EXHIBIT 1(ii)
VIRGINIA ELECTRIC AND POWER COMPANY
Preferred Stock
FORM OF UNDERWRITING AGREEMENT
[Date]
[Name of Underwriter]
as Representative for
the Several Underwriters
named in Schedule I hereto
[Address of Representative]
Ladies and Gentlemen:
Virginia Electric and Power Company, a Virginia corporation (the
Company), proposes to issue and sell to the several Underwriters named in
Schedule I hereto for whom you are acting as Representative, _______ shares of
its Series __ Preferred Stock (the Firm Shares). The Company also proposes to
issue and sell to the several Underwriters not more than an additional _______
shares of Preferred Stock (the Additional Shares) if and to the extent the
Representative shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such shares of Preferred Stock granted to the Underwriters
in Section I hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the Shares. The shares of Preferred Stock of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the Preferred Stock.
1. Underwriters and Representative. The term "Underwriters" as used
--------------------------------
herein shall be deemed to mean the several persons, firms or corporations
(including the Representative hereinafter mentioned) named in Schedule I hereto,
and the term "Representative" as used herein shall be deemed to mean the
representative to whom this Agreement is addressed, who by signing this
Agreement represents that it has been authorized by the other Underwriters to
execute this Agreement on their behalf and to act for them in the manner herein
provided. If there shall be only one person, firm or corporation named in
Schedule I hereto, the term "Underwriters" and the term "Representative" as used
herein shall mean that person, firm or corporation. All obligations of the
Underwriters hereunder are several and not joint. Any action under or in respect
of this Agreement taken by the Representative will be binding upon all the
Underwriters.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, the Underwriters that:
(a) A registration statement, No. 333-______ on Form S-3 for
the registration of the Shares 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 you, 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 Shares
included in the Registration Statement, which prospectus is now
proposed to be supplemented by a supplement relating to the Shares 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).
(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, on the Closing Date, 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 (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 Underwriters or on the Underwriters'
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
-2-
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.
(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, financial or otherwise.
The Company has no material contingent financial obligation
that is disclosed in each of the Registration Statement and Prospectus.
(e) 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. The execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
will not result in a material breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, rule,
regulation or order of any governmental agency or body or any court
having jurisdiction over the Company or any subsidiary or any of their
properties or, to the best of such counsel's knowledge, any agreement
or instrument to which the Company is [now a party, or the charter of
the Company, as amended or any order, rule or regulation applicable to
the Company of any federal or state regulatory board or body or
administrative agency having jurisdiction over the Company or over its
property.] a party or by which the Company is bound or to which any of
the properties of the Company is subject, or the articles of
incorporation or bylaws of the Company, and the Company has full power
and authority to authorize, issue and sell the Shares as contemplated
by this Agreement.
(e) The Shares, upon issuance thereof, will conform in all
respects to the terms of the relevant order or orders of the State
Corporation Commission of Virginia (the "Virginia Commission") now or
hereafter in effect with respect to the Shares.
[(g) The Preferred Stock (other than the Shares) is and, upon
issuance the Shares will be, listed on the New York Stock Exchange.
Company will use best efforts to complete listing of the shares on the
New York Stock Exchange]
-3-
4. Public Offering. On the basis of the representations and warranties
---------------
herein contained, but subject to the terms and conditions in this Agreement set
forth, the Company agrees to sell to each of the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company, at
the, place and time hereinafter specified, the number of Shares set forth
opposite the name of such Underwriter in Schedule I hereto at a price of $_____
per share (the "Purchase Price"). The Company is further advised by the
Underwriters that the Shares are to be offered by the Underwriters to the public
initially at $______ a share (the "Public Offering Price") and to certain
dealers selected by the Representatives at a price that represents a concession
not in excess of $__.__ a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of $____ a share, to any Underwriter or to certain other dealers. It is
understood that after such initial offering the several Underwriters reserve the
right to vary the offering price and further reserve the right to withdraw,
cancel or modify such offering without notice.
