Record Date and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date next succeeding the Original Issue Date to the holder of this Note on the Regular Record Date with respect to such second Interest Payment Date; and provided, further, that interest payable on an Interest Payment Date that is the Maturity Date or Redemption Date will be paid to the Person to whom principal is payable. Except as otherwise provided in the Indenture (hereinafter defined), any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture. Payment of the principal of (and premium, if any) and interest on this Note will be made in immediately available funds (upon surrender of the Note, in the case of payment due at the Maturity Date or upon earlier redemption, at the Corporate Trust Office of the Trustee, maintained for that purpose in the Borough of Manhattan, New York City currently located at 450 W. 33rd St. New York, New York 10001); provided, however, that if such payment of principal or interest is to be made in a Specified Currency other than U.S. dollars, as provided on the reverse hereof, by wire transfer to an account maintained by the Holder hereof in the country of said Specified Currency shown above (the Holder's Overseas Account), as designated by the Holder of this Note by written notice to the Trustee on or prior to the Regular Record Date or at least 16 days prior to the Maturity Date or in connection with any transfer after such 16th day. In the absence of such designation or if such wire transfer cannot be made for any other reason, the Trustee will mail a notice to the address of the Person entitled thereto as such address shall appear on the Security Register on the Regular Record Date for any payment of interest or on the date of such notice in connection with payment of principal, as the case may be, requesting a designation pursuant to which such wire transfer can be made and no such payment shall be made until such designation is made. As more fully provided on the reverse hereof, if payment of principal of (and premium, if any) and interest on this Note is to be made in U.S. dollars, payment will be made (upon surrender of the Note, in the case of payment due at the Maturity Date or upon earlier redemption, at the foregoing Corporate Trust Office) by wire transfer to an account designated by the Holder (the Holder's U.S. Account) by written notice to the Trustee on or prior to the Regular Record Date or at least 16 days prior to the Maturity Date, or, in the absence of such designation, by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register on the Regular Record Date for any payment of interest or the Maturity Date shown above or Redemption Date for payment of principal, as the case may be. As more fully provided on the reverse hereof, payment of the principal of (and premium, if any) and interest on this Note will be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts based on then prevailing exchange rates with respect to the Specified Currency and the U.S. dollar or, if payment of the principal of and interest on this Note is to be made in a Specified Currency other than U.S. dollars, subject to applicable laws and regulations, in the Specified Currency shown above. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: CHEMICAL BANK, VIRGINIA ELECTRIC AND POWER COMPANY as Trustee By By Authorized Officer President By Vice President, Attest: Assistant Corporate Secretary [SEAL OF VIRGINIA ELECTRIC AND POWER COMPANY APPEARS HERE] * The bracketed language would apply to and appear on only a Book-Entry Note. VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTE, SERIES F This Note is one of a duly authorized issue of Securities of the Company, issued and issuable in one or more series under an indenture, dated as of April 1, 1988, as supplemented, (the Indenture) between the Company and Chemical Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof as Medium-Term Notes, Series F (the Notes) in aggregate principal amount of up to U.S. $200 million or its equivalent in foreign currencies or currency units, based upon the applicable exchange rate at the time of issuance. The Notes are identical except for Specified Currency, denomination, interest rate, issue date, Maturity Date and redemption terms, if any. The principal of (and premium, if any) and interest on this Note are payable by the Company in the Specified Currency shown on the face hereof. If this Note is denominated in a Specified Currency other than U.S. dollars and if the Holder hereof shall have elected to receive payments in U.S. dollars, Chemical Bank, in its capacity as exchange rate agent, or such other Person as shall be appointed by the Company (the Exchange Rate Agent), will convert payments of principal of and interest on this Note to U.S. dollars. The amount to be received by a Holder of this Note electing to receive payments in U.S. dollars will be based on the highest bid quotation in New York City received by the Exchange Rate Agent at approximately 11:00 A.M. New York City time on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holders of Notes electing to receive payment in U.S. dollars and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs will be borne pro rata by the Holders electing payment in U.S. dollars by deductions from such payments in U.S. dollars. As used herein, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or executive order to close in New York City provided, however, that, with respect to Notes the payment of which is to be made in a Specified Currency other than U.S. dollars, such day is also not a day on which banking institutions are authorized or required by law or executive order to close in the Principal Financial Center of the country of such Specified Currency (or, in the case of the European Currency Units (ECU), is not a day designated as an ECU Non-Settlement Day by the ECU Banking Association or otherwise generally regarded in the ECU interbank market as a day on which payments in ECUs shall not be made). "Principal Financial Center" means the capital city of the country issuing the Specified Currency, except that with respect to U.S. dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECU, the "Principal Financial Center" shall be New York City, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. If this Note is denominated in a Specified Currency other than U.S. dollars, the Holder of this Note may elect to receive payment of the principal of and interest on this Note in U.S. dollars by transmitting a written request for such payment to the Trustee at its Corporate Trust Office in New York City on or prior to the Regular Record Date or at least 16 days prior to the Maturity Date, as the case may be. Such request may be in writing (mailed or hand delivered) or may be by cable, telex or other form of facsimile transmission. The Holder of this Note need not file a separate election for each such payment. Such election, once properly made, will remain in effect until this Note is transferred or until changed by written notice to the Trustee, but written notice of any such change must be received by the Trustee on or prior to the Regular Record Date or at least 16 days prior to the Maturity Date, as the case may be. In order for the Holder of this Note to receive payments by wire transfer, such Holder shall designate an appropriate account (being either the Holder's Overseas Account or the Holder's U.S. Account, as the case may be). Such designation shall be made by filing the appropriate information with the Trustee at its Corporate Trust Office in New York City on or prior to the Regular Record Date for an Interest Payment Date or at least 16 days prior to the Maturity Date, except as provided