_____________ Trust Preferred Securities
VIRGINIA POWER CAPITAL TRUST II
guaranteed by
VIRGINIA ELECTRIC AND POWER COMPANY
PURCHASE AGREEMENT
[Date]
[Name of Representative],
for itself
and the other several Underwriters
named in Schedule I, attached hereto
[Address of Representative]
Ladies and Gentlemen:
Virginia Power Capital Trust II (the Trust), a statutory business trust
created under the Business Trust Act (the Delaware Act) of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801 et seq.)
and Virginia Electric and Power Company, a Virginia corporation (the Company
and, together with the Trust, the Offerors), confirm their agreement (the
Agreement) with [Name of Representative] (the Representative), and each of the
other Underwriters named in Schedule I (collectively, including the
Representative, the Underwriters), with respect to the issue and sale by the
Trust and the purchase by the Underwriters, acting severally and not jointly, of
the respective number set forth opposite their names in Schedule I of the
__________ ____% Trust Preferred Securities (liquidation amount of $______ per
security) of the Trust (the Trust Preferred Securities). The Trust Preferred
Securities will be guaranteed by the Company, to the extent described in the
Prospectus (as defined below), with respect to distributions and payments upon
liquidation, redemption and otherwise pursuant to the Trust Preferred Securities
Guarantee Agreement (the Trust Preferred Securities Guarantee), to be dated as
of __________ ___, 200__, between the Company and The Chase Manhattan Bank, as
Trustee (the Guarantee Trustee). The Trust Preferred Securities issued in
book-entry form will be issued to Cede & Co., as nominee of The Depository Trust
Company (DTC), pursuant to a letter of representations, to be dated on or prior
to the Closing Time (as defined in Section 3(b)) (the DTC Agreement), among the
Trust, the Guarantee Trustee and DTC.
The entire proceeds from the sale of the Trust Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the Common Securities), and will be used by
the Trust to purchase $_____________ of ____% Junior Subordinated Notes due
____________ ___, 20___ (the Junior Subordinated Notes) issued by the Company.
The Trust Preferred Securities and the Common Securities will be issued pursuant
to the Amended and Restated Trust Agreement, to be dated as of ____________ ___,
200__ (the Trust Agreement), among
the Company, as sponsor, ______________________ and ___________________, as
administrative trustees (the Administrative Trustees), The Chase Manhattan Bank,
as property trustee (the Property Trustee), and Chase Manhattan Bank Delaware,
as Delaware trustee (the Delaware Trustee and, together with the Property
Trustee and the Administrative Trustees, the Trustees). The Junior Subordinated
Notes will be issued pursuant to an indenture, dated as of August, 1, 1995
between the Company and the Trustee as amended by a First Supplemental Indenture
dated as of August 1, 1995 and a Second Supplemental Indenture dated as of
_____________ ___, 200_ ,(collectively the Indenture) (collectively, the
Indenture), between the Company and The Chase Manhattan Bank, as trustee (the
Junior Subordinated Note). The Trust and the Company shall enter into an
Agreement as to Expenses and Liabilities (the Expenses Agreement) to be dated as
of _____________ ___, 200__, pursuant to which the Company shall pay, under
certain circumstances, the Obligations (as defined in the Expenses Agreement) of
the Trust.
The Trust Preferred Securities, the Trust Preferred Securities
Guarantee and the Junior Subordinated Notes may be collectively referred to
herein as the "Securities." The Indenture, the Trust Agreement and the Trust
Preferred Securities Guarantee, the Expenses Agreement, the DTC Agreement and
this Agreement may be referred to herein collectively as the "Operative
Documents."
The Offerors understand that the Underwriters propose to make a public
offering of the Trust Preferred Securities (as guaranteed by the Trust Preferred
Securities Guarantee) on the terms and in the manner set forth herein and agree
that the Underwriters may resell, subject to the conditions set forth herein,
all or a portion of the Trust Preferred Securities.
SECTION 1. Representations and Warranties. The Offerors jointly and
------------------------------
severally represent and warrant to each Underwriter as of the date hereof and as
of the Closing Time, and agree with each Underwriter as follows:
(a) A registration statement, No. 333-______ on Form S-3 for the
registration of the Securities and certain other securities of the Company 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 the Underwriters, has become effective. The
registration statement, including all exhibits thereto, as amended through the
date hereof, is hereinafter referred to as the "Registration Statement"; the
prospectus relating to the Securities and other securities included in the
Registration Statement, which prospectus is now proposed to be supplemented by a
supplement relating to the Securities to be filed with the Commission under the
Securities Act, as so supplemented, is hereinafter referred to as the
"Prospectus". As used herein, the terms "Registration Statement", "prospectus"
and "Prospectus" include all documents (including any Current Report on Form
8-K) incorporated therein by reference, and shall include any documents
(including any Current Report on Form 8-K) filed after the date of such
Registration Statement, prospectus or Prospectus and incorporated therein by
reference from the date of filing of such incorporated documents (collectively,
the Incorporated Documents).
