<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
( ) Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-2967
UNION ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Missouri 43-0559760
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1901 Chouteau Avenue, St. Louis, Missouri 63103
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (314) 621-3222
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock, $5 par value New York Stock Exchange
Preferred Stock, without par value (entitled to cumulative dividends):
Stated value $100 per share - }
$4.56 Series }
$4.50 Series } New York Stock Exchange
$4.00 Series }
$3.50 Series }
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
agreement to this Form 10-K. (X)
Aggregate market value of voting stock held by non-affiliates as of
March 3, 1997, based on closing prices most recently available as reported in
The Wall Street Journal (excluding Preferred Stock for which quotes are not
publicly available): $3,975,596,594.
Shares of Common Stock, $5 par value, outstanding as of March 3, 1997:
102,123,834 shares (excluding 42,990 treasury shares).
DOCUMENTS INCORPORATED BY REFERENCES.
Portions of the registrant's 1996 Annual Report to Stockholders (the
"1996 Annual Report") are incorporated by reference into Parts I, II and IV.
Portions of the registrant's definitive proxy statement for the 1997
annual meeting are incorporated by reference into Part III.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Page
----
<S> <C>
Item 1 - Business
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Construction Program and Financing . . . . . . . . . . . . . . . . . . . . . . . . 2
Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fuel Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Industry Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Operating Statistics(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Other Statistical Information . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2 - Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 3 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 4 - Submission of Matters to a Vote of Security Holders(2)
Executive Officers of the Registrant (Item 401(b) of Regulation S-K) . . . . . . . . . . . . . . . . 9
PART II
Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6 - Selected Financial Data(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 8 - Financial Statements and Supplementary Data1 . . . . . . . . . . . . . . . . . . . . . 10
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure(2)
PART III
Item 10 - Directors and Executive Officers of the Registrant(1) . . . . . . . . . . . . . . . . . 11
Item 11 - Executive Compensation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 12 - Security Ownership of Certain Beneficial Owners
and Management(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 13 - Certain Relationships and Related Transactions(1) . . . . . . . . . . . . . . . . . . . 11
PART IV
Item 14 - Exhibits, Financial Statement Schedules (including unaudited
pro forma financial information) , and Reports on Form 8-K . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
- ------------
(1) Incorporated herein by reference.
(2) Not applicable and not included herein.
<PAGE> 3
PART I
ITEM 1. BUSINESS.
GENERAL
The registrant, Union Electric Company (the "Company"),
incorporated in Missouri in 1922, is successor to a number of companies, the
oldest of which was organized in 1881. The Company, which is the largest
electric utility in the State of Missouri, supplies electric service in
territories in Missouri and Illinois having an estimated population of
2,600,000 within an area of approximately 24,500 square miles, including the
greater St. Louis area. Retail gas service is supplied in 90 Missouri
communities and in the City of Alton, Illinois and vicinity.
On August 11, 1995, the Company and CIPSCO Incorporated
("CIPSCO") entered into an Agreement and Plan of Merger, which was subsequently
approved by the shareholders of both companies. The merger ("Merger") is
further conditioned on, among other things, receipt of certain regulatory and
governmental approvals and is expected to be consummated by the end of 1997.
Upon completion of the Merger, two operating companies will continue as
subsidiaries of a newly formed holding company, Ameren Corporation.
On February 21, 1997, the Missouri Public Service Commission
("MoPSC") entered a final order approving the Merger. In the order the MoPSC
also approved a joint agreement dated July 12, 1996 between the Company, the
MoPSC staff, the Office of the Public Counsel and others. This agreement is
described in Note 3 under "Notes to Financial Statements" on Pages 30 and 31 of
the 1996 Annual Report pages incorporated herein by reference. In addition,
the order requires the Company to take steps to participate in or form an
Independent System Operator to control the operation, pricing and planning of
the Company's transmission system, as well as file a report with the MoPSC that
assesses the potential ability of the merged companies to exercise vertical and
horizontal market power in price deregulated retail generation. That report is
due by January 1, 1998. The MoPSC's order became effective on March 4, 1997.
On March 3, 1997, the Illinois Commerce Commission ("ICC")
expanded the scope of issues it will consider in connection with the Merger
proceedings. In addition to market power issues, the ICC ordered that issues
related to the treatment of affiliate transactions, as well as ICC
jurisdictional issues, be addressed as part of the Merger proceedings.
Hearings at the Federal Energy Regulatory Commission on the
Merger have concluded and the administrative law judge's proposed order is
expected by April 30, 1997.
For additional information on the Merger, see Notes 2 and 3 to
the "Notes to Financial Statements" on Pages 29 and 30 of the 1996 Annual
Report pages incorporated herein by reference. Also, see Item 14 below for
unaudited pro forma financial information for Ameren Corporation.
For the year 1996, 95.6% of total operating revenues was derived
from the sale of electric energy and 4.4% from the sale of natural gas.
Electric operating revenues as a percentage of total operating revenues for the
years 1992, 1993, 1994, and 1995 were 95.9%, 95.5%, 96.1%, and 96.1%,
respectively.
The Company employed 6,035 persons at December 31, 1996.
Approximately 70% of the Company's employees are represented by local unions
affiliated with the AFL-CIO. Labor agreements covering 4,132 employees expired
in 1996. New agreements covering 1,061 employees
- 1 -
<PAGE> 4
have been negotiated and expire in 1999. Agreements covering 3,188 employes
continue to be negotiated. Two agreements covering 117 employees will expire
in 1997.
CONSTRUCTION PROGRAM AND FINANCING
The Company is engaged in a construction program under which
expenditures averaging approximately $267 million are anticipated during each
of the next five years. Capital expenditures for compliance with the Clean Air
Act Amendments of 1990 are included in the construction program -- also see
"Regulation", below. The Company does not anticipate a need for additional
base load electric generating capacity until after the year 2013.
During the five-year period ended 1996, gross additions to the
property of the Company, including allowance for funds used during construction
and excluding nuclear fuel, were approximately $1.5 billion (including $325
million in 1996) and property retirements were $265 million.
In addition to the funds required for construction during the
1997-2001 period, $174 million will be required to repay long-term debt as
follows: $74 million in 1997 and $100 million in 1999. Amounts for years
subsequent to 1997 do not include nuclear fuel lease payments since the amounts
of such payments are not currently determinable.
For information on the Company's external cash sources, see
"Liquidity and Capital Resources" under "Management's Discussion and Analysis"
on Page 19 of the 1996 Annual Report pages incorporated herein by reference.
FINANCING RESTRICTIONS. Under the most restrictive earnings test
contained in the Company's principal Indenture of Mortgage and Deed of Trust
("Mortgage") relating to its First Mortgage Bonds ("Bonds"), no Bonds may be
issued (except in certain refunding operations) unless the Company's net
earnings available for interest after depreciation for 12 consecutive months
within the 15 months preceding such issuance are at least two times annual
interest charges on all Bonds and prior lien bonds then outstanding and to be
issued (all calculated as provided in the Mortgage). Such ratio for the 12
months ended December 31, 1996 was 6.4, which would permit the Company to issue
an additional $2.7 billion of Bonds (8% annual interest rate assumed).
Additionally, the Mortgage permits issuance of new bonds up to (a) 60% of
defined property additions, or (b) the amount of previous bonds retired or to
be retired, or (c) the amount of cash put up for such purpose. At December 31,
1996, the aggregate amount of Bonds issuable under (a) and (b) above was
approximately $2 billion.
The Company's Restated Articles of Incorporation restrict the
Company from selling Preferred Stock unless its net earnings for a period of 12
consecutive months within 15 months preceding such sale are at least two and
one-half times the annual dividend requirements on its Preferred Stock then
outstanding and to be issued. Such ratio for the 12 months ended December 31,
1996 was 22.7, which would permit the Company to issue an additional $1.3
billion stated value of Preferred Stock (8% annual dividend rate assumed).
Certain other financing arrangements require the Company to obtain prior
consents to various actions by the Company, including any future borrowings,
except for permitted financings such as borrowings under revolving credit
agreements, the nuclear fuel lease, unsecured short-term borrowings (subject to
certain conditions), and the issuance of additional Bonds.