on the face hereof. The Trustee will, subject to applicable laws and regulations (in the case of a Specified Currency other than U.S. dollars) and until it receives notice to the contrary or until this Note is transferred, make such payment and all succeeding payments to such Holders by wire transfer to the designated Holder's Overseas Account or Holder's U.S. Account, as the case may be. The Company will pay any administrative costs imposed by banks in connection with making wire transfer of payments, but any tax, assessment, governmental or other charge imposed upon such payments will be borne by the Holder of this Note and deducted therefrom. If the Specified Currency other than U.S. dollars is not available for the payment of principal or interest with respect to this Note due to the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligations to the Holder of this Note by making such payment in U.S. dollars on the basis of the applicable Exchange Rate (defined as the noon buying rate in New York City for cable transfers for such Specified Currency, as certified for customs purposes by the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange determined by the Commission of the European Communities or any successor thereto as published in the Official Journal of the European Communities, or any successor publication) as of the most recent date on which an Exchange Rate was available. The Exchange Rate determined as provided above as certified by the Company to the Trustee shall be conclusive absent manifest error. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. A good faith determination by the Company that the Specified Currency is unavailable shall be binding upon the Trustee and the Holder of this Note. In the case where the Interest Payment Date, the Maturity Date or the Redemption Date does not fall on a Business Day, payment of principal (and premium, if any) or interest otherwise payable on such day need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Maturity Date or the Redemption Date and no interest shall accrue for the period from and after the Interest Payment Date, Maturity Date or the Redemption Date. Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. If so provided on the face of this Note, this Note may be redeemed by the Company on and after the Initial Redemption Date, if any, indicated on the face hereof. If no Initial Redemption Date is set forth hereof, this Note may not be redeemed prior to the Maturity Date. On and after the Initial Redemption Date, if any, this Note may be redeemed at any time in whole or in part (provided that any remaining principal amount of this Note shall be equal to an authorized denomination) at the option of the Company, at the applicable Redemption Price (as defined below), together with interest thereon payable to the Redemption Date, on notice given not more than 60 nor less than 30 days prior to the Redemption Date. In the event of redemption of this Note in part only, a new Note for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the surrender hereof. The Notes will not have a sinking fund. The "Redemption Price" shall initially be the Initial Redemption Percentage, shown on the face hereof, of the principal amount of this Note to be redeemed and shall decline at each anniversary of the Initial Redemption Date, shown on the face hereof, by the Annual Redemption Percentage Reduction, if any, shown on the face hereof, of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount. Notwithstanding the foregoing, the Company may not, prior to the Limitation Date specified on the face hereof, if any, redeem this Note as contemplated by the next preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of monies borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than the Refunding Rate specified on the face hereof, if any. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, in the coin or currency, and to the manner, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registerable in the Security Register, upon surrender of this Note, for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes having the same Stated Maturity and Original Issue Date, of authorized denominations and of like tenor and for the same aggregate principal amount in the same Specified Currency, will be issued to the designated transferee or transferees. The Notes are issuable in registered form only, without coupons, and unless otherwise specified on the face hereof, in denominations of U.S. $1,000 and in integral multiples of U.S. $1,000 in excess thereof or the approximate equivalent of U.S. $1,000 in the Specified Currency in which this Note is denominated (if not U.S. dollars) at the Exchange Rate on the Business Day immediately preceding the trade date, rounded down to the nearest integral multiple of 1,000 units of said Specified Currency and in any amount in excess thereof that is an integral multiple of 1,000 units of such Specified Currency. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes having the same Specified Currency, Stated Maturity and Original Issue Date of any authorized denominations as requested by the Holder surrendering the same, upon surrender of the Note or Notes to be exchanged at the office or agency of the Company. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company, or the Trustee may treat the Person in whose name this Note is registered as the absolute owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. No recourse for the payment of the principal of (and premium, if any) or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, official or director, as such, past, present or future, of the Company or of any successor entity, either directly or through the Company or any successor company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. Reference in this Note to "U.S.$" or "U.S. dollars", is to the currency of the United States of America. Reference in this Note to the "Specified Currency" is to the Specified Currency shown on the face hereof. All terms used in this Note and not otherwise defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. ----------------------------- ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT--_________ TEN ENT -- as tenants by the entireties (Cust) JT TEN -- as joint tenants with rights of Custodian _________ survivorship and not as tenants (Minor) in common Under Uniform Gifts to Minors Act _________________________ (State) Additional abbreviations may also be used though not in the above list. ----------------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), and transfer(s) unto Please insert social security or other identifying number of assignee ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably Attorney constituting and appointing to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: _____________________________ _______________________________________ _______________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatever. EX-4.III 4 FORM OF FLOATING RATE MEDIUM TERM NOTE, SERIES F EXHIBIT 4(iii) VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTE, SERIES F (Floating Rate) REGISTERED NO. CUSIP NO. [FACE OF NOTE] [UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TRUST COMPANY (THE DEPOSITARY) (55 WATER STREET, NEW YORK, NEW YORK) TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]* PRINCIPAL AMOUNT: BASE RATE: ORIGINAL ISSUE DATE: STATED MATURITY DATE: IF LIBOR: IF CMT RATE: [ ] LIBOR Reuters Designated CMT Telerate Page: [ ] LIBOR Telerate Designated CMT Maturity Index: INDEX CURRENCY: INDEX MATURITY: INITIAL INTEREST RATE: INITIAL INTEREST RESET DATE: SPREAD: MINIMUM INTEREST RATE: INTEREST PAYMENT DATE(S): SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: INTEREST RESET DATE(S): INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION DATE: PERCENTAGE: PERCENTAGE REDUCTION: DAY COUNT CONVENTION CALCULATION AGENT: [ ] Actual/360 for the period from ____ to ____ [ ] Actual/Actual for the period from ____ to ____ SPECIFIED CURRENCY: LIMITATION DATE: EXCHANGE RATE AGENT: REFUNDING RATE: OTHER/ADDITIONAL PROVISIONS: DEFAULT RATE: Virginia Electric and Power Company (the Company, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of , on the Stated Maturity Date specified above (or any Redemption Date as defined on the reverse hereof) (each such Stated Maturity Date or Redemption Date being hereinafter referred to as the "Maturity Date" with respect to the principal repayable on such date) and to pay interest thereon, at a rate per annum equal to the Initial Interest Rate specified above until the Initial Interest Reset Date specified above and thereafter at a rate determined in accordance with the provisions specified above and on the reverse hereof with respect to the Base Rate specified above until the principal hereof is paid or duly made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the Default Rate per annum specified above on any overdue principal, premium and/or interest. The Company will pay interest in arrears on each Interest Payment Date, if any, specified above (each, an Interest Payment Date), commencing with the first Interest Payment Date next succeeding the Original Issue Date specified above, and on the Maturity Date; provided, -------- however, that if the Original Issue Date occurs between a Record Date (as - ------- defined below) and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date next succeeding the Original Issue Date to the holder of this Note on the Record Date with respect to such second Interest Payment Date. Interest on this Note will accrue from, and including, the immediately preceding Interest Payment Date to which interest has been paid or duly provided for (or from, and including, the Original Issue Date if no interest has been paid or duly provided for with respect to this Note) to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, subject to certain exceptions described herein, be paid to the person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the fifteenth calendar day (whether or not a Business Day, as defined on the reverse hereof) immediately preceding such Interest Payment Date (the Record Date); provided, -------- however, that interest payable on the Maturity Date will be payable to the - ------- person to whom the principal hereof and premium, if any, hereon shall be payable. Any such interest not so punctually paid or duly provided for (Defaulted Interest) will forthwith cease to be payable to the holder on any Record Date, and may either be paid to the person in whose name this Note is registered at the close of business on a special record date (the Special Record Date) for the payment of such Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to the holder of this Note by the Trustee not less than 10 calendar days prior to such Special Record Date or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture. Payment of principal of (and premium, if any) and interest on this Note will be made in immediately available funds (upon surrender of the Note, in the case of payment due at the Maturity Date or upon earlier redemption, at the Corporate Trust Office of the Trustee, maintained for that purpose in the Borough of Manhattan, New York City, currently located at 450 W. 33rd Street, New York, New York 10001); provided, however, that if such payment of principal or interest is to be made in a Specified Currency other than U.S. dollars, as provided on the reverse hereof, by wire transfer to an account maintained by the Holder hereof in the country of said Specified Currency shown above (the Holder's Overseas Account), as designated by the Holder of this Note by written notice to the Trustee on or prior to the Record Date or at least 16 days prior to the Maturity Date or in connection with any transfer after such 16th day. In the absence of such designation or if such wire transfer cannot be made for any other reason, the Trustee will mail a notice to the address of the Person entitled thereto, as such address shall appear on the Security Register on the Record Date for any payment of interest or on the date of such notice in connection with payment of principal, as the case may be, requesting a designation pursuant to which such wire transfer can be made and no such payment shall be made until such designation is made. As more fully provided on the reverse hereof, if payment of principal of (and premium, if any) and interest on this Note is to be made in U.S. dollars, payment will be made (upon surrender of the Note, in the case of payment due at the Maturity Date or upon earlier redemption, at the foregoing Corporate Trust Office) by wire transfer to an account designated by the Holder (the Holder's U.S. Account) by written notice to the Trustee on or prior to the Record Date or at least 16 days prior to the Maturity Date, or, in the absence of such designation, by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register on the Record Date for any payment of interest or the Maturity Date shown above or Redemption Date for payment of principal, as the case may be. As more fully provided on the reverse hereof, payment of the principal of (and premium, if any) and interest on this Note will be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts based on then prevailing exchange rates with respect to the Specified Currency and the U.S. dollar or, if payment of the principal of and interest on this Note is to be made in a Specified Currency other than U.S. dollars, subject to applicable laws and regulations, in the Specified Currency shown above. If any Interest Payment Date other than the Maturity Date would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that if LIBOR is an applicable Base Rate and such Business Day falls in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity Date falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue with respect to such payment for the period from and after the Maturity Date to the date of such payment on the next succeeding Business Day. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH ON THE FACE HEREOF. Unless the Certificate of Authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under its corporate seal. VIRGINIA ELECTRIC AND POWER COMPANY By --------------------------- President Dated: By --------------------------- Vice President Attest: Assistant Corporate Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. CHEMICAL BANK, as Trustee By --------------------------------- Authorized Officer [Seal of Virginia Electric and Power Company appears here] * The bracketed language would apply to and appear on only a Book-Entry Note. [REVERSE OF NOTE] VIRGINIA ELECTRIC AND POWER COMPANY MEDIUM-TERM NOTE, SERIES F (FLOATING RATE) This Note is one of a duly authorized issue of Securities of the Company, issued and issuable in one or more series under an indenture, dated as of April 1, 1988, as supplemented, (the Indenture) between the Company and Chemical Bank, as Trustee (the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof as Medium-Term Notes, Series F (the Notes) in aggregate principal amount of up to U.S. $200 million or its equivalent in foreign currencies or currency units, based upon the applicable exchange rate at the time of issuance. The Notes are identical except for Specified Currency, denomination, interest rate, issue date, Maturity Date and redemption terms, if any. The principal of (and premium, if any) and interest on