(a) On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company agrees to
sell to the Underwriters the Additional Shares, and the Underwriters shall have
a one-time right to purchase, severally and not jointly, all or part of ________
the Additional Shares at the Purchase Price. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the Representative may determine)
that bears approximately the same proportion to the total number of Additional
Shares to be purchased as the number of Firm Shares set forth in Schedule I
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
(b) The Company hereby agrees that, without the prior written consent
of the Representative, it will not during the period ending 60 days after the
date of the Prospectus (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, or to register or announce the sale or offering of any
shares of Preferred Stock of the Company or any securities convertible into or
exercisable or exchangeable for such Preferred Stock or (ii) enter into any
agreement that transfers, in whole or in part, the economic consequences of
ownership of such Preferred Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of such Preferred Stock or
such other securities in cash or otherwise. The foregoing (a) the Shares to be
sold hereunder; (b) the issuance by the Company of shares of Preferred Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing.
5. Time and Place of Closing. Payment for the Firm Shares shall be made
-------------------------
by or on behalf of the several Underwriters by the wire transfer of immediately
available funds to the
-4-
Company's account. Such payment shall be made upon delivery of the Firm Shares
to the Representative or upon its order at the office of the Representative,
[Address], at 10:00 A.M., New York City time, on the third business day (unless
postponed in accordance with the provisions of Section 10) following the date of
this Agreement, or if pricing takes place after 4:30 P.M. New York time, on the
fourth business day following the date of this Agreement (unless postponed in
accordance with the provisions of Section 10), or at such other time on the same
or such other earlier date, as shall be agreed upon by the Representative and
the Company. The time and date of such payment are hereinafter referred to as
the Closing Date.
Payment for any Additional Shares shall be made by or on behalf of the
several Underwriters by the wire transfer of immediately available funds to the
Company's account. Such payment shall be made upon delivery of the Additional
Shares to the Representative or upon its order at the office of the
Representative, [Address], at 10:00 A.M., New York City time, on such date
(which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor later than ten business days after the giving of the notice
hereinafter referred to) as shall be designated in a written notice from the
Representative to the Company of the Representative's determination, on behalf
of the Underwriters, to purchase a number, specified in said notice, of
Additional Shares, or on such other date, in any event not later than ______
200__, as shall be agreed upon by the Representative and the Company. The time
and date of such payment are hereinafter referred to as the Option Closing Date.
The notice of the determination to exercise the option to purchase Additional
Shares and of the Option Closing Date may be given at any time within 30 days
after the date of this Agreement.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as the
Representative shall request in writing not later than one full business day
prior to the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and Additional Shares shall be delivered
to the Representative on the Closing Date or the Option Closing Date, as the
case may be, for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
6. Covenants of the Company. The Company agrees that:
------------------------
(a) The Company, at or prior to the Closing Date, will deliver
to the Representative 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
Representative.
(b) The Company will pay all expenses in connection with (i)
the preparation and
-5-
filing by it of the Registration Statement and Prospectus and the
printing of this Agreement, (ii) the preparation, issue and delivery of
certificates for the Shares, (iii) the printing and delivery to the
Underwriters in reasonable quantities of copies of the Registration
Statement and the Prospectus (each as originally filed and as
subsequently amended). The Company also will pay all taxes, if any,
except transfer taxes, on the issue of the Shares. In addition, the
Company will pay the reasonable out of pocket fees and disbursements of
Underwriters' outside counsel, [Underwriters' Counsel], in connection
with the qualification of the Shares under state securities or blue sky
laws or investment laws (if and to the extent such qualification is
required by the Underwriters or the Company).
(c) If, during the time when a prospectus relating to the
Shares is required to be delivered under the Act, any event occurs 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
Act, the Company promptly will (i) notify the Representative to suspend
solicitation of purchases of the Shares 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 or amended.] In case any Underwriter is required to
deliver a prospectus in connection with the sale of any Shares after
the expiration of the period specified in the preceding sentence, the
Company, upon the request of the Representative, will furnish to the
Representative, at the expense of such Underwriter, a 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 6(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 Representative and [Underwriters' Counsel].