- 2 -
<PAGE> 5
RATES
For the year 1996, approximately 83%, 7%, and 10% of the
Company's electric operating revenues were based on rates regulated by the
MoPSC, the ICC, and the Federal Energy Regulatory Commission ("FERC") of the U.
S. Department of Energy, respectively.
For additional information on "Rates", see Note 3 to the "Notes
to Financial Statements" on Page 30 of the 1996 Annual Report pages
incorporated herein by reference.
FUEL SUPPLY
<TABLE>
<CAPTION>
Cost of Fuels Year
- ------------- ------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Million BTU - Coal 112.250 cent 117.645 cent 123.950 cent 153.284 cent 150.941 cent
- Nuclear 47.499 cent 48.592 cent 49.932 cent 56.848 cent 61.818 cent
- System 96.596 cent 101.590 cent 101.867 cent 126.362 cent 126.711 cent
Per kWh of Steam Generation 1.024 cent 1.068 cent 1.064 cent 1.331 cent 1.310 cent
</TABLE>
COAL. Because of uncertainties of supply due to potential work
stoppages, equipment breakdowns and other factors, the Company has a policy of
maintaining a coal inventory of 75 days, based on normal annual burn practices.
See "Regulation" for additional reference to the Company's coal requirements.
NUCLEAR. The components of the nuclear fuel cycle required for
nuclear generating units are as follows: (1) uranium; (2) conversion of
uranium into uranium hexafluoride; (3) enrichment of uranium hexafluoride; (4)
conversion of enriched uranium hexafluoride into uranium dioxide and the
fabrication into nuclear fuel assemblies; and (5) disposal and/or reprocessing
of spent nuclear fuel.
The Company has agreements to fulfill its needs for uranium,
enrichment, and fabrication services through 2002. The Company's agreements
for conversion services are sufficient to supply the Callaway Plant through
1999. Additional contracts will have to be entered into in order to supply
nuclear fuel during the remainder of the life of the Plant, at prices which
cannot now be accurately predicted. The Callaway Plant normally requires
re-fueling at 18-month intervals and re-fuelings are presently scheduled for
the spring of 1998 and the fall of 1999.
Under the Nuclear Waste Policy Act of 1982, the U. S. Department of
Energy ("DOE") is responsible for the permanent storage and disposal of spent
nuclear fuel. DOE currently charges one mill per nuclear generated
kilowatt-hour sold for future disposal of spent fuel. Electric rates charged
to customers provide for recovery of such costs. DOE is not expected to have
its permanent storage facility for spent fuel available until at least 2015.
The Company has sufficient storage capacity at the Callaway Plant site until
2005 and has viable storage alternatives under consideration. Each alternative
will likely require Nuclear Regulatory Commission approval and may require
other regulatory approvals. The delayed availability of DOE's disposal facility
is not expected to adversely affect the continued operation of the Callaway
Plant.
OIL AND GAS. The actual and prospective use of such fuels is
minimal, and the Company has not experienced and does not expect to experience
difficulty in obtaining adequate supplies.
- 3 -
<PAGE> 6
For additional information on the Company's "Fuel Supply", see Note
11 to the "Notes to Financial Statements" on Page 34 of the 1996 Annual Report
pages incorporated herein by reference.
REGULATION
The Company is subject to regulation by the MoPSC and the ICC as to
rates, service, accounts, issuance of equity securities, issuance of debt
having a maturity of more than twelve months, mergers, and various other
matters. The Company is also subject to regulation by the FERC as to rates and
charges in connection with the transmission of electric energy in interstate
commerce and the sale of such energy at wholesale in interstate commerce,
mergers, and certain other matters. Authorization to issue debt having a
maturity of twelve months or less is obtained from the FERC.
Operation of the Company's Callaway Plant is subject to regulation
by the Nuclear Regulatory Commission. The Company's Facility Operating License
for the Callaway Plant expires on October 18, 2024.
The Company's Osage hydroelectric plant and its Taum Sauk
pumped-storage hydro plant, as licensed projects under the Federal Power Act,
are subject to certain federal regulations affecting, among other things, the
general operation and maintenance of the projects. The Company's license for
the Osage Plant expires on February 28, 2006, and its license for the Taum Sauk
Plant expires on June 30, 2010. The Company's Keokuk Plant and dam located in
the Mississippi River between Hamilton, Illinois and Keokuk, Iowa, are operated
under authority, unlimited in time, granted by an Act of Congress in 1905.
The Company is exempt from the provisions of the Public Utility
Holding Company Act of 1935 ("PUHCA"), except Section 9(a)(2) relating to the
acquisition of securities of other public utility companies and Section
11(b)(2) with respect to concluding matters relating to the 1974 acquisition of
the common stock of a former subsidiary. When the Securities and Exchange
Commission approved such acquisition it reserved jurisdiction to pass upon the
right of the Company to retain its gas properties. For information on PUHCA
and the Merger, see Note 2 to the "Notes to Financial Statements" on Page 30 of
the 1996 Annual Report pages incorporated herein by reference.
The Company is regulated, in certain of its operations, by air and
water pollution and hazardous waste regulations at the city, county, state and
federal levels. The Company is in substantial compliance with such existing
regulations.
Under the Clean Air Act Amendments of 1990, the Company is required
to reduce total annual emissions of sulfur dioxide by the year 2000.
Significant reductions in nitrogen oxide will also be required. By switching
to low-sulfur coal and early banking of emission credits, the Company
anticipates that it can comply with the requirements of the law with no
significant revenue increases because the related capital costs, estimated at
about $300 million, are largely offset by lower fuel costs. As of the end of
1996 about 84% of the Clean Air Act related capital costs had been expended.
As of December 31, 1996, the Company was designated a potentially
responsible party ("PRP") by federal and state environmental protection
agencies at four hazardous waste sites. Other hazardous waste sites have been
identified for which the Company may be responsible but has not been designated
a PRP. The Company continually reviews the remediation costs that will be
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<PAGE> 7
required for all of these sites. However, such costs are not expected to have
a material adverse effect on the Company's financial position, results of
operations or liquidity.
Other aspects of the Company's business are subject to the
jurisdiction of various regulatory authorities and, for additional information
on regulations, see Note 3 to the "Notes to Financial Statements" on Page 30 of
the 1996 Annual Report pages incorporated herein by reference.
INDUSTRY ISSUES
The Company is facing issues common to the electric and gas utility
industries which have emerged during the past several years. These issues
include: the potential for more intense competition and for changing the
structure of regulation; changes in the structure of the industry as a result
of amendments to federal laws regulating ownership of generating facilities and
access to transmission systems; on-going consideration of additional changes of
the industry by federal and state authorities; continually developing
environmental laws, regulations and issues including proposed new air quality
standards; public concern about the siting of new facilities; proposals for
demand side management programs; and public concerns about nuclear
decommissioning and the disposal of nuclear wastes, and about global climate
issues. The Company is monitoring these issues and is unable to predict at
this time what impact, if any, these issues will have on its operations,
financial condition, or liquidity.
- 5 -
<PAGE> 8
OPERATING STATISTICS
The information on Page 37 in the Company's 1996 Annual Report is
incorporated herein by reference.
OTHER STATISTICAL INFORMATION
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
KILOWATTHOUR OUTPUT (in millions)
Fossil fuel generation . . . . . . . . . 24,610 23,822 21,941 19,582 21,266
Nuclear generation . . . . . . . . . . . 8,891 8,242 10,007 8,381 8,084
Hydro generation . . . . . . . . . . . . 1,316 1,626 1,714 1,971 1,509
Purchased from Electric
Energy, Inc. . . . . . . . . . . . . . 774 760 681 673 527
Other purchases . . . . . . . . . . . 8,281 7,926 7,757 10,764 6,660
------- ------- ------- ------- -------
Total Output . . . . . . . . . . . 43,872 42,376 42,100 41,371 38,046
Less line losses and system use . . . . . 2,596 2,507 2,412 2,389 2,300
------- ------- ------- ------- -------
KilowattHour Sales . . . . . . . . 41,276 39,869 39,688 38,982 35,746
======= ======= ======= ======= =======
</TABLE>
- - - - - - - - - - - - - - -
<TABLE>
<S> <C> <C> <C> <C> <C>
Common Stock dividends
as a percentage
of earnings . . . . . . . . . . . . . . . 88 83 80 84 80
</TABLE>
- 6 -
<PAGE> 9
ITEM 2. PROPERTIES.