this Note are payable by the Company in the Specified Currency shown on the face hereof. If this Note is denominated in a Specified Currency other than U.S. dollars and if the Holder hereof shall have elected to receive payments in U.S. dollars, Chemical Bank, in its capacity as exchange rate agent, or such other Person as shall be appointed by the Company (the Exchange Rate Agent), will convert payments of principal of and interest on this Note to U.S. dollars. The amount to be received by a Holder of this Note electing to receive payments in U.S. dollars will be based on the highest bid quotation in New York City received by the Exchange Rate Agent at approximately 11:00 A.M. New York City time on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holders of Notes electing to receive payment in U.S. dollars and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs will be borne pro rata by the Holders electing payment in U.S. dollars by deductions from such payments in U.S. dollars. If this Note is denominated in a Specified Currency other than U.S. dollars, the Holder of this Note may elect to receive payment of the principal of and interest on this Note in U.S. dollars by transmitting a written request for such payment to the Trustee at its Corporate Trust Office in New York City on or prior to the Record Date or at least 16 days prior to the Maturity Date, as the case may be. Such request may be in writing (mailed or hand delivered) or may be by cable, telex or other form of facsimile transmission. The Holder of this Note need not file a separate election for each such payment. Such election, once properly made, will remain in effect until this Note is transferred or until changed by written notice to the Trustee, but written notice of any such change must be received by the Trustee on or prior to the Record Date or at least 16 days prior to the Maturity Date, as the case may be. In order for the Holder of this Note to receive payments by wire transfer, such Holder shall designate an appropriate account (being either the Holder's Overseas Account or the Holder's U.S. Account, as the case may be). Such designation shall be made by filing the appropriate information with the Trustee at its Corporate Trust Office in New York City on or prior to the Record Date for the next succeeding Interest Payment Date or at least 16 days prior to the Maturity Date, except as provided on the face hereof. The Trustee will, subject to applicable laws and regulations (in the case of a Specified Currency other than U.S. dollars) and until it receives notice to the contrary or until this Note is transferred, make such payment and all succeeding payments to such Holders by wire transfer to the designated Holder's Overseas Account or Holder's U.S. Account, as the case may be. The Company will pay any administrative costs imposed by banks in connection with making wire transfer of payments, but any tax, assessment, governmental or other charge imposed upon such payments will be borne by the Holder of this Note and deducted therefrom. If the Specified Currency other than U.S. dollars is not available for the payment of principal or interest with respect to this Note due to the imposition of exchange controls or other circumstances beyond the control of the Company, the Company will be entitled to satisfy its obligations to the Holder of this Note by making such payment in U.S. dollars on the basis of the applicable Exchange Rate (defined as the noon buying rate in New York City for cable transfers for such Specified Currency, as certified for customs purposes by the Federal Reserve Bank of New York or, in the case of European Currency Units (ECUs), the rate of exchange determined by the Commission of the European Communities or any successor thereto as published in the Official Journal of the European Communities, or any successor publication) as of the most recent date on which an Exchange Rate was available. The Exchange Rate determined as provided above as certified by the Company to the Trustee shall be conclusive absent manifest error. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. A good faith determination by the Company that the Specified Currency is unavailable shall be binding upon the Trustee and the Holder of this Note. Except as set forth below or on the face hereof, this Note shall bear interest at the rate determined by reference to the applicable Base Rate (a) plus or minus the Spread, if any, and/or (b) multiplied by the Spread Multiplier, if any, in each case as specified on the face hereof. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shall be reset as of each Interest Reset Date specified on the face hereof; provided, however, that the interest rate in effect for the period, if -------- ------- any, from the Original Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate. Unless otherwise specified on the face hereof, the rate with respect to each Base Rate will be determined in accordance with the applicable provisions below. Except as set forth above, the interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the interest rate determined as of the Interest Determination Date (as hereinafter defined) immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that if LIBOR is an applicable Base Rate and such Business Day falls in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day as used herein, "Interest Reset Period" means the period of time beginning on an Interest Reset Date for this Note and ending on the calendar day immediately preceding the next succeeding Interest Reset Date. As used herein, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or executive order to close in New York City; provided, however, that, with respect to Notes the payment of which is to be made in a Specified Currency other than U.S. dollars, such day is also not a day on which banking institutions are authorized or required by law or executive order to close in the Principal Financial Center of the country of such Specified Currency (or, in the case of the ECU, is not a day designated as an ECU Non-Settlement Day by the ECU Banking Association or otherwise generally regarded in the ECU interbank market as a day on which payments in ECUs shall not be made); provided, further, that, with respect to Notes as to which LIBOR is an applicable Base Rate, such day is also a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined below) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association or otherwise generally regarded in the ECU interbank market as a day on which payments in ECUs shall not be made. "Principal Financial Center" means the capital city of the country issuing the specified Index Currency (as defined below) or the Specified Currency, as the case may be, except that with respect to U.S. dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and ECUs, the "Principal Financial Center" shall be New York City, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. The "Interest Determination Date" pertaining to an Interest Reset Date for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate Notes and Prime Rate Notes will be the second Business Day next preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note will be the second London Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, but such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction falls on a day that is an Interest Reset Date, such Interest Reset Date will be the next following Business Day. Unless otherwise specified on the face hereof, the "Calculation Date," where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date, or, if such day is not a Business Day, the next succeeding Business Day, or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity Date, as the case may be. CD Rate. If the Base Rate for this Note is specified on the face ------- hereof as the CD Rate, this Note will bear interest at the interest rate, calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and the Minimum Interest Rate and Maximum Interest Rate, if any, specified on the face hereof. The CD Rate shall be determined as of the applicable Interest Determination Date (a CD Rate Interest Determination Date) as the rate on such date for negotiable certificates of deposit having the Index Maturity designated on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or any successor publication of the Board of Governors of the Federal Reserve System (H.15(519)) under the heading "CDs (Secondary Market)," or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate will be the rate on such Interest Determination Date for negotiable certificates of deposit of the Index Maturity designated on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" (the Composite Quotations) under the heading "Certificates of Deposit." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the CD Rate on such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such Interest Determination Date for certificates of deposit in an amount that is representative for a single transaction at that time with a remaining maturity closest to the Index Maturity designated on the face hereof of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in New York City selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the CD Rate in effect for the applicable period will be the same as the CD Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). CMT Rate. If the Base Rate for this Note is specified on the -------- face hereof as the CMT Rate, this Note will bear interest at the interest rate, calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate, and the Maximum Interest Rate, if any, specified on the face hereof. The CMT Rate shall be determined as of the applicable Interest Determination Date (a CMT Rate Interest Determination Date) as the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption "...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45 P.M.", under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, such CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as applicable, ended immediately preceding the week in which the related CMT Rate Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or, if not published by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for the Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a Reference Dealer) in New York City (which may include Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated or their affiliates) selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent, after consultation with the Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States (Treasury notes) with an original maturity of approximately the Designated CMT Maturity Index and remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury notes quotations, the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date of three Reference Dealers in New York City (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least U.S. $100,000,000. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate for such Interest Reset Date will be the same as the CMT Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). If two Treasury notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" shall be the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified as such on the face hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified on the face hereof the Designated CMT Maturity Index shall be two years. Commercial Paper Rate. If the Base Rate for this Note is specified --------------------- on the face hereof as the Commercial Paper Rate, this Note will bear interest at the interest rate, calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any, specified on the face hereof. The Commercial Paper Rate shall be determined as of the applicable Interest Determination Date (a Commercial Paper Rate Interest Determination Date) as the Money Market Yield (as defined below) of the rate on such date for commercial paper having the Index Maturity specified on the face hereof, as such rate shall be published in H.15(519), under the heading "Commercial Paper." In the event that such rate is not published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet available in either H.15(519) or Composite Quotations, then the Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York City time, on such Interest Determination Date of three leading dealers of commercial paper in New York City selected by the Calculation Agent for commercial paper of the specified Index Maturity, placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized statistical rating organization; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the Commercial Paper Rate in effect for the applicable period will be the same as the Commercial Paper Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). "Money Market Yield" means a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = D x 360 -------------------- x 100 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the Interest Period for which interest is being calculated. Federal Funds Rate. If the Base Rate for this Note is specified on the ------------------ face hereof as the Federal Funds Rate, this Note will bear interest at the interest rate, calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and Maximum Interest Rate, if any, specified on the face hereof. The Federal Funds Rate shall be determined as of the applicable Interest Determination Date (a Federal Funds Rate Interest Determination Date) as the rate on such date for Federal funds as published in H.15(519) under the heading "Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate will be the rate on such Interest Determination Date as published in the Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is not yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight Federal funds, as of 9:00 A.M., New York City time, on such Interest Determination Date, arranged by three leading brokers of Federal funds transactions in New York City selected by the Calculation Agent; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the Federal Funds Rate in effect for the applicable period will be the same as the Federal Funds Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). LIBOR. If the Base Rate for this Note is specified on the face hereof as ----- LIBOR, this Note will bear interest at the interest rate, calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any, specified on the face hereof. LIBOR shall be determined by the Calculation Agent as of the applicable Interest Determination Date (a LIBOR Interest Determination Date) in accordance with the following provisions: (i) As of the Interest Determination Date, LIBOR will be either: (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such Interest Determination Date, that appear on the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement, the rate for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such Interest Determination Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on that Interest Determination Date. If fewer than two offered rates appear (if "LIBOR Reuters" is specified on the face hereof) (or, no rate appears, if, as aforesaid, only a single rate is required) or no rate appears (if "LIBOR Telerate" is specified on the face hereof), LIBOR in respect of the related Interest Determination Date will be determined as if the parties had specified the rate described in clause (ii) below. (ii) With respect to an Interest Determination Date