(d) The Company will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Representative a reasonable opportunity
to comment on any such proposed amendment or supplement; and the
Company will also advise the Representative promptly of the filing of
any such amendment or supplement [As soon as the Company is advised
thereof, it will advise the Representative of the issuance of any stop
order under the Securities Act with respect to the Registration
Statement or any part thereof, or] and of the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement or of any part thereof and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
-6-
(e) 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 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 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 required of it
to the delivery by it of the Shares.
(h) The Company will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the Shares for
offer and sale under the securities or blue sky laws of such states as
the Representative 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.
(g) Fees and disbursements of [Underwriter Counsel]. who are
acting as counsel for the Underwriters (exclusive of fees and
disbursements of such counsel which are to be paid as set forth in
Section 6(b)), shall be paid by the Underwriters; provided, however,
that if this Agreement is terminated in accordance with the provisions
of Sections 7 or 8 hereof, the Company shall reimburse the
Representative for the account of the Underwriters for the amount of
such fees and disbursements.
7. Conditions of Underwriters' Obligations; Termination by the
------------------------------------------------------------
Underwriters.
------------
(a) The obligations of the Underwriters to purchase
and pay for the Shares shall be subject to the following
conditions:
(i) No stop order suspending the
effectiveness of the Registration Statement shall be
in effect on the Closing Date and no proceedings for
that purpose shall be pending before, or to the
knowledge of the Company
-7-
threatened by, the Commission on such date. The
Representative shall have received, prior to payment
for the Shares, a certificate dated the Closing Date
and signed by any Chief Executive Officer, any Chief
Financial Officer, any Executive Vice President or
any Senior Vice President of the Company to the
effect that no such stop order is in effect and that
no proceedings for such purpose are pending before
or, to the knowledge of the Company, threatened by
the Commission.
(ii) At the Closing Date an order or orders
of the Commission pursuant to the Holding Company Act
permitting the issuance and sale of the Shares shall
be in full force and effect and all provisions of
such order or orders heretofore entered are deemed
acceptable to the Representative and the Company, and
all provisions of such order or orders hereafter
entered shall be deemed acceptable to the
Representative and the Company unless within 24 hours
after receiving a copy of any such order either shall
give notice to the other to the effect that such
order contains an unacceptable provision.
(iii) At the Closing Date the Representative
shall receive, on behalf of the several Underwriters,
the opinions of McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP,
counsel to the Company and [Underwriters' Counsel],
counsel to the Underwriters, substantially in the
forms attached hereto as Schedules II and III.
(a) At the time of execution of this
Agreement and as of the Closing Date, the
Representative shall have received letters, on behalf
of the Underwriters, dated as of the date hereof and
as of the Closing Date, in form and substance
satisfactory to the Representative, 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.
(b) Subsequent to the execution of this
Agreement and prior to the Closing Date, (A) except
as reflected in, or contemplated by, the Registration
Statement and the Prospectus, there shall not have
occurred (1) any change in the Shares of the Company
(other than a decrease in the aggregate number
thereof outstanding), (2) any material adverse change
in the general affairs, financial condition or
earnings of the Company or (3) any material
transaction entered into by the Company other than a
transaction in the ordinary course of business, the
effect of which in each such case in the judgment of
the Representative is so material and so adverse
-8-
that it makes it inadvisable to proceed with the
public offering or delivery of the Shares on the
terms and in the manner contemplated in the
Prospectus and this Agreement, or (B) there shall not
have occurred (1) a downgrading in the rating
accorded any of the Company's senior 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), (2) any general suspension of
trading in securities on the New York Stock Exchange
or any material limitation on prices for such trading
or any restrictions on the distribution of securities
established by the New York Stock Exchange or by the
Commission or by any federal or state agency or by
the decision of any court, (3) a banking moratorium
declared either by federal or New York State
authorities or (4) any outbreak or escalation of
major hostilities in which the United States is
involved, any declaration of war by the United States
Congress or any other substantial national or
international calamity or crisis resulting in the
declaration of a national emergency, the effect of
which outbreak, escalation, declaration, calamity or
crisis, in the reasonable judgment of the
Representative, makes it impracticable or inadvisable
to proceed with the public offering or delivery of
the Shares on the terms and in the manner
contemplated in the Prospectus and in this Agreement.