The following table sets forth information with respect to the
Company's generating facilities and capability at the time of the expected 1997
peak.
<TABLE>
<CAPTION>
Gross Kilowatt
Energy Installed
Source Plant Location Capability
------ ----- -------- ----------------
<S> <C> <C> <C>
Coal Labadie Franklin County, Mo. 2,404,000
Rush Island Jefferson County, Mo. 1,216,000
Sioux St. Charles County, Mo. 1,008,000
Meramec St. Louis County, Mo. 928,000
----------
Total Coal 5,556,000
Nuclear Callaway Callaway County, Mo. 1,193,000
Hydro Osage Lakeside, Mo. 212,000
Keokuk Keokuk, Ia. 126,000
---------
Total Hydro 338,000
Oil and Venice Venice, Ill. 459,000
Natural Other Various 383,000
---------
Gas Total Oil and
Natural Gas 842,000
Pumped-
storage Taum Sauk Reynolds County, Mo. 350,000
---------
TOTAL 8,279,000
=========
</TABLE>
In planning its construction program, the Company is presently
utilizing a forecast of kilowatthour sales growth of approximately 1.9% and
peak load growth of 1%, each compounded annually, and is providing for a
minimum reserve margin of approximately 17% to 21% above its anticipated peak
load requirements.
See "Operating Statistics", incorporated by reference in Part I of
this Form 10-K, for information on loads and capability during the five-year
period ended 1996.
The Company is a member of one of the ten regional electric
reliability councils organized for coordinating the planning and operation of
the nation's bulk power supply - MAIN (Mid-America Interconnected Network)
operating primarily in Wisconsin, Illinois and Missouri. The Company has
interconnections for the exchange of power, directly and through the facilities
of others, with thirteen private utilities and with Associated Electric
Cooperative, Inc., the City of Columbia, Missouri, the Southwestern Power
Administration and the Tennessee Valley Authority.
The Company owns 40% of the capital stock of Electric Energy, Inc.
("EEI"), the balance of which is held by three other sponsoring companies --
Kentucky Utilities Company ("KU"), Central Illinois Public Service Company
("CIPS" -- a subsidiary of CIPSCO), and Illinova Generating ("IG"). EEI owns
and operates a generating plant with a nominal capacity of 1,000
- 7 -
<PAGE> 10
mW. 60% of the plant's output is committed to the Paducah Project of the DOE,
20% is committed to KU, 10% to the Company, and 5% each to IG and CIPS.
As of December 31, 1996, the Company owned approximately 3,300
circuit miles of electric transmission lines and substations with a transformer
capacity of approximately 45,497,000 kVA. The Company operates three
propane-air plants with an aggregate daily natural gas equivalent
deliverability of 23 million Btu and 2,688 miles of gas mains. Other
properties of the Company include distribution lines, underground cable, steam
distribution facilities in Jefferson City, Missouri and office buildings,
warehouses, garages and repair shops.
The Company has fee title to all principal plants and other
important units of property, or to the real property on which such facilities
are located (subject to mortgage liens securing outstanding indebtedness of the
Company and to permitted liens and judgment liens, as defined), except that (i)
a portion of the Osage Plant reservoir, certain facilities at the Sioux Plant,
certain of the Company's substations and most of its transmission and
distribution lines and gas mains are situated on lands occupied under leases,
easements, franchises, licenses or permits; (ii) the United States and/or the
State of Missouri own, or have or may have, paramount rights to certain lands
lying in the bed of the Osage River or located between the inner and outer
harbor lines of the Mississippi River, on which certain generating and other
properties of the Company are located; and (iii) the United States and/or State
of Illinois and/or State of Iowa and/or City of Keokuk, Iowa own, or have or
may have, paramount rights with respect to, certain lands lying in the bed of
the Mississippi River on which a portion of the Company's Keokuk Plant is
located.
Substantially all of the Company's property and plant is subject to
the direct first lien of an Indenture of Mortgage and Deed of Trust dated June
15, 1937, as amended and supplemented. As part of the 1983 merger of the
Company with its utility subsidiaries, the Company assumed the mortgage
indenture of each subsidiary. Currently, the prior liens of two former
subsidiary indentures extend to the property and franchises acquired by the
Company from such subsidiaries. Such indentures also contain provisions
subjecting to the prior lien thereof after-acquired property of the Company
constituting (with certain exceptions) additions, extensions, improvements,
repairs, and replacements appurtenant to property acquired in the merger. In
addition, one such indenture contains a provision subjecting to the prior lien
thereof after-acquired property of the Company situated in the territory served
by the former subsidiary prior to the merger. Further, no debt is outstanding
under the one such indenture, and the Company is in the process of
extinguishing the lien of such indenture.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in legal and administrative proceedings before
various courts and agencies with respect to matters arising in the ordinary
course of business, some of which involve substantial amounts. Management is
of the opinion that the final disposition of these proceedings will not have a
material adverse effect on the Company's financial position, results of
operations, or liquidity.
_______________________________
Statements made in this report which are not based on historical facts
are forward-looking and, accordingly, involve risks and uncertainties that
could cause actual results to differ materially from those discussed. Although
such forward-looking statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to
future expectations, beliefs,
- 8 -
<PAGE> 11
plans strategies, objectives, events, conditions and financial performance. In
connection with the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is providing the following
cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. Factors include, but are
not limited to, the effects of: regulatory actions; changes in laws and other
governmental actions; competition; business and economic conditions; weather
conditions; fuel prices and availability; generation plant performance;
monetary and fiscal policies; and legal and administrative proceedings.
INFORMATION REGARDING EXECUTIVE OFFICERS REQUIRED BY ITEM 401(b) OF REGULATION
S-K:
<TABLE>
<CAPTION>
Date First
Age At Elected or
Name 12/31/96 Present Position Appointed
---- -------- ---------------- ------------
<S> <C> <C> <C>
Charles W. Mueller 58 President 7/1/93
Chief Executive Officer 1/1/94
and Director 6/11/93
Paul A. Agathen 49 Senior Vice President 2/16/96
Donald E. Brandt 42 Senior Vice President 7/1/88
Robert O. Piening 59 Senior Vice President 7/1/88
Donald F. Schnell 64 Senior Vice President 7/1/88
Charles J. Schukai 62 Senior Vice President 7/1/88
M. Patricia Barrett 59 Vice President 3/1/91
Charles A. Bremer 52 Vice President 4/24/84
Donald W. Capone 61 Vice President 7/1/88
William J. Carr 59 Vice President 10/1/88
Jean M. Hannis 49 Vice President 1/1/96
William E. Jaudes 59 Vice President and 4/23/85
General Counsel 4/22/80
R. Alan Kelley 44 Vice President 7/1/88
Michael J. Montana 50 Vice President 7/1/88
Garry L. Randolph 48 Vice President 3/1/91
Robert J. Schukai 58 Vice President 7/1/88
William C. Shores 58 Vice President 7/1/88
Samuel E. Willis 52 Vice President 11/1/95
Ronald C. Zdellar 52 Vice President 7/1/88
Warner L. Baxter 35 Controller 8/1/96
James C. Thompson 57 Secretary 12/1/82
Jerre E. Birdsong 42 Treasurer 7/1/93
</TABLE>
All officers are elected or appointed annually by the Board of
Directors following the election of such Board at the annual meeting of
stockholders held in April. There are no family relationships between the
foregoing officers of the Company except that Charles J. Schukai and Robert J.
Schukai are brothers. Except for Mr. Baxter, each of the above-named executive
officers has been employed by the Company for more than five years in executive
or management positions. Mr. Baxter was previously employed by Price
Waterhouse LLP.
- 9 -
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information required to be reported by this item is included on Page
41 of the 1996 Annual Report and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information for the 1992-1996 period required to be reported by this
item is included on Pages 38 and 39 of the 1996 Annual Report and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Information required to be reported by this item is included on Pages
17, 18, 19, 20, and 21 of the 1996 Annual Report and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Company on Pages 22 through 36, the
report thereon of Price Waterhouse LLP appearing on Page 16 and the Selected
Quarterly Information on Page 28 of the 1996 Annual Report are incorporated
herein by reference.