2
(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, the Securities Exchange Act of 1934, as
amended (the Securities Exchange Act), and the rules, regulations and releases
of the Commission thereunder (the Rules and Regulations) and, on the date
hereof, 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, and,
at the Closing Time, the Registration Statement and the Prospectus (including
any amendments and supplements thereto) will conform in all respects to the
requirements of the Securities Act and the Rules and Regulations, and neither of
such documents will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, that the foregoing representations
and warranties in this Section 1(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 the
Underwriter or on the Underwriter's behalf 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 or in any amendment or supplement thereto.
(c) Deloitte & Touche LLP, who have examined certain of the Company's
financial statements filed with the Commission and incorporated by reference in
the Registration Statement, are independent public accountants as required by
the Securities Act and the rules and regulations of the Commission thereunder.
3
(d) Except as reflected in, or contemplated by, the Registration Statement
and Prospectus, 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.
The Company has no material contingent financial obligation that is not
disclosed in each of the Registration Statement and Prospectus.
4
by the Property Trustee and the Delaware Trustee, the Trust Agreement will, at
the Closing Time, be a valid and binding obligation of the Company and the
Trustees, enforceable against the Company and the Trustees in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditor's rights generally or by general
principles of equity (whether in a proceeding at law or in equity) and the
availability of equitable remedies (collectively, the Bankruptcy Exceptions);
will conform in all material respects to the description thereof contained in
the Prospectus; and will have been duly qualified under the Trust Indenture Act
of 1939, as amended (the 1939 Act).
(e) The Trust Preferred Securities Guarantee, the Indenture and the
Expenses Agreement have been duly authorized by the Company and, at the Closing
Time, will have been duly executed and delivered by the Company, and will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to the Bankruptcy Exceptions;
will conform in all material respects to the description thereof contained in
the Prospectus; and at the time the Closing Time, the Trust Preferred Securities
Guarantee and the Indenture will have been duly qualified under the 1939 Act.
(f) The Junior Subordinated Notes have been duly authorized by the Company
and, at the Closing Time, will have been duly executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor as described in the Prospectus, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to the Bankruptcy Exceptions; and the
Junior Subordinated Notes will be in the forms contemplated by, and entitled to
the benefits of, the Indenture and will conform in all material respects to the
descriptions thereof in the Prospectus.
5
(g) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust or the Company, threatened to which the Trust or the
Company is a party or to which any of the properties of the Trust or the Company
is subject, other than proceedings accurately described in all material respects
in the Prospectus, the effect of which is materially adverse to the condition,
financial or otherwise, or in the earnings, business affairs or operations of
the Company or on the power or ability of the Trust or the Company to perform
its obligations under the Operative Documents or the Securities, as applicable.
SECTION 2. Offering The Underwriters have advised the Company that the
--------
Underwriters propose to make an offering of the Trust Preferred Securities
purchased by the Underwriters for sale on the terms set forth in the Prospectus.
SECTION 3. Purchase and Delivery On the basis of the representations and
---------------------
warranties contained herein and subject to the terms and conditions herein set
forth, the Trust agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Trust, at a price of $_______ per Trust Preferred Security, the number of Trust
Preferred Securities set forth in Schedule I opposite the name of such
Underwriter, plus any additional Trust Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof.
(b) Deliveries of certificates for the Trust Preferred Securities shall
be made at the offices of the Underwriters in [Location] (or at the offices of
[Underwriters'
6
Counsel] specified below in the case of Trust Preferred Securities registered in
the name of Cede & Co.), and payment of the purchase price for the Trust
Preferred Securities shall be made by the Representative, on behalf of the
several Underwriters, to the Trust by wire transfer of immediately available
funds contemporaneous with closing at the offices of [Underwriters' Counsel],
[Office Address of Underwriters' Counsel], at 10:00 A.M. on ______________ ___,
200__ (unless postponed in accordance with the provisions of Section 8), or such
other time not later than ten business days after such date as shall be agreed
upon in a writing signed by the Representative and the Offerors (such time and
date of payment and delivery being herein called the "Closing Time").