(c) On the Closing Date, the representations
and warranties of the Company in this Agreement shall
be true and correct as if made on and as of such
date, and the Company shall have performed all
obligations and satisfied all conditions required of
it under this Agreement; and, at the Closing Date,
the Representative shall have received a certificate
to such effect signed by the Chairman of the Board,
Chief Executive Officer, President or any Executive
or Senior Vice President of the Company.
(d) All legal proceedings to be taken in
connection with the issuance and sale of the Shares
shall have been satisfactory in form and substance to
[Underwriters' Counsel].
(iv) In case any of the conditions specified above in
Section 7(a) shall not have been fulfilled, this Agreement may
be terminated by the Representative upon mailing or delivering
written notice thereof to the Company; provided, however, that
in case the conditions specified in Section 7(a)(v) and (vi)
shall not have been fulfilled, this Agreement may not be so
terminated by the Representative unless Underwriters who have
agreed to purchase in the aggregate greater than 50% or more
of the aggregate principal amount of the Shares shall have
consented to such termination and the aforesaid notice shall
so state. Any such termination shall be without liability of
any party to any other party except as otherwise provided in
Section 9 and Sections 6(b), 6(g) and 7(c) hereof.
-9-
(v) If this Agreement shall be terminated by the
Representative pursuant to Section 7(b) above or 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, then in any such
case, the Company will reimburse the Underwriters, severally,
for all out-of-pocket expenses (in addition to the fees and
disbursements of their outside counsel as provided in Section
6(g)) reasonably incurred by such Underwriters in connection
with this Agreement or the offering contemplated hereunder
and, upon such reimbursement, the Company shall be absolved
from any further liability hereunder, except as provided in
Section 6(b) and Section 9.
(vi) The several obligations of the Underwriters to
purchase Additional Shares hereunder are subject to the
delivery to the Representative on the Option Closing Date of
such documents and opinions as the Representative may
reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the
Additional Shares.
8. Conditions of the Obligation of the Company. The obligation of the
-------------------------------------------
Company to deliver the Shares shall be subject to the conditions set forth in
the first sentence of Section 7(a)(i) and in Section 7(a)(ii). In case said
conditions shall not have been fulfilled, this Agreement may be terminated by
the Company by mailing or delivering written notice thereof to the
Representative. Any such termination shall be without liability of any party to
any other party except as otherwise provided in Sections 6(b), 6(g), 9 and 10(c)
hereof.
9. Indemnification. (a) The Company agrees to indemnify and hold
---------------
harmless each Underwriter and each person who controls any Underwriter 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 such Underwriter and controlling person for any
legal or other expenses (including, to the extent hereinafter provided,
reasonable outside 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, or in either such document as amended
or supplemented (if any amendments or supplements thereto shall have been
furnished), or any Preliminary Prospectus (if and when used prior to the
effective date of the Registration Statement), 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
foregoing agreement,
-10-
insofar as it relates to any Preliminary Prospectus, shall not inure to the
benefit of any Underwriter (or to the benefit of any person who controls such
Underwriter) on account of any losses, claims, damages or liabilities arising
out of the sale of any of the Shares by such Underwriter to any person if it
shall be established that a copy of the Prospectus, excluding any documents
incorporated by reference (as supplemented or amended, if the Company shall have
made any supplements or amendments which have been furnished to the
Representative), shall not have been sent or given by or on behalf of such
Underwriter to such person at or prior to the written confirmation of the sale
to such person in any case where such delivery is required by the Securities
Act, if the misstatement or omission leading to such loss, claim, damage or
liability was corrected in the Prospectus (excluding any documents incorporated
by reference) as amended or supplemented, and such correction would have cured
the defect giving rise to such loss, claim, damage, or liability; and provided
further, however, that the indemnity agreement contained in this Section 9(a)
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 herein or otherwise in
writing to the Company by or on behalf of any Underwriter for use in the
Registration Statement or any amendment thereto, in the Prospectus or any
supplement thereto, or in any Preliminary Prospectus. The indemnity agreement of
the Company contained in this Section 9(a) and the representations and
warranties of the Company contained in Section 3 hereof shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or any such controlling person, and shall survive the
delivery of the Shares.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its officers and directors, each other
Underwriter, and each person who controls any thereof 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 outside 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, or in either such document as amended
or supplemented (if any amendments or supplements thereto shall have been
furnished), or any Preliminary Prospectus (if and when used prior to the
effective date of the Registration Statement), 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 herein or in writing to
the Company by or on behalf of such Underwriter for use in the Registration
Statement or the Prospectus or any amendment or supplement to either thereof, or
any Preliminary Prospectus. The indemnity agreement of the respective
Underwriters contained in this Section 9(b) shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
Company, or any such other
-11-
Underwriter or any such controlling person, and shall survive the delivery of
the Shares.