- 10 -
<PAGE> 13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Any information concerning directors required to be reported by this
item is included under "Item (1): Election of Directors" in the Company's 1997
definitive proxy statement filed pursuant to Regulation 14A and is incorporated
herein by reference.
Information concerning executive officers required by this item is
reported in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Any information required to be reported by this item is included under
"Compensation" in the Company's 1997 definitive proxy statement filed pursuant
to Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Any information required to be reported by this item is included under
"Security Ownership of Management" in the Company's 1997 definitive proxy
statement filed pursuant to Regulation 14A and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Any information required to be reported by this item is included under
"Item (1): Election of Directors" in the Company's 1997 definitive proxy
statement filed pursuant to Regulation 14A and is incorporated herein by
reference.
- 11 -
<PAGE> 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial Statements: *
<TABLE>
<CAPTION>
Page From 1996
Annual Report
---------------
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . 16
Statement of Income - Years 1996, 1995, and 1994 . . . . . . . . . . . . . . . . 22
Statement of Cash Flows - Years 1996, 1995, and 1994 . . . . . . . . . . . . . . 23
Balance Sheet - December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 24
Long-Term Debt - December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 26
Preferred Stock - December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . 27
Statement of Retained Earnings - Years 1996, 1995, and 1994 . . . . . . . . . . . 28
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
*Incorporated by reference from the indicated pages of the 1996
Annual Report
2. Financial Statement Schedules:
The following schedule, for the years ended December 31, 1996,
1995, and 1994, should be read in conjunction with the
aforementioned financial statements (schedules not included have
been omitted because they are not applicable or the required data
is shown in the aforementioned financial statements).
<TABLE>
<CAPTION>
Pages Herein
------------
<S> <C>
Report of Independent Accountants on Financial
Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Valuation and Qualifying Accounts (Schedule II) . . . . . . . . . . . . . . . . . 13
3. Unaudited Pro Forma Financial Information of Ameren Corporation
Balance Sheet - December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . 16
Statements of Income for the years ended
December 31, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . 17
Notes to Unaudited Pro Forma Combined
Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . 20
4. Exhibits: See EXHIBITS beginning on Page 22
(b) Reports on Form 8-K. None
</TABLE>
- 12 -
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Union Electric Company
Our audits of the financial statements referred to in our report dated February
4, 1997 appearing on page 16 of the 1996 Annual Report to Stockholders of Union
Electric Company (which report and financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our
opinion, this Financial Statement Schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related financial statements.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 4, 1997
- 13 -
<PAGE> 16
UNION ELECTRIC COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Col. A. Col. B Col. C Col. D. Col. E
------- ------ ------ ------- ------
Additions
-------------------------
(1) (2)
Balance at Charged to Balance at
beginning costs and Charged to end of
Description of period expenses other accounts Deductions period
----------- --------- ----------- -------------- ---------- ----------
Year ended December 31, 1996 (Note)
<S> <C> <C> <C> <C> <C>
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $6,924,965 $12,100,000 $13,829,633 $5,195,332
========== =========== =========== ==========
Year ended December 31, 1995
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $6,277,378 $10,800,000 $10,152,413 $6,924,965
========== =========== =========== ==========
Year ended December 31, 1994
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $6,194,179 $10,800,000 $10,716,801 $6,277,378
========== =========== =========== ==========
</TABLE>
Note: Uncollectible accounts charged off, less recoveries.
-14-
<PAGE> 17
UNAUDITED PRO FORMA FINANCIAL INFORMATION
AMEREN CORPORATION
The following unaudited pro forma financial information combines the
historical balance sheets and statements of income of the Company and CIPSCO
Incorporated, including their respective subsidiaries, after giving effect to
the Merger. The unaudited pro forma combined condensed balance sheet at
December 31, 1996 gives effect to the Merger as if it had occurred at December
31, 1996. The unaudited pro forma combined condensed statements of income for
each of the years ended December 31, 1996, 1995, and 1994, give effect to the
Merger as if it had occurred at the beginning of the periods presented. These
statements are prepared on the basis of accounting for the Merger as a pooling
of interests and are based on the assumptions set forth in the notes thereto.
In addition, the pro forma financial information does not give effect to the
expected synergies of the transaction.
The following pro forma financial information has been prepared
from, and should be read in conjunction with, the historical financial
statements and related notes thereto of the Company and CIPSCO. The following
information is not necessarily indicative of the financial position or
operating results that would have occurred had the Merger been consummated on
the date, or at the beginning of the periods, for which the Merger is being
given effect nor is it necessarily indicative of future operating results or
financial position.
- 15 -
<PAGE> 18
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
AT DECEMBER 31, 1996
(Thousands of Dollars)
<TABLE>
<CAPTION>
ASSETS: As Reported (Note 1) Pro Forma
- ------- ------------------------- Adjustments Pro Forma
Property and plant UE CIPSCO (Notes 2,9) Combined
----- ------ ----------- ---------
<S> <C> <C> <C> <C>
Electric $8,630,628 $2,244,571 $ 376,896 $11,252,095
Gas 185,867 242,664 - 428,531
Other 35,965 - - 35,965
---------- ------------- ------------ -----------
8,852,460 2,487,235 376,896 11,716,591
Less accumulated depreciation and amortization 3,656,890 1,099,261 267,895 5,024,046
---------- ---------- ---------- -----------
5,195,570 1,387,974 109,001 6,692,545
Construction work in progress:
Nuclear fuel in process 96,147 - - 96,147
Other 90,953 70,150 1,311 162,414
---------- ---------- ---------- ----------
Total property and plant, net 5,382,670 1,458,124 110,312 6,951,106
Regulatory assets:
Deferred income taxes (Note 6) 692,171 42,035 - 734,206
Other 178,760 64,754 - 243,514
---------- ---------- ------------ ----------
Total regulatory assets 870,931 106,789 - 977,720
Other assets:
Unamortized debt expense 10,591 2,871 591 14,053
Nuclear decommissioning trust fund 96,601 - - 96,601
Investments in nonregulated activities - 113,310 - 113,310
Other 27,377 25,624 (2,399) 50,602
---------- --------- ---------- ----------
Total other assets 134,569 141,805 (1,808) 274,566
Current assets:
Cash and temporary investments 4,897 6,270 4,715 15,882
Accounts receivable, net 192,868 56,473 19,344 268,685
Unbilled revenue 76,190 30,126 - 106,316
Materials and supplies, at average cost -
Fossil fuel 63,651 34,971 7,531 106,153
Other 94,517 38,806 4,630 137,953
Other 50,516 40,327 3,343 94,186
---------- ---------- ---------- ----------
Total current assets 482,639 206,973 39,563 729,175
---------- ---------- ---------- ----------
Total Assets $6,870,809 $1,913,691 $ 148,067 $8,932,567
========== ========== ========== ==========
CAPITAL AND LIABILITIES:
- ------------------------
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders' equity (Note 2) 1,844,182 304,782 866,059 3,015,023
---------- ---------- ---------- ----------
Total common stockholders' equity 2,354,801 661,594 - 3,016,395
Preferred stock of subsidiary 219,121 80,000 - 299,121
Long-term debt 1,798,671 421,227 130,000 2,349,898
---------- ---------- ---------- ----------
Total capitalization 4,372,593 1,162,821 130,000 5,665,414
Minority interest in consolidated subsidiary - - 3,534 3,534
Accumulated deferred income taxes 1,318,404 341,373 (6,682) 1,653,095
Accumulated deferred investment tax credits 160,342 48,885 - 209,227
Regulatory liability 203,822 100,350 - 304,172
Accumulated provision for nuclear decommissioning 98,274 - - 98,274
Other deferred credits and liabilities 156,913 35,737 4,733 197,383
Current liabilities:
Current maturity of long-term debt 73,966 58,000 - 131,966
Short-term debt 11,300 57,768 - 69,068