Payment for the Trust Preferred Securities purchased by the Underwriters
shall be made to the Trust by wire transfer of immediately available funds,
against delivery for the respective accounts of the Underwriters of certificates
for the Trust Preferred Securities. Certificates for the Trust Preferred
Securities shall be in definitive or global form and in such denominations as
the Underwriters may request in writing at least one business day before the
Closing Time. It is understood that each Underwriter has authorized the
Representative, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Trust Preferred Securities which it has
agreed to purchase. The certificates representing the Trust Preferred Securities
shall be registered in the name of Cede & Co. pursuant to the DTC Agreement and
shall be made available for examination by the Underwriters in the City of New
York not later than 10:00 A.M. on the last business day prior to the Closing
Time.
(c) As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the Trust
Preferred Securities will be used to purchase Junior Subordinated Notes of the
Company (which purchase was arranged by the Underwriters), the Company hereby
agrees to pay at the Closing Time to the Representative by wire transfer in
immediately available funds, for the accounts of the several Underwriters,
$_______ per Capital Security to be delivered by the Company hereunder at the
Closing Time.
SECTION 4 Conditions to Closing. The several obligations of the
---------------------
Underwriters under this Agreement to purchase the Trust Preferred Securities
will be subject to the following conditions:
(a) Subsequent to the date of this Agreement and prior to the Closing
Date,
(i) there shall not have occurred any downgrading of
the Company's or the Trust's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(ii) there shall not have occurred any change, the
effect of which is materially adverse to the financial
condition, earnings or operations of the Company of the Trust.
7
(b) At the Closing Time, the Underwriters shall have received
certificates, dated as of the Closing Time and signed by the Chairman
of the Board, any Chief Executive Officer, any President or any
Executive or Senior Vice President of the Company and an Administrative
Trustee of the Trust, to the effect set forth in clause (a) above and
to the effect that the representations and warranties of the Company
and the Trust, as the case may be, contained in this Agreement are true
and correct as of the Closing Time and that each of the Company and the
Trust has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied on or before the
Closing Time.
The officer and Administrative Trustee signing and delivering
such certificates may rely upon the best of his or her knowledge as to
proceedings threatened.
(c) At the Closing Time, the Underwriters shall have received
the opinion, dated as of the Closing Time, of XxXxxxx, Woods, Battle & Xxxxxx
LLP, counsel for the Offerors, in form and substance satisfactory to counsel for
the Underwriters.
(d) At the Closing Time, the Underwriters shall have received
the opinion, dated as of the Closing Time, of Xxxxxxxx, Xxxxxx and Finger,
special Delaware counsel to the Offerors, in form and substance satisfactory to
counsel for the Underwriters.
(e) At the Closing Time, the Underwriters shall have received
the favorable opinion, dated as of the Closing Time, of Xxxxxxxx, Xxxxxx &
Finger, counsel to Chase Manhattan Bank Delaware, as Delaware Trustee under the
Trust Agreement, in form and substance satisfactory to counsel for the
Underwriters.
(f) At the Closing Time, the Underwriters shall have received
an opinion, dated as of the Closing Time, of McGuire, Woods, Battle & Xxxxxx
LLP, special tax counsel to the Offerors, that (i) the Junior Subordinated Notes
will be classified for United States federal income tax purposes as indebtedness
of the Company, (ii) the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation and (iii) subject to the qualifications set forth therein, the
discussion set forth in the Prospectus under the heading "Certain Federal Income
Tax Consequences" represents, in all material respects, a fair and accurate
summary of the United States federal income tax consequences of the purchase,
ownership and disposition of the Trust Preferred Securities under current law
and the opinion contained therein is confirmed as of the date of such opinion.
Such opinion may be conditioned on, among other things, the initial and
continuing accuracy of the facts, financial and other information, covenants and
representations set forth in certificates of officers of the Company and other
documents deemed necessary for such opinion.
8
(g) At the Closing Time, the Underwriters shall have received
the opinion, dated as of the Closing Time, of [Underwriters' Counsel], counsel
for the Underwriters with respect to such matters relating to the offering
contemplated hereby as the Underwriters may reasonably request.
(h) At the time of execution of this Agreement and at the
Closing Time, the Underwriters shall have received a letter or letters, as the
case may be, dated as of the date hereof and/or as of the Closing Time, in form
and substance satisfactory to the Underwriters, from the Company's independent
public accountants, containing statements and information of the type ordinarily
included in accountants' SAS 72 "comfort letters" to underwriters with respect
to the financial statements and certain financial information contained in or
incorporated by reference into the Prospectus.