on which fewer than two offered rates appear (if "LIBOR Reuters" is specified on the face hereof) (or on which no rate appears, if, as aforesaid, only a single rate is required) or no rate appears (if "LIBOR Telerate" is specified on the face hereof), the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such Interest Determination Date and in a principal amount of not less than $1,000,000 (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M. (or such other time specified on the face hereof), in the applicable Principal Financial Center for the country of the Index Currency on such Interest Determination Date, by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated on the face hereof and in a principal amount of not less than $1,000,000 commencing on the second London Business Day immediately following such Interest Determination Date (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR in effect for the applicable period will be the same as LIBOR for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). "Index Currency" means the currency (including composite currencies) specified on the face hereof as the currency for which LIBOR shall be calculated. If no such currency is specified on the face hereof, the Index Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated on the face hereof, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is designated on the face hereof, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR for the applicable Index Currency will be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had been specified. Prime Rate. If the Base Rate for this Note is specified on the ---------- face hereof as the Prime Rate, this Note will bear interest at the interest rate, calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any, specified on the face hereof. The Prime Rate shall be determined as of the applicable Interest Determination Date (a Prime Rate Interest Determination Date) as the rate set forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Prime Rate for such Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Interest Determination Date as quoted on the Reuters Screen NYMF Page on such Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen NYMF Page for such Interest Determination Rate, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by at least two of the three major money center banks in New York City selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean on the basis of the prime rates in New York City by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, in each case having total equity capital of at least U.S. $500 million and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to quote such rate or rates; provided, however, that if the banks or trust companies selected as aforesaid by the Calculation Agent are not quoting as set forth above, the "Prime Rate" in effect for the applicable period will be the same as the Prime Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Rate). "Reuters Screen NYMF Page" means the display designated as Page "NYMF" on the Reuters Monitor Money Rates Services (or such other page as may replace the NYMF Page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). Treasury Rate. If the Base Rate for this Note is specified on the ------------- face hereof as the Treasury Rate, this Note will bear interest at the interest rate, calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum Interest Rate, if any, specified on the face hereof. The Treasury Rate shall be determined as of the applicable Interest Determination Date (a Treasury Rate Interest Determination Date) as the rate for the auction held on such date of direct obligations of the United States (Treasury Bills) having the Index Maturity designated on the face hereof, as published in H.15(519) under the heading "Treasury Bills auction average (investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the auction average rate on such Interest Determination Date (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having the Index Maturity designated on the face hereof are not published or reported as provided above by 3:00 P.M., New York City time, on such Calculation Date or if no such auction is held on such Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) calculated using the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity designated on the face hereof; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, the Treasury Rate for such Interest Reset Date will be the same as the Treasury Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on this Note shall be the Initial Interest Rate). Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified on the face hereof. The interest rate on this Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. The Calculation Agent shall calculate the interest rate hereon in accordance with the foregoing on or before each Calculation Date. The "Calculation Date", if applicable, pertaining to any Interest Determination Date shall be the earlier of (i) the tenth calendar day after such Interest Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be. At the request of the Holder hereof, the Calculation Agent will provide to the Holder hereof the interest rate hereon then in effect and, if determined, the interest rate which will become effective as a result of a determination made for the next succeeding Interest Reset Data. With respect to this Note, accrued interest shall be calculated by multiplying the principal amount of this Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which interest is being paid. Unless otherwise specified on the face hereof, the interest factor for each such day is computed by dividing the interest rate applicable to such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes and CMT Rate Notes. All percentages used in or resulting from any calculation of the rate of interest on this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward, and all dollar amounts used in or resulting from such calculation on this Note will be rounded to the nearest cent, with one-half cent rounded upward. The interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. The interest rate applicable to any other day is the interest rate from the immediately preceding Interest Reset Date (or, if none, the Initial Interest Rate). If so provided on the face of this Note, this Note may be redeemed by the Company on and after the Initial Redemption Date, if any, indicated on the face hereof. If no Initial Redemption Date is set forth hereof, this Note may not be redeemed prior to the Maturity Date. On and after the Initial Redemption Date, if any, this Note may be redeemed at any time in whole or in part (provided that any remaining principal amount of this Note shall be equal to an authorized denomination) at the option of the Company, at the applicable Redemption Price (as defined below), together with interest thereon payable to the "Redemption Date", on notice given not more than 60 nor less than 30 days prior to the Redemption Date. In the event of redemption of this Note in part only, a new Note for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the surrender hereof. The Notes will not have a sinking fund. The "Redemption Price" shall initially be the Initial Redemption Percentage, shown on the face hereof, of the principal amount of this Note to be redeemed and shall decline at each anniversary of the Initial Redemption Date, shown on the face hereof, by the Annual Redemption Percentage Reduction, if any, shown on the face hereof, of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount. Notwithstanding the foregoing, the Company may not, prior to the Limitation Date specified on the face hereof, if any, redeem this Note as contemplated by the next preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of monies borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than the Refunding Rate specified on the face hereof, if any. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, in the coin or currency, and to the manner, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registerable in the Security Register, upon surrender of this Note, for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes having the same Stated Maturity and Original Issue Date, of authorized denominations and of like tenor and for the same aggregate principal amount in the same Specified Currency, will be issued to the designated transferee or transferees. The Notes are issuable in registered form only, without coupons, and unless otherwise specified on the face hereof, in denominations of U.S. $1,000 and in integral multiples of U.S. $1,000 in excess thereof or the approximate equivalent of U.S. $1,000 in the Specified Currency in which this Note is denominated (if not U.S. dollars) at the Exchange Rate on the Business Day immediately preceding the trade date, rounded down to the nearest integral multiple of 1,000 units of said Specified Currency and in any amount in excess thereof that is an integral multiple of 1,000 units of such Specified Currency. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes having the same Specified Currency, Stated Maturity and Original Issue Date of any authorized denominations as requested by the Holder surrendering the same, upon surrender of the Note or Notes to be exchanged at the office or agency of the Company. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company, or the Trustee may treat the Person in whose name this Note is registered as the absolute owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. No recourse for the payment of the principal of (and premium, if any) or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, convenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, official or director, as such, past, present or future, of the Company or of any successor entity, either directly or through the Company or any successor company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. Reference in this Note to "U.S.$" or "U.S. dollars", is to the currency of the United States of America. Reference in this Note to the "Specified Currency" is to the Specified Currency shown on the face hereof. All terms used in this Note and not otherwise defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. ------------------------------ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIT GIFT MIN ACT--________ TEN ENT -- as tenants by the entireties (Cust) JT TEN -- As joint tenants with rights Custodian____________ of survivorship and not as (Minor) tenants in common Under Uniform Gifts to Minors Act________________ (State) Additional abbreviations may also be used though not in the above list. ------------------------------ FOR VALUE RECEIVED, the undersigned hereby sell(s), and transfer(s) unto Please insert social security or other identifying number of assignee - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the within Note and all rights thereunder, hereby irrevocably Attorney constituting and appointing to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated:___________________________ ___________________________________________ ___________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement, or any change whatever. EX-5 5 LEGAL OPINION OF HUNTON & WILLIAMS EXHIBIT 5 [LETTERHEAD OF HUNTON & WILLIAMS APPEARS HERE] June 14, 1995 Virginia Electric and Power Company One James River Plaza Richmond, Virginia 23219 Virginia Electric and Power Company Medium-Term Notes, Series F ----------------------------------- Gentlemen: We consent that this opinion may be filed as an exhibit to the Registration Statement of Virginia Electric and Power Company (the Company) with respect to up to U.S. $200,000,000 aggregate principal amount of its Medium-Term Notes, Series F, due from nine months to thirty years from the date of issue (the Notes) proposed to be issued under an Indenture dated as of April 1, 1988, as amended and supplemented by a first supplemental indenture dated as of August 1, 1989 (the Indenture) between you and Chemical Bank. We are of the opinion that the Company is a corporation duly organized and existing under the laws of Virginia, is duly qualified as a foreign corporation in West Virginia and North Carolina and has corporate power to conduct its business and issue the Notes. We are further of the opinion that when the steps mentioned in the next paragraph below shall have been taken, (a) all requisite corporate and governmental authorizations will have been given for the issuance and sale of the Notes (except such governmental authorization as may be necessary under the Blue Sky Laws of the several States), and (b) the Notes will be valid, legal and binding obligations of the Company (subject, as to enforceability, to applicable bankruptcy, moratorium and similar laws from time to time in force). The steps to be taken as indicated in the preceding paragraph are: (1) Authorization of the issuance and sale of the Notes by the Board of Directors and Executive Committee of the HUNTON & WILLIAMS Virginia Electric and Power Company June 14, 1995 Page 2 Company and by the State Corporation Commission of Virginia; (2) Compliance with the Securities Act of 1933, as amended; and (3) Issuance and sale of the Notes in accordance with such authorizations. Insofar as this opinion relates to any matter governed by the laws of West Virginia, we base it on the opinion of Jackson & Kelly, Charleston, West Virginia, evidenced by their consents to the statements made in regard to them under the caption EXPERTS in the Registration Statement. But we express no opinion with respect to any matter governed by the laws of West Virginia in regard to property titles or the lien of the Company's Indenture of Mortgage, dated November 1, 1935. We hereby consent to the statements made in regard to our firm under the captions EXPERTS and LEGAL OPINIONS in the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the Securities and Exchange Commission. The opinions expressed in this letter are solely for your information and use, and no other person may rely upon or otherwise use the opinions for any purpose without our express written consent. Very truly yours, /s/ Hunton & Williams HUNTON & WILLIAMS EX-8 6 TAX OPINION OF HUNTON & WILLIAMS Exhibit 8 [LETTERHEAD OF HUNTON & WILLIAMS APPEARS HERE] June 14, 1995 Virginia Electric and Power Company One James River Plaza Richmond, Virginia 23219 Medium-Term Notes, Series F Federal Income Tax Considerations --------------------------------- Gentlemen: We have acted as your counsel in connection with the offering of U.S. $200,000,000 maximum aggregate principal amount of your Medium-Term Notes, Series F (the Notes). The Notes will be offered on a continuing basis pursuant to an Indenture dated April 1, 1988, amended and supplemented by a first supplemental indenture dated as of August 1, 1989, (the Indenture) between you and Chemical Bank. We have examined copies of (i) the registration statement on Form S-3 to be filed on June 14, 1995, relating to the Notes (the Registration Statement), (ii) the prospectus to be included in the Registration Statement (the Prospectus), and (iii) the Indenture. In addition, we have reviewed such other documents and made such other factual and legal inquiries as we have considered necessary for purposes of this opinion. Based on our review, we are of the opinion that the statements and legal conclusions contained in the Prospectus under the caption "SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" are correct and that the discussion does not omit any material matter with respect to the topics covered. We consent to the references to our firm under the caption "SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" and to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the Securities and Exchange Commission. The opinions expressed in this letter are solely for your information and use. No other person may rely upon or otherwise use those opinions for any purpose without our express written consent. Very truly yours, /s/ Hunton & Williams HUNTON & WILLIAMS EX-12 7 STATEMENTS REGARDING COMPUTATION OF RATIOS EXHIBIT 12 VIRGINIA ELECTRIC AND POWER COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (thousands except ratios)