Accounts payable 170,383 62,774 13,600 246,757
Wages payable 39,966 10,294 - 50,260
Taxes accrued 95,478 13,692 8 109,178
Interest accrued 45,173 8,432 416 54,021
Other 124,195 13,565 2,458 140,218
---------- ---------- ---------- ----------
Total current liabilities 560,461 224,525 16,482 801,468
---------- ---------- ---------- ----------
Total Capital and Liabilities $6,870,809 $1,913,691 $ 148,067 $8,932,567
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
- 16 -
<PAGE> 19
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,4) (Notes 2,9) Combined
------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $2,160,815 $ 730,812 $ 175,313 $3,066,940
Gas 99,064 155,348 - 254,412
Other 485 10,555 1,113 12,153
---------- ---------- ---------- ----------
Total operating revenues 2,260,364 896,715 176,426 3,333,505
OPERATING EXPENSES:
Operations
Fuel and purchased power 512,831 274,215 93,158 880,204
Gas Costs 64,548 96,228 - 160,776
Other 379,106 146,588 18,304 543,998
---------- ---------- ---------- ----------
956,485 517,031 111,462 1,584,978
Maintenance 223,632 61,461 17,110 302,203
Depreciation and amortization 241,298 87,397 15,665 344,360
Income taxes (Note 7) 197,369 49,557 7,943 254,869
Other taxes 213,266 57,817 1,951 273,034
---------- ---------- ---------- ----------
Total operating expenses 1,832,050 773,263 154,131 2,759,444
OPERATING INCOME 428,314 123,452 22,295 574,061
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 6,492 378 - 6,870
Minority interest in consolidated subsidiary - - (4,875) (4,875)
Miscellaneous, net (4,293) (2,784) (7,413) (14,490)
---------- ---------- ----------- ----------
Total other income and deductions, net 2,199 (2,406) (12,288) (12,495)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 430,513 121,046 10,007 561,566
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 132,644 37,751 10,007 180,402
Allowance for borrowed funds used during
construction (7,007) (483) - (7,490)
Preferred dividends of subsidiaries (Note 8) 13,249 3,721 - 16,970
----------- ---------- ----------- ----------
Net interest charges and preferred dividends 138,886 40,989 10,007 189,882
NET INCOME $ 291,627 $ 80,057 $ - $ 371,684
========== ========== =========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.86 $2.35 $2.71
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
=========== ========== ========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
- 17 -
<PAGE> 20
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,3,4) (Notes 2,9) Combined
-------------- ------------- ---------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $2,154,109 $ 703,483 $ 155,935 $3,013,527
Gas 87,814 129,606 - 217,420
Other 441 9,173 362 976
---------- ---------- ---------- ----------
Total operating revenues 2,242,364 842,262 156,297 3,240,923
OPERATING EXPENSES:
Operations
Fuel and purchased power 504,815 248,226 70,910 823,951
Gas Costs 51,251 74,054 - 125,305
Other 367,870 155,368 19,148 542,386
---------- ---------- ---------- ----------
923,936 477,648 90,058 1,491,642
Maintenance 221,609 67,996 17,941 307,546
Depreciation and amortization 233,237 83,263 15,747 332,247
Income taxes (Note 7) 209,541 45,772 7,857 263,170
Other taxes 212,145 56,613 1,912 270,670
---------- ---------- ---------- ----------
Total operating expenses 1,800,468 731,292 133,515 2,665,275
OPERATING INCOME 441,896 110,970 22,782 575,648
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 6,827 889 - 7,716
Minority interest in consolidated subsidiary - - (4,558) (4,558)
Miscellaneous, net (5,981) (2,298) (7,908) (16,187)
---------- --------- ---------- ----------
Total other income and deductions, net 846 (1,409) (12,466) 13,029
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 442,742 109,561 10,316 562,619
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 134,741 33,769 10,316 178,826
Allowance for borrowed funds used during
construction (6,106) (73) - (6,179)
Preferred dividends of subsidiaries (Note 8) 13,250 3,850 - 17,100
----------- --------- ----------- ----------
Net interest charges and preferred dividends 141,885 37,546 10,316 189,747
NET INCOME $ 300,857 $ 72,015 $ - $ 372,872
========== ========= =========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.95 $2.11 $2.72
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
=========== ========== ========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
- 18 -
<PAGE> 21
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Note 1) (Note 1) (Notes 2,9) Combined
-------------- ------------- ---------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $2,137,355 $ 697,427 $ 200,730 $3,035,512
Gas 86,109 138,418 - 224,527
Other 474 8,770 188 9,432
---------- ---------- ---------- ----------
Total operating revenues 2,223,938 844,615 200,918 3,269,471
OPERATING EXPENSES:
Operations
Fuel and purchased power 497,384 251,867 113,166 862,417
Gas Costs 60,096 85,043 - 145,139
Other 375,570 140,068 19,952 535,590
---------- ---------- ---------- ----------
933,050 476,978 133,118 1,543,146
Maintenance 197,760 65,176 19,076 282,012
Depreciation and amortization 226,045 81,099 13,776 320,920
Income taxes (Note 7) 206,421 49,082 9,739 265,242
Other taxes 210,476 56,017 1,929 268,422
---------- ---------- ---------- ----------
Total operating expenses 1,773,752 728,352 177,638 2,679,742
OPERATING INCOME 450,186 116,263 23,280 589,729
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 5,767 630 - 6,397
Minority interest in consolidated subsidiary - - (5,554) (5,554)
Miscellaneous, net 403 3,502 (8,297) (4,392)
---------- ---------- ---------- ----------
Total other income and deductions, net 6,170 4,132 (13,851) (3,549)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 456,356 120,395 9,429 586,180
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 141,112 33,220 9,429 183,761
Allowance for borrowed funds used during
construction (5,513) (289) - (5,802)
Preferred dividends of subsidiaries (Note 8) 13,252 3,510 - 16,762
--------- ---------- ---------- ---------
Net interest charges and preferred dividends 148,851 36,441 9,429 194,721
NET INCOME $ 307,505 $ 83,954 $ - $ 391,459
========== ========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $3.01 $2.46 $2.85
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,106,585 1,023,198 137,253,617
=========== ========== ========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
- 19 -
<PAGE> 22
AMEREN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. Reclassifications were made to certain "as reported" account balances
reflected in the registrant's and CIPSCO's financial statements to conform
to this reporting presentation (See Notes 6, 7 and 8). All other financial
statement presentation and accounting policy differences were immaterial
and were not adjusted in the pro forma combined condensed financial
statements.
2. The pro forma combined condensed financial statements reflect the
conversion of each share of the registrant's Common Stock ($5 par value)
outstanding into one share of Ameren Common Stock ($.01 par value) and the
conversion of each share of CIPSCO Common Stock (no par value) outstanding
into 1.03 shares of Ameren Common Stock, as provided in the Merger
Agreement. The pro forma combined condensed financial statements are
presented as if the companies were combined during all periods included
therein.
3. Net income for the twelve months ended December 31, 1995 included CIPSCO's
pre-tax charge of $5.8 million for a voluntary separation program and $5.7
million of system development expenses.
4. The allocation between the registrant and CIPSCO and their customers of the
estimated cost savings, resulting from the merger, net of the costs
incurred to achieve such savings, will be subject to regulatory review and
approval. Merger-related costs (which include transaction costs and costs
to achieve such savings) are currently estimated to be approximately $73
million (including costs for financial advisors, attorneys, accountants,
consultants, filings, printing, system integration, relocation, etc.).
None of these estimated cost savings have been reflected in the pro forma
combined condensed financial statements. However, net income for the
twelve months ended December 31, 1996 and 1995, included merger-related
costs of $7.9 million and $9.0 million, net of income taxes, for the
registrant, and $4.9 million and $4.7 million, net of income taxes, for
CIPSCO, respectively.
5. Intercompany transactions (including purchased and exchanged power
transactions) between the registrant and CIPSCO during the periods
presented were not material and, accordingly, no pro forma adjustments were
made to eliminate such transactions.
6. CIPSCO's regulatory asset related to deferred income taxes was reclassified
from the regulatory liability account balance to conform to this reporting
presentation.
7. CIPSCO's income taxes are reflected as operating expenses to conform to
this reporting presentation.