(i) At the Closing Time, the Underwriters shall have received
the favorable opinion, dated as of the Closing Time, of Xxxxxxx, Swaine & Xxxxx,
counsel for the [ ], the Guarantee Trustee and the Property Trustee,
in form and substance reasonably satisfactory to counsel for the Underwriters.
SECTION 5. Covenants of the Offerors In further consideration of the
-------------------------
agreements of the Underwriters contained in this Agreement, the Offerors jointly
and severally covenant as follows:
(a) The Company, at or prior to the Closing Time, will deliver
to the Underwriters conformed copies of the Registration Statement as originally
filed, including all exhibits, any related preliminary prospectus supplement,
the Prospectus and all amendments and supplements to each such document, in each
case as soon as available and in such quantities as are reasonably requested by
the Underwriters.
(b) Before amending or supplementing the Registration
Statement of the Prospectus, to furnish to the Underwriters a copy of each such
proposed amendment or supplement and not to use any such proposed amendment or
supplement to which the Underwriters reasonably object.
(c) If, during the time when a prospectus relating to the
Securities is required to be delivered under the Securities Act, any event shall
occur as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Securities Act, the Company promptly
will (i) notify the Underwriters to suspend solicitation of purchases of the
Securities and (ii) at its expense, prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance[ and (iii) at its expense, furnish
to the Representative a reasonable quantity of the prospectus as so supplemented
and amended.] In case any Underwriter is required to deliver a prospectus in
connection with the sale of any Securities after the expiration of the period
specified in the preceding sentence, the Company, upon the request of the
Underwriter, will furnish to the Underwriter, at the expense of such
Underwriter, a
9
reasonable quantity of a supplemented or amended prospectus, or supplements or
amendments to the Prospectus, complying with Section 10(a) of the Securities
Act. During the period specified in the second sentence of this Section (c), 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 and regulations of the Commission thereunder; provided, that
the Company shall not file such documents or amendments without also furnishing
copies thereof to the Underwriter and [Underwriter's Counsel].
(d) To furnish such proper information as may be lawfully
required and otherwise cooperate in qualifying the Trust Preferred Securities
for offer and sale under the securities laws of such jurisdictions as the
Underwriters 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 which it deems
unduly burdensome.
(e) Whether or not any sale of such Trust Preferred Securities
is consummated, to pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and filing of
the Registration Statement and the Prospectus and all amendments and supplements
thereto, (ii) the preparation, issuance and delivery of the Securities, (iii)
the reasonable out of pocket fees and disbursements of the Offerors' outside
counsel and the reasonable fees and expenses of the Trustees, (iv) the
qualification of such Securities under state securities laws in accordance with
the provisions of Section 5(d), including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of any Blue Sky or legal investment memoranda,
(v) the printing and delivery to the Underwriters of reasonable quantities of
the Prospectus and any amendments or supplements thereto, (vi) any fees charged
by rating agencies for the rating of such Securities, and (vii) the fees and
expenses, if any, incurred in connection with the admission of such Securities
for trading in any appropriate market system or clearing with any appropriate
clearing system.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, an earnings statement of the
Company (which need not
10
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.
(g) [The Company will use its best efforts to cause the Trust
Preferred Securities to be listed on the New York Stock Exchange, subject to
official notice of issuance and 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 required of it to the delivery by it of the Trust Preferred
Securities.]
SECTION 6. Indemnification and Contribution. The Offerors jointly and
--------------------------------
severally, agree to indemnify and hold harmless each Underwriter, their
respective directors, officers and each person, if any, who controls such
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act, from and against any and all losses,
claims, damages and liabilities, and to reimburse each such Underwriter and each
such director, officer, employee or controlling person promptly upon demand for
any legal or other expenses (including, to the extent hereinafter provided,
reasonable out of pocket outside counsel fees) incurred by it or them in
connection with investigating or defending or preparing to defend against any
such losses, claims, damages or liabilities arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or any omission or alleged omission to state
therein a material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Underwriters expressly for use therein; provided,
however, that the foregoing indemnity, insofar as it relates to the preliminary
prospectus, shall not inure to the benefit of any indemnified person if the
person asserting any such loss, claim or damage purchased Trust Preferred
Securities from an Underwriter and if a copy of the Prospectus (correcting the
preliminary prospectus) was not delivered by the Underwriter or on its behalf to
such person at, prior to or promptly following the written confirmation of the
sale of the Trust Preferred Securities to such person, unless such failure to
deliver the Prospectus was a result of non-compliance by the Company with
Section [5(a), (b) or (c)] hereof.