(c) The Company and each of the Underwriters agrees 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
such Underwriter or controlling person as aforesaid, in respect of which
indemnity may be sought on account of any indemnity agreement contained herein,
it 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 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 satisfactory to the
indemnified party or parties who shall be defendant or defendants in such
action, and such defendant or defendants shall bear the fees and expenses of any
additional outside counsel retained by them; provided that, if the defendants 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 outside counsel retained by
the indemnified party if (i) the indemnified party shall have retained such
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, representing the indemnified parties under Section 9(a) or
9(b), as the case may be, who are parties to such action), (ii) the indemnifying
party shall have elected not to assume the defense of such action, (iii) the
indemnifying party shall not have employed counsel 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. Notwithstanding the foregoing sentence, an
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent (such consent not to be unreasonably
withheld), but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which indemnification may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such a proceeding), 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 Section 9 is
unavailable to or insufficient to
-12-
hold harmless an indemnified party 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 by 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 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 Company on the one hand or by you on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and you agree that
it would not be just and equitable if contribution pursuant to this Section 9(d)
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 9(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 Section 9(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
under this Section 9(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
10. Termination by the Company. If any one or more of the Underwriters
--------------------------
shall fail or refuse to purchase the Shares which it or they have agreed to
purchase hereunder, and the aggregate principal amount of the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate principal amount of the Shares, then
the other Underwriters shall be obligated severally in the proportions which the
principal amount of the Shares set forth opposite their respective names in
Schedule I bears to the aggregate underwriting obligations of all non-defaulting
Underwriters, or in such other proportions as the Underwriters may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase. If any Underwriter or Underwriters shall so fail
or refuse to purchase Shares and the aggregate principal amount of the Shares
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Shares and arrangements satisfactory to the
Underwriters and the Company for the purchase of such Shares are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter (except as provided in Section 6(g)
and Section 9) or of the Company (except as provided in Section 6(b) and Section
9). In any such case not involving a termination, either the Representative or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
-13-
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this Section 10 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. 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 or on behalf of any Underwriter or any controlling person
of any Underwriter, or by or on behalf of the Company, and shall survive
delivery of the Shares.
12. Miscellaneous. The validity and interpretation of this Agreement
-------------
shall be governed by the laws of the State of New York. This Agreement shall
inure to the benefit of the Company, the Underwriters and, with respect to the
provisions of Section 9 hereof, each controlling person and each officer and
director of the Company referred to in Section 9, and their respective
successors, assigns, executors and administrators. Nothing in this Agreement is
intended or shall be construed to give to any other 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 purchaser, as such, of any of the Shares
from any of the several Underwriters.
13. Notices. All communications hereunder shall be in writing and if to
-------
the Underwriters shall be mailed, telexed, telecopied or delivered to the
Representative at the address set forth on Schedule I hereto, or if to the
Company shall be mailed, telexed, telecopied or delivered to it, attention of
Treasurer, Virginia Electric and Power Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
-14-
Please sign and return to us a counterpart of this letter, whereupon
this letter will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
VIRGINIA ELECTRIC AND POWER COMPANY
By:_________________________________
Title:
The foregoing agreement is
hereby confirmed and accepted,
as of the date first
above written.