8. Currently, the registrant's Preferred Stock is not issued by a subsidiary;
subsequent to the merger, the registrant's Preferred Stock will be issued
by a subsidiary of Ameren. As a result, the registrant's preferred
dividend requirements have been reclassified to conform to this reporting
presentation.
9. Pro forma adjustments have been made to consolidate the financial results
of Electric Energy, Inc. (EEI), which will, in substance, be a 60% owned
subsidiary of Ameren subsequent to the merger. Prior to the merger, the
registrant and CIPSCO held 40% and 20% ownership interests, respectively,
in EEI and accounted for these investments under the equity method of
accounting. All intercompany transactions between the registrant, CIPSCO
and EEI were eliminated.
10. Net income for the twelve months ended December 31, 1996 and 1995 included
credits for Missouri electric customers which reduced revenues and pre-tax
income of the registrant by $47 million and $30 million, respectively.
- 20 -
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
UNION ELECTRIC COMPANY
(Registrant)
CHARLES W. MUELLER
President and
Chief Executive Officer
Date March 27, 1997 By /s/ James C. Thompson
------------------------ -----------------------------------
(James C. Thompson, Attorney-in-Fact)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title
- --------- -----
CHARLES W. MUELLER President, Chief Executive
Officer and Director
(Principal Executive Officer)
DONALD E. BRANDT Senior Vice President
(Principal Financial and Accounting Officer)
WILLIAM E. CORNELIUS Director
THOMAS A. HAYS Director
THOMAS H. JACOBSEN Director
RICHARD A. LIDDY Director
JOHN PETERS MacCARTHY Director
PAUL L. MILLER, JR. Director
ROBERT H. QUENON Director
HARVEY SALIGMAN Director
JANET MCAFEE WEAKLEY Director
By /s/ James C. Thompson March 27, 1997
-------------------------------------
(James C. Thompson, Attorney-in-Fact)
- 21 -
<PAGE> 24
EXHIBITS
Exhibits Filed Herewith
Exhibit No. Description
----------- -----------
4.36 - Indenture of the Company (For Unsecured Subordinated Debt
Securities), dated as of December 1, 1996.
4.37 - Resolutions authorizing the issuance of 7.69% Unsecured
Subordinated Debt Securities.
12(a) - Statement re Computation of Ratios of Earnings to Fixed
Charges.
12(b) - Statement re Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividend Requirements.
13 - Those pages of the 1996 Annual Report incorporated herein by
reference.
23 - Consent of Independent Accountants.
24 - Powers of Attorney.
27 - Financial Data Schedule.
- 22 -
<PAGE> 25
EXHIBITS INCORPORATED BY REFERENCE
The following exhibits heretofore have been filed with the
Securities and Exchange Commission pursuant to requirements of the Acts
administered by the Commission. Such exhibits are identified by the references
following the listing of each such exhibit, and they are hereby incorporated
herein by reference.
Exhibit No. Description
----------- -----------
2 - Agreement and Plan of Merger, dated as of August 11, 1995, by
and among the Company, CIPSCO Incorporated, Ameren
Corporation and Arch Merger Inc. (June 30, 1995 Form 10-Q/A
(Amendment No. 1), Exhibit 2(a).)
3(i) - Restated Articles of Incorporation of the Company, as filed
with the Secretary of State of the State of Missouri. (1993
Form 10-K, Exhibit 3(i).)
3(ii) - By-Laws of the Company as amended to August 11, 1995. (June
30, 1995 Form 10-Q/A (Amendment No. 2), Exhibit 3(ii).)
4.1 - Order of the Securities and Exchange Commission dated October
16, 1945 in File No. 70-1154 permitting the issue of
Preferred Stock, $3.70 Series. (Registration No. 2-27474,
Exhibit 3-E.)
4.2 - Order of the Securities and Exchange Commission dated April
30, 1946 in File No. 70-1259 permitting the issue of
Preferred Stock, $3.50 Series. (Registration No. 2-27474,
Exhibit 3-F.)
4.3 - Order of the Securities and Exchange Commission dated October
20, 1949 in File No. 70-2227 permitting the issue of
Preferred Stock, $4.00 Series. (Registration No. 2-27474,
Exhibit 3-G.)
4.4 - Indenture of Mortgage and Deed of Trust of the Company dated
June 15, 1937, as amended May 1, 1941, and Second
Supplemental Indenture dated May 1, 1941. (Registration No.
2-4940, Exhibit B-1.)
4.5 - Supplemental Indentures to Mortgage
<TABLE>
<CAPTION>
DATED AS OF FILE REFERENCE EXHIBIT NO.
----------- -------------- -----------
<S> <C> <C>
March 1, 1967 2-58274 2.9
April 1, 1971 Form 8-K, April 1971 6
February 1, 1974 Form 8-K, February 1974 3
July 7, 1980 2-69821 4.6
May 1, 1990 Form 10-K, 1990 4.6
December 1, 1991 33-45008 4.4
December 4, 1991 33-45008 4.5
January 1, 1992 Form 10-K, 1991 4.6
October 1, 1992 Form 10-K, 1992 4.6
</TABLE>
- 23 -
<PAGE> 26
Exhibit No. Description
----------- -----------
<TABLE>
<CAPTION>
Dated as of File Reference Exhibit No.
----------- -------------- -----------
<S> <C> <C> <C>
4.5 - (continued)
December 1, 1992 Form 10-K, 1992 4.7
February 1, 1993 Form 10-K, 1992 4.8
May 1, 1993 Form 10-K, 1993 4.6
August 1, 1993 Form 10-K, 1993 4.7
October 1, 1993 Form 10-K, 1993 4.8
January 1, 1994 Form 10-K, 1993 4.9
</TABLE>
4.6 - Indenture of Mortgage and Deed of Trust of Missouri Power &
Light Company dated July 1, 1946 and Supplemental Indentures
dated July 1, 1946, November 1, 1949, June 1, 1951, July 1,
1954, December 1, 1959, July 1, 1962, March 1, 1966, April 1,
1967, June 15, 1969, April 15, 1973, December 1, 1974, May 1,
1976 and July 1, 1979. (Registration No. 2-87469, Exhibit
4.1.)
4.7 - Fourteenth Supplemental Indenture dated as of December 30,
1983 to the Mortgage and Deed of Trust dated July 1, 1946, of
Missouri Power & Light Company. (1983 Form 10-K, Exhibit
4.23.)
4.8 - Instrument of Substitution of Individual Trustee dated as of
November 1, 1988 under the Mortgage and Deed of Trust dated
July 1, 1946 of Union Electric Company (successor to Missouri
Power & Light Company). (1988 Form 10-K, Exhibit 4.8.)
4.9 - Indenture of Mortgage or Deed of Trust of Missouri Edison
Company dated July 1, 1945 and Supplemental Indentures dated
January 1, 1952, June 1, 1961, June 1, 1965, August 1, 1975,
September 1, 1976, November 1, 1977, February 1, 1981 and
July 1, 1982. (Registration No. 2-87469, Exhibit 4.2.)
4.10 - Ninth Supplemental Indenture dated as of December 30, 1983 to
the Indenture of Mortgage or Deed of Trust dated as of July
1, 1945 of Missouri Edison Company. (1983 Form 10-K, Exhibit
4.24.)
4.11 - Instrument of Substitution of Trustee dated as of March 1,
1985 under the Indenture of Mortgage or Deed of Trust dated
July 1, 1945 of Union Electric Company (successor to Missouri
Edison Company). (1984 Form 10-K, Exhibit 4.10.)
4.12 - Instrument of Substitution of Trustee dated as of October 14,
1986 under the Indenture of Mortgage or Deed of Trust dated
July 1, 1945 of Union Electric Company (successor to Missouri
Edison Company). (September 30, 1986 Form 10-Q, Exhibit
4.2.)
4.13 - Series A Agreement of Sale dated as of June 1, 1984 between
the State Environmental Improvement and Energy Resources
Authority of the State of Missouri and the Company, together
with Letter of Credit and Reimbursement Agreement dated as of
June 1, 1984 between Citibank, N.A. and the Company and
- 24 -
<PAGE> 27
Exhibit No. Description
----------- -----------
Series A Trust Indenture dated as of June 1, 1984 between the
Authority and Mercantile Trust Company National Association,
as trustee. (Registration No. 2-96198, Exhibit 4.25.)