(a) The Company agrees to indemnify the Trust against all
loss, liability, claim, damage and expense whatsoever, as due from the Trust
under Section 6(a).
(b) Each Underwriter agrees, severally and not jointly, to
indemnify, hold harmless and reimburse the Offerors, their respective directors,
officers and each person, if any, who controls either of the Offerors within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act to the same extent as the foregoing indemnity from the
Offerors to such Underwriter, but only with reference to information relating to
such Underwriter furnished to the Company in writing by such
11
Underwriter through the Underwriters expressly for use in the Prospectus or any
amendments or supplements thereto. The indemnity agreement of the respective
Underwriters contained in this Section shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the Company,
or any such other Underwriter or any such controlling person, and shall survive
the delivery of the Trust Preferred Securities.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 6(a) or 6(c) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, 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 otherwise than on account of such indemnity
agreement. In case such notice of any such action shall be so given, such
indemnifying party shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
out of pocket fees and disbursements of such outside counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel if necessary,
reasonably satisfactory to all parties) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by the Representative in the case of parties
indemnified pursuant to Section 6(a) above and by the Company in the case of
parties indemnified pursuant to Section 6(c) above. The indemnifying party shall
not be liable for any settlement of any litigation, investigation or proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss, claim damage, expense
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in
12
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 and does not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) To the extent the indemnification provided for in
Section 6(a) or 6(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
fault of the Offerors, on the one hand, and of the Underwriters, on the other,
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations, including relative benefit. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading relates to
information supplied by the Offerors on the one hand or by the Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 6(e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 6(e). 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 Section 6(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
SECTION 7. Termination. This Agreement shall be subject to
-----------
termination by notice given by the Underwriters to the Company, if (a) after the
execution and delivery of this Agreement and prior to the Closing Time, (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any calamity or crisis that, in which the United States is
involved that is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event singly or together with any
other such event makes
13
it, impracticable to market the Trust Preferred Securities on the terms and in
the manner contemplated in the Prospectus.
SECTION 8. Miscellaneous. If, as of the Closing Time, any one or more
-------------
of the Underwriters shall fail or refuse to purchase Trust Preferred Securities
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Trust Preferred Securities which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase is not more than one-
tenth of the aggregate number of Trust Preferred Securities to be purchased on
such date, the other Underwriters shall be obligated severally in the
proportions that the number of Trust Preferred Securities set forth opposite
their respective names in Schedule I bears to the aggregate number of Trust
Preferred Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the non-defaulting Underwriters
may specify, to purchase the Trust Preferred Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided, however, that in no event shall the number of Trust Preferred
Securities that any Underwriter has agreed to purchase pursuant to Section 3 be
increased pursuant to this Section 8 by an amount in excess of one-ninth of such
number of Trust Preferred Securities without the written consent of such
Underwriter. If on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Trust Preferred Securities which it or they have agreed to
purchase hereunder on such date and the aggregate number of Trust Preferred
Securities with respect to which such default occurs is more than one-tenth of
the number of Trust Preferred Securities to be purchased on such date and
arrangements satisfactory to the non-defaulting Underwriters and the Company for
the purchase of such Trust Preferred Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or of the Company. In any such case either the
Underwriters or the Company shall have the right to postpone the Closing Time,
but in no event for longer than seven days, in order that the required changes,
if any, in the Prospectus or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder; and such termination shall be without
liability of any party to any other party except as provided in Section 5(e).
14
Section 7, this Section 8 and all representations, warranties and
agreements contained in this Agreement, or in certificates of officers of the
Company or trustees of the Trust submitted hereunder, shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement;
(ii) any investigation made by or on behalf of the Underwriters or any person
controlling any Underwriter or by or on behalf of the Trust, the Trustees, the
Company, its officers or directors or any other person controlling the Company;
and (iii) acceptance of payment for any of the Trust Preferred Securities.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
15
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
VIRGINIA POWER CAPITAL TRUST II
By: VIRGINIA ELECTRIC AND POWER
COMPANY, as
Depositor
By:
---------------------------------
Name:
Title:
VIRGINIA ELECTRIC AND POWER COMPANY
By:
---------------------------------
Name:
Title:
Agreed, this ___ day of ___________, 200_
[Underwriter]
Acting severally on behalf of itself and the several Underwriters named herein.
By [Underwriter]
By:
---------------------------------
Name:
Title:
16