12 Months Ended March 31, 1995 1994 1993 1992 1991 1990 Net Income............ $428,706 $447,144 $ 509,051 $ 469,521 $ 487,379 $ 450,354 Add: Income Taxes..... 215,643 225,647 257,217 211,295 233,323 213,463 Total................. 644,349 672,791 766,268 680,816 720,702 663,817 Fixed Charges: Interest on Long-Term Debt....... 294,549 291,864 300,152 300,857 335,651 356,279 Other Interest........ 8,039 7,551 19,121 29,534 27,805 25,927 Estimated Interest Factor of Rents Charged to Operating Expenses, Clearing and Other Accounts....... 7,647 7,132 5,660 6,231 9,999 10,400 Total Fixed Charges... 310,235 306,547 324,933 336,622 373,455 392,606 Earnings as Defined... $954,584 $979,338 $1,091,201 $1,017,438 $1,094,157 $1,056,423 Ratio of Earnings to Fixed Charges..... 3.08 3.19 3.36 3.02 2.93 2.69
EX-23.II 8 CONSENT OF JACKSON & KELLY EXHIBIT 23(ii) [LETTERHEAD OF JACKSON & KELLY APPEARS HERE] June 14, 1995 Virginia Electric and Power Company Richmond, VA 23261 Re: Virginia Electric and Power Company Medium-Term Notes - Series F Dear Sirs: We hereby consent to the statements made in respect to our firm under the caption "EXPERTS" appearing in the Registration Statement on Form S-3 (and the prospectus included therein) of Virginia Electric and Power Company, to be filed on or about June 14, 1995, with the Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, for registration of $200,000,000 in Medium-Term Notes, Series F. Very truly yours, /s/ Jackson & Kelly JACKSON & KELLY EX-23.III 9 CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23(iii) CONSENT OF INDEPENDENT AUDITORS ------------------------------- We consent to the incorporation by reference in this Registration Statement of Virginia Electric and Power Company on Form S-3 of our report dated February 6, 1995, appearing in the Annual Report on Form 10-K of Virginia Electric and Power Company for the year ended December 31, 1994, and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Richmond, Virginia June 14, 1995 EX-25 10 FORM T-1: STATEMENT OF ELIGIBILITY OF TRUSTEE EXHIBIT 25 ___________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ___________________________________________ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ________________________________________ CHEMICAL BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) _____________________________________________ Virginia Electric and Power Company (Exact name of obligor as specified in its charter) Virginia 54-0418825 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) One James River Plaza Richmond, Virginia 23261-6666 (Address of principal executive offices) (Zip Code) ___________________________________________ Debt Securities (Title of the indenture securities) _____________________________________________________ GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 and Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 33-84460, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Chemical Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 26th day of April, 1995. CHEMICAL BANK By /s/ P. Kelly ------------------------------------------- P. Kelly Assistant Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF Chemical Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1994, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Millions Cash and balances due from dep ository institutions: Noninterest-bearing balances and currency and coin .................................... $ 6,291 Interest-bearing balances ............................ 5,484 Securities: ....... ................................... Held to maturity securities............................. 6,313 Available for sale securities........................... 16,699 Federal Funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds sold.................................... 1,922 Securities purchased under agreements to resell....... 0 Loans and lease financing receivables: Loans and leases, net of unearned income.............. $ 66,724 Less: Allowance for loan and lease losses............. 1,909 Less: Allocated transfer risk reserve................. 113 -------- Loans and leases, net of unearned income, allowance, and reserve................................ 64,702 Assets held in tradin g accounts........................ 25,685 Premis es and fixed assets (including capitalized leases)............................................... 1,409 Other real estate owned................................. 248 Investments in unconsolidated sub sidiaries and associated companies.................................. 150 Customer's liability to th is bank on acceptance outstanding........................................... 1,064 Intangible asset s...................................... 535 Oth er assets........................................... 5,240 -------- TOTAL ASSETS............................................ $135,742 ========
- 4 - LIABILITIES
Deposits In domestic offices................................... $ 47,044 Noninterest-bearing .................................. $ 16,782 Interest-bearing ..................................... 30,262 -------- In foreign offices, Edge and Agreement subsidiaries, and IBF's............................................. 31,227 Noninterest-bearing .................................. $ 124 Interest-bearing ..................................... 31,103 -------- Federal funds purchased and securities sold under agree- ments to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's Federal funds purchased............................... 12,222 Securities sold under agreements to repurchase........ 1,428 Demand notes issued to the U.S. Treasury................ 1,105 Trading liabilities..................................... 17,412 Other Borrowed money: With original maturity of one year or less............ 7,500 with original maturity of more than one year.......... 916 Mortgage indebtedness and obligations under capitalized leases................................................ 22 Bank's liability on acceptances executed and outstanding 1,081 Subordinated notes and debentures....................... 3,410 Other liabilities....................................... 5,205 TOTAL LIABILITIES....................................... 128,572 -------- EQUITY CAPITAL Common stock............................................ 620 Surplus................................................. 4,501 Undivided profits and capital reserves.................. 2,461 Net unrealized holding gains (Losses) on available-for-sale securities........................ (410) Cumulative foreign currency translation adjustments..... (2) TOTAL EQUITY CAPITAL.................................... 7,170 -------- TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL............................... $135,742 ========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) EDWARD D. MILLER )DIRECTORS WILLIAM B. HARRISON ) - 5 - -----END PRIVACY-ENHANCED MESSAGE-----