4.14 - Reimbursement Agreement dated as of April 21, 1992 among
Swiss Bank Corporation, various financial institutions, and
the Company, providing for an alternate letter of credit to
serve as a source of payment for bonds issued under the
Series A Trust Indenture dated as of June 1, 1984. (1992
Form 10-K, Exhibit 4.23.)
4.15 - Series B Agreement of Sale dated as of June 1, 1984 between
the State Environmental Improvement and Energy Resources
Authority of the State of Missouri and the Company, together
with Reimbursement Agreement dated as of June 1, 1984 between
Chemical Bank and the Company and Series B Trust Indenture
dated as of June 1, 1984 between the Authority and Mercantile
Trust Company National Association, as trustee.
(Registration No. 2-96198, Exhibit 4.26.)
4.16 - Reimbursement Agreement dated as of April 22, 1988 between
Union Bank of Switzerland and the Company, providing for an
alternate letter of credit to serve as a source of payment
for bonds issued under the Series B Trust Indenture dated as
of June 1, 1984. (June 30, 1988 Form 10-Q, Exhibit 4.2.)
4.17 - Amendment and Extension Agreement dated as of June 1, 1990 to
the Reimbursement Agreement dated as of April 22, 1988
between Union Bank of Switzerland and the Company. (1990 Form
10-K, Exhibit 4.29.)
4.18 - Amendment and Extension Agreement dated as of June 1, 1991 to
the amended Reimbursement Agreement dated as of April 22,
1988 between Union Bank of Switzerland and the Company.
(1992 Form 10-K, Exhibit 4.27.)
4.19 - Amendment Agreement dated as of June 1, 1992 to the amended
Reimbursement Agreement dated as of April 22, 1988 between
Union Bank of Switzerland and the Company. (1992 Form 10-K,
Exhibit 4.28.)
4.20 - Series 1985 A Reaffirmation Agreement and Second Supplement
to Agreement of Sale dated as of June 1, 1985 between the
State Environmental Improvement and Energy Resources
Authority of the State of Missouri and the Company, together
with Series 1985 A Reimbursement Agreement dated as of June
1, 1985 between Union Bank of Switzerland and the Company and
Series 1985 A Trust Indenture dated as of June 1, 1985
between the Authority and Mercantile Trust Company National
Association, as trustee and Texas Commerce Bank National
Association, as co-trustee. (June 30, 1985 Form 10-Q,
Exhibit 4.1.)
4.21 - Amendment and Extension Agreement dated as of June 1, 1988
revising the Reimbursement Agreement dated as of June 1, 1985
between Union Bank of Switzerland and the Company. (June 30,
1988 Form 10-Q, Exhibit 4.4.)
- 25 -
<PAGE> 28
Exhibit No. Description
----------- -----------
4.22 - Amendment and Extension Agreement dated as of June 1, 1990
revising the Reimbursement Agreement dated as of June 1,
1985, as amended, between Union Bank of Switzerland and the
Company. (1990 Form 10-K, Exhibit 4.37.)
4.23 - Amendment and Extension Agreement dated as of June 1, 1991 to
the amended Reimbursement Agreement dated as of June 1, 1985
between Union Bank of Switzerland and the Company. (1992
Form 10-K, Exhibit 4.32.)
4.24 - Amendment Agreement dated as of June 1, 1992 to the amended
Reimbursement Agreement dated as of June 1, 1985 between
Union Bank of Switzerland and the Company. (1992 Form 10-K,
Exhibit 4.33.)
4.25 - Series 1985 B Reaffirmation Agreement and Third Supplement to
Agreement of Sale dated as of June 1, 1985 between the State
Environmental Improvement and Energy Resources Authority of
the State of Missouri and the Company, together with Series
1985 B Reimbursement Agreement dated as of June 1, 1985
between The Long-term Credit Bank of Japan, Limited and the
Company and Series 1985 B Trust Indenture dated as of June 1,
1985 between the Authority and Mercantile Trust Company
National Association, as trustee and Texas Commerce Bank
National Association, as co-trustee. (June 30, 1985 Form
10-Q, Exhibit 4.2.)
4.26 - Reimbursement Agreement dated as of February 1, 1993 between
Westdeutsche Landesbank Girozentrale and the Company,
providing for an alternate letter of credit to serve as a
source of payment for bonds issued under the Series 1985 B
Trust Indenture dated as of June 1, 1985. (1992 Form 10-K,
Exhibit 4.35.)
4.27 - Loan Agreement dated as of May 1, 1990 between the State
Environmental Improvement and Energy Resources Authority of
the State of Missouri and the Company, together with
Indenture of Trust dated as of May 1, 1990 between the
Authority and Mercantile Bank of St. Louis, N.A., as trustee.
(1990 Form 10-K, Exhibit 4.40.)
4.28 - Loan Agreement dated as of December 1, 1991 between the State
Environmental Improvement and Energy Resources Authority and
the Company, together with Indenture of Trust dated as of
December 1, 1991 between the Authority and Mercantile Bank of
St. Louis, N.A., as trustee. (1992 Form 10-K, Exhibit 4.37.)
4.29 - Loan Agreement dated as of December 1, 1992, between the
State Environmental Improvement and Energy Resources
Authority and the Company, together with Indenture of Trust
dated as of December 1, 1992 between the Authority and
Mercantile Bank of St. Louis, N.A., as trustee. (1992 Form
10-K, Exhibit 4.38.)
4.30 - Fuel Lease dated as of February 24, 1981 between the Company,
as lessee, and Gateway Fuel Company, as lessor, covering
nuclear fuel. (1980 Form 10-K, Exhibit 10.20.)
- 26 -
<PAGE> 29
Exhibit No. Description
----------- -----------
4.31 - Amendments to Fuel Lease dated as of May 8, 1984 and October
15, 1984, respectively, between the Company, as lessee, and
Gateway Fuel Company, as lessor, covering nuclear fuel.
(Registration No. 2-96198, Exhibit 4.28.)
4.32 - Amendment to Fuel Lease dated as of October 15, 1986 between
the Company, as lessee, and Gateway Fuel Company, as lessor,
covering nuclear fuel. (September 30, 1986 Form 10-Q,
Exhibit 4.3.)
4.33 - Credit Agreement dated as of August 15, 1989 among the
Company, Certain Lenders, The First National Bank of Chicago,
as Agent and Swiss Bank Corporation, Chicago Branch, as
Co-Agent. (September 30, 1989 Form 10-Q, Exhibit 4.)
4.34 - Credit Agreement dated as of November 8, 1991 between the
Company, Certain Banks and Chemical Bank, as Agent. (1991
Form 10- K, Exhibit 4.44.)
4.35 - Amendment dated as of October 26, 1992, to the Credit
Agreement dated as of November 8, 1991 between the Company,
Certain Banks and Chemical Bank, as Agent. (1992 Form 10-K,
Exhibit 4.44.)
10.1 - Deferred Compensation Plan for Members of the Board of
Directors. (1992 Form 10-K, Exhibit 10.1.)
10.2 - Deferred Compensation Plan for Members of the General
Executive Staff. (1992 Form 10-K, Exhibit 10.3.)
10.3 - Executive Incentive Plan. (1992 Form 10-K, Exhibit 10.4.)
10.4 - Stock Option Agreement, dated as of August 11, 1995, by and
between CIPSCO Incorporated and the Company. (June 30, 1995
Form 10-Q, Exhibit 10(a).)
10.5 - Stock Option Agreement, dated as of August 11, 1995, by and
between the Company and CIPSCO Incorporated. (June 30, 1995
Form 10-Q, Exhibit 10(b).)
10.6 - Long-Term Incentive Plan of 1995. (1995 Form 10-K, Exhibit
10.7.)
10.7 - Change of Control Severance Plan. (1995 Form 10-K, Exhibit
10.8.)
Note: Reports of the Company on Forms 8-K, 10-Q and 10-K are on file with the
SEC under file number 1-2967.