[Name of Representative]
By:________________________________
Title:
Acting individually and on
behalf of the other several
Underwriters named in
Schedule I hereto.
-15-
SCHEDULE I
--------------------------------------------------------------------------------
Underwriter Number of Firm Shares To Be Purchased
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total
I-1
SCHEDULE II
PROPOSED FORM OF OPINION
OF
MCGUIRE, WOODS, BATTLE & ▇▇▇▇▇▇ LLP
One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
______, 200_
[Name of Underwriter]
as Representative for
the Several Underwriters
named in Schedule I hereto
[Address of Representative]
Re: Virginia Electric and Power Company Preferred Stock Offering
Ladies and Gentlemen:
We have acted as counsel to Virginia Electric and Power Company, a
Virginia corporation (the "Company"), in connection with the issuance and sale
by the Company of ____ shares (the "Shares") of its preferred stock pursuant to
an underwriting agreement dated ____________, 200__ (the "Underwriting
Agreement") among the Company and ____________ (the "Underwriters"), and the
several other underwriters named therein. This opinion is rendered pursuant to
the provisions of Section 7(a)(iii) of the Underwriting Agreement, and, except a
set forth herein, the terms used herein which are defined in the Underwriting
Agreement have the same meanings as they have in the Underwriting Agreement.
We have examined the Underwriting Agreement, a specimen certificate for
the Preferred Stock, the Articles of Incorporation and the By-laws of the
Company and such other corporate records of the Company, agreements and other
instruments, certificates of public officials, certificates of officers and
representatives of the Company, and other documents and have conducted such
other investigations of facts and law as we have deemed necessary or advisable
for purposes of this opinion. As to certain facts material to the opinions
expressed herein, we
II-1
have relied upon the representations and warranties contained in the documents
examined by us. Whenever the phrases "to our knowledge" or "known to us" are
used herein, they refer to the actual knowledge of the attorneys of this firm
generally involved in the representation of the Company.
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 of the Company.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted as certified or photostatic copies
and the authenticity of the originals of such copies, (iii) the genuineness of
signatures not witnessed by us, (iv) the legal capacity of natural persons, and
(v) the due authorization, execution and delivery of all documents by all
parties and the validity and binding effect thereof (other than the
authorization, execution and delivery of documents by the Company, and the
validity and binding effect upon the Company).
Based upon and subject to the foregoing as well as the qualifications
hereinafter set forth, we are of the opinion that:
(A) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia and is duly qualified as a foreign corporation
in West Virginia and North Carolina, has the corporate power and
authority to own, lease and operate its property and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and is duly qualified as a
foreign corporation in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(B) The execution and delivery by the Company of the
Underwriting Agreement and the performance by the Company of its
obligations thereunder have been duly authorized by all necessary
corporate action on the part of the Company; and the Underwriting
Agreement has been duly executed and delivered by the Company.
(C) The Preferred Stock of the Company conforms in all
material respects to the description thereof in the Prospectus.
II-2
(D) The Shares have been duly authorized and are validly
issued, fully paid and non-assessable. The Shares are not subject to
any preemptive or similar rights. The Shares have been duly authorized
for listing on the New York Stock Exchange (the "NYSE").
(E) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement and the issuance and sale by the Company of the Shares do not
and will not contravene the Articles of Incorporation or the By-laws of
the Company or any provision of any law of the Commonwealth of
Virginia, the State of New York or U.S. federal law or, to our
knowledge, any judgment, order or decree of any U.S. federal court or
government agency or any court or government agency of the State of New
York or the Commonwealth of Virginia having jurisdiction over the
Company. No approval, authorization or consent of any U.S. federal, New
York, or Virginia court or governmental authority or agency is required
in connection with the consummation by the Company of the transactions
contemplated by the Underwriting Agreement, except such as have been
obtained or will have been obtained prior to the Closing Date or as may
be required under state securities laws.
(F) To the best of our knowledge, there are no actions, suits
or proceedings pending or threatened to which the Company is a party or
to which any of its properties is subject other than any proceedings
described in the Prospectus and proceedings which we believe are not
likely to have a material adverse effect on the power or ability of the
Company to perform its obligations under the Underwriting Agreement or
to consummate the transactions contemplated thereby or by the
Prospectus.
(G) We have reviewed the Registration Statement and Prospectus
and participated in conferences with officers and other representatives
of the Company, representatives of the independent public accountants
for the Company and with your representatives and representatives of
your counsel at which conferences the contents of the Registration
Statement and Prospectus and related matters were discussed and have
also reviewed certain corporate records, documents and proceedings,
and, although we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Prospectus (except to the extent set forth
in paragraphs (I) below and (D) above), on the basis of the foregoing,
no facts have come to our attention which have led us to believe that,
as of its effective date, the Registration Statement contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date or the Closing Date, the
Prospectus contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (except that we express no comment or belief
with respect to the
II-3
financial statements and schedules and other financial or statistical
information contained in the Registration Statement or Prospectus).
(H) [The statements in (A) the Prospectus under the captions
"Virginia Stock Corporation Act and the Articles and By-laws" and
"Description of Capital Stock -- Preferred Stock," and (B) in the
Registration Statement in Item 15, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly summarize the matters referred to therein
in all material respects (except that we express no comment or belief
with respect to the financial statements and schedules and other
financial or statistical information contained in the Registration
Statement or Prospectus).]
(I) Each of the Registration Statement and the Prospectus,
when it became effective or was filed with the Commission, as the case
may be, appeared on its face to be appropriately responsive in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder (except that we express no
comment or belief with respect to the financial statements and
schedules and other financial or statistical information contained in
the Registration Statement or Prospectus).
(J) The form of the certificate for the Shares conforms in all
material respects to the requirements of the Virginia Stock Corporation
Act and the NYSE.
(K) The Company is not, and following consummation of the
transactions contemplated by the Underwriting Agreement will not be, an
"investment company" or a company "controlled" by an "investment
company" which is required to be registered under the Investment
Company Act of 1940, as amended.
We do not purport to express an opinion on any laws other than those of
the Commonwealth of Virginia, the State of New York and the United States of
America. [Underwriters Counsel] may rely on this opinion in connection with the
opinions they are delivering on the date hereof with respect to the matters set
forth herein to the extent that such opinion involves matters governed by the
laws of the Commonwealth of Virginia. Our opinion in paragraph (F) as to
non-contravention of the laws of the State of New York is based upon a review of
those laws and statutes which, in our experience, are normally applicable to
transactions of the type contemplated by the Underwriting Agreement. We do not
express any opinion herein on whether the provisions of the Underwriting
Agreement regarding rights to indemnity and contribution contravene or are
limited by federal or state securities laws or public policy.
This opinion letter may not be relied upon by, nor may copies be
delivered to, any person without our prior written consent.
Very truly yours,
II-4
SCHEDULE III
PROPOSED FORM OF OPINION
OF
UNDERWRITER'S COUNSEL
[DATE]
[Name of Underwriter]
as Representative for the
Several Underwriters named
in Schedule I hereto
[Address of Representative]
Re: Virginia Electric and Power Company--Offering of _______
Shares of Preferred Stock
Ladies and Gentlemen:
We have acted as counsel for you (the "Underwriters") in connection
with the purchase today by you severally of _______ shares (the "Shares") of the
preferred stock of Virginia Electric and Power Company, a Virginia corporation
(the "Company"), pursuant to the terms of an underwriting agreement dated
____________, 200__ (the "Underwriting Agreement") among the Company and you.
This letter is being delivered to you pursuant to the provisions of Section
7(a)(iii) of the Underwriting Agreement. Terms used in this letter which are not
defined herein but which are defined, either directly or by cross-reference, in
the Underwriting Agreement are used herein with the respective meanings assigned
to such terms in the Underwriting Agreement.
In connection therewith, we have examined (a) the Registration
Statement on Form S-3 (Registration No. _______________ thereto, filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), relating to the registration of
the Shares, as it became effective under the Act (such Registration Statement,
as so amended and including documents incorporated therein by reference, being
hereinafter referred to as the "Registration Statement"), (b) the Company's
Prospectus Supplement, dated ___________, 2000, as filed in final form with the
Commission
III-1
on ______________, 200_ pursuant to Rule 424(b) under the Act (such
Prospectus Supplement, together with the Prospectus included as part of the
Registration Statement and documents incorporated therein by reference, the
"Prospectus", (c) executed counterparts of the Underwriting Agreement, (d) a
copy of the Articles of Incorporation of the Company, (e) a copy of the By-Laws
of the Company, (f) a specimen certificate for the Preferred Stock and (g) a
record of corporate proceedings of the Company relating to the authorization of
the public offering, including the execution and delivery of the Underwriting
Agreement. In addition, we have examined certificates of public officials and
the originals (or copies certified or otherwise identified to our satisfaction)
of such other agreements, certificates, documents and records and have reviewed
such questions of law as we have deemed necessary or appropriate for the
purposes of the opinions rendered herein.
In such examination, we have assumed, without inquiry, the genuineness
of all signatures on all documents examined by us, the authenticity of all
documents submitted to us as originals, the conformity to authentic original
documents of all documents submitted to us as copies and the authenticity of the
originals of such latter documents. In addition, we have assumed, without
inquiry, that the Underwriting Agreement has been duly authorized, executed and
delivered by all parties other than the Company, and that the certificates
representing the Shares being issued on the date hereof conform in all respects
to the specimens examined by us. As to any facts material to our opinion, we
have, when relevant facts were not independently established, relied on the
aforesaid agreements, instruments, certificates, documents and records.
Based on the foregoing, and subject to the qualifications, assumptions
and limitations stated herein, we are of the opinion that:
(L) The Company is validly existing as a corporation in good
standing under the laws of the Commonwealth of Virginia;
(M) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(N) the Shares have been duly authorized and are validly
issued, fully paid and non-assessable; and
(O) 'The statements in the Prospectus under the captions
"Description of Capital Stock -- Preferred Stock" and "Underwriters,"
insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, fairly summarize the
matters referred to therein in all material respects.
As your counsel, we have reviewed the Registration Statement and
Prospectus, participating in discussions with representatives of the
Underwriters and of the Company and its accountants at which contents of the
Registration Statement and Prospectus and related matters
III-2
were discussed. We did not participate in the preparation of the Registration
Statement (other than the Prospectus Supplement) or any of the documents (other
than the Underwriting Agreement) incorporated by reference therein. Although we
are not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as described in paragraph (iv) hereof),
based on the foregoing, no facts have come to our attention in the course of
such review which have led us to believe that, as of its effective date, the
Registration Statement (other than the financial statements and the financial,
accounting and statistical data and related schedules incorporated by reference
or included therein or excluded therefrom, as to which we express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date or the date hereof, the Prospectus (other
than the financial statements and financial, accounting and statistical data and
related schedules incorporated by reference or included therein or excluded
therefrom, as to which we express no opinion) contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
The opinions rendered herein are limited to the laws of the State of
New York and the Federal law of the United States. In rendering the foregoing
opinions, we have, with your consent, relied solely upon the opinion of McGuire,
Woods, Battle & ▇▇▇▇▇▇ LLP, dated the date hereof and addressed to you, as to
all matters under the laws of the Commonwealth of Virginia, and our opinions
rendered herein as to such matters are subject to the same qualifications,
assumptions and limitations as are set forth in such opinion.
This letter and the opinions rendered herein are furnished by us as
counsel to you in connection with the transactions contemplated by the
Underwriting Agreement and solely for your benefit and may not be delivered to
or relied upon in any manner by any other person or entity without our express
written consent.
Very truly yours,
III-3