- 27 -
<PAGE> 1
EXHIBIT 4.36
_____________________________________
UNION ELECTRIC COMPANY
TO
BOATMEN'S TRUST COMPANY
Trustee
________
INDENTURE
(FOR UNSECURED SUBORDINATED DEBT SECURITIES)
DATED AS OF DECEMBER 1, 1996
_____________________________________
<PAGE> 2
UNION ELECTRIC COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF DECEMBER 1, 1996
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 914
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
910
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
903
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812
813
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802
812
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 803
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 804
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
ARTICLE ONE
Definitions and Other Provisions of General Application
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Authenticating Agent" . . . . . . . . . . . . . . . . . . . . . . . 2
"Authorized Officer" . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . . 2
"Board Resolution" . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Company Request" or "Company Order" . . . . . . . . . . . . . . . . 3
"Corporate Trust Office" . . . . . . . . . . . . . . . . . . . . . . 3
"corporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . . 3
"Discount Security" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Dollar" or "$" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Eligible Obligations" . . . . . . . . . . . . . . . . . . . . . . . 3
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Governmental Authority" . . . . . . . . . . . . . . . . . . . . . . 3
"Government Obligations" . . . . . . . . . . . . . . . . . . . . . . 3
"Holder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Interest Payment Date" . . . . . . . . . . . . . . . . . . . . . . . 4
"Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Officer's Certificate" . . . . . . . . . . . . . . . . . . . . . . . 4
"Opinion of Counsel" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Outstanding" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Periodic Offering" . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Place of Payment" . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Predecessor Security" . . . . . . . . . . . . . . . . . . . . . . . 6
"Redemption Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Redemption Price" . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Regular Record Date" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Required Currency" . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Responsible Officer" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Security Register" and "Security Registrar" . . . . . . . . . . . . 6
"Senior Indebtedness" . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C> <C>
"Special Record Date" . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Stated Interest Rate" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Stated Maturity" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Successor Corporation" . . . . . . . . . . . . . . . . . . . . . . . . 7
"Tranche" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"United States" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . 7
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . 8
SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 105. Notices, Etc., to Trustee and Company. . . . . . . . . . . . . . . . . 10
SECTION 106. Notice to Holders of Securities; Waiver. . . . . . . . . . . . . . . . 11
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . 11
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . 11
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . 13
</TABLE>
-ii-
<PAGE> 5
ARTICLE THREE
The Securities
<TABLE>
<S> <C> <C>
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . 13
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . 16
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . 19
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . 20
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . 21
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 309. Cancellation by Security Registrar . . . . . . . . . . . . . . . . . . . . . 22
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 311. Payment to Be in Proper Currency . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 312. Extension of Interest Payment Periods . . . . . . . . . . . . . . . . . . . . 23
ARTICLE FOUR
Redemption of Securities
SECTION 401. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 402. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . 24
SECTION 403. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . 24
SECTION 404. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 405. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . 25
SECTION 406. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
-iii-
<PAGE> 6
ARTICLE FIVE
Sinking Funds
<TABLE>
<S> <C> <C>
SECTION 501. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 502. Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . 26
SECTION 503. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . 27
ARTICLE SIX
Covenants
SECTION 601. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . 27
SECTION 602. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 603. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . 28
SECTION 604. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 605. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 606. Annual Officer's Certificate as to Compliance . . . . . . . . . . . . . . . 30
SECTION 607. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE SEVEN
Satisfaction and Discharge
SECTION 701. Satisfaction and Discharge of Securities . . . . . . . . . . . . . . . . . 30
SECTION 702. Legal and Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 703. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE EIGHT
Events of Default; Remedies
SECTION 801. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 802. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . 36
</TABLE>
-iv-
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 803. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . 37
SECTION 804. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 805. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . 38
SECTION 806. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 807. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 808. Unconditional Right of Holders to Receive Principal, Premium and Interest . . . . . 39
SECTION 809. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 810. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 811. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 812. Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 813. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 814. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 815. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE NINE
The Trustee
SECTION 901. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 902. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 903. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 904. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . 44
SECTION 905. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 906. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 907. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 908. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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SECTION 909. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . 45
SECTION 910. Resignation and Removal; Appointment of Successor . . . . . . . . . . . 45
SECTION 911. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . 47
SECTION 912. Merger, Conversion, Consolidation or Succession to Business . . . . . . 48
SECTION 913. Preferential Collection of Claims Against Company . . . . . . . . . . . 48
SECTION 914. Co-trustees and Separate Trustees . . . . . . . . . . . . . . . . . . . 49
SECTION 915. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . 50
ARTICLE TEN
Holders' Lists and Reports by Trustee and Company
SECTION 1001. Lists of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1002. Reports by Trustee and Company. . . . . . . . . . . . . . . . . . . . . 52
ARTICLE ELEVEN
Consolidation, Merger, Conveyance or Other Transfer
SECTION 1101. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . 52
SECTION 1102. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . 53
ARTICLE TWELVE
Supplemental Indentures
SECTION 1201. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . 53
SECTION 1202. Supplemental Indentures With Consent of Holders. . . . . . . . . . . . 55
SECTION 1203. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . 56
SECTION 1204. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . 56
SECTION 1205. Conformity With Trust Indenture Act. . . . . . . . . . . . . . . . . . 57
</TABLE>
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SECTION 1206. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . 57
SECTION 1207. Modification Without Supplemental Indenture. . . . . . . . . . . . . . . . . . . 57
ARTICLE THIRTEEN
Meetings of Holders; Action Without Meeting
SECTION 1301. Purposes for Which Meetings May Be Called. . . . . . . . . . . . . . . . . . . . 57
SECTION 1302. Call, Notice and Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1303. Persons Entitled to Vote at Meetings. . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1304. Quorum; Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1305. Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1306. Counting Votes and Recording Action of Meetings. . . . . . . . . . . . . . . . . 60
SECTION 1307. Action Without Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. Liability Solely Corporate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE FIFTEEN
Subordination of Securities
SECTION 1501. Securities Subordinate to Senior Indebtedness. . . . . . . . . . . . . . . . . . 61
SECTION 1502. Payment Over of Proceeds of Securities. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1503. Disputes with Holders of Certain Senior Indebtedness. . . . . . . . . . . . . . . 63
SECTION 1504. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1505. Obligation of the Company Unconditional. . . . . . . . . . . . . . . . . . . . . 63
SECTION 1506. Priority of Senior Indebtedness Upon Maturity . . . . . . . . . . . . . . . . . . 64
</TABLE>
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SECTION 1507. Trustee as Holder of Senior Indebtedness. . . . . . . . . . . . . . . . . . . . 64
SECTION 1508. Notice to Trustee to Effectuate Subordination. . . . . . . . . . . . . . . . . 64
SECTION 1509. Modification, Extension, Etc., of Senior Indebtedness. . . . . . . . . . . . . 64
SECTION 1510. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness. . . . . . . . 65
SECTION 1511. Paying Agents Other Than the Trustee. . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1512. Rights of Holders of Senior Indebtedness Not Impaired. . . . . . . . . . . . . 65
SECTION 1513. Effect of Subordination Provisions; Termination. . . . . . . . . . . . . . . . 65
</TABLE>
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<PAGE> 11
INDENTURE, dated as of December 1, 1996, between UNION ELECTRIC
COMPANY, a corporation duly organized and existing under the laws of the State
of Missouri (herein called the "Company"), having its principal office at 1901
Chouteau Avenue, St. Louis, Missouri 63103, and BOATMEN'S TRUST COMPANY, a
corporation duly organized and existing under the laws of the State of
Missouri, having its principal corporate trust office at 510 Locust Street, St.
Louis, Missouri 63101, as Trustee (herein called the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series as contemplated
herein; and all acts necessary to make this Indenture a valid agreement of the
Company have been performed.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires, capitalized terms used
herein shall have the meanings assigned to them in Article One of this
Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(b) all terms used herein without definition which are
defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally
accepted accounting principles in the United States, and, except
as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the
date of such computation or, at the election of the Company from
time to time, at the date of the execution and delivery of this
Indenture; provided, however, that in determining generally
accepted accounting principles applicable to the Company, the
Company shall, to the extent
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<PAGE> 12
required, conform to any order, rule or regulation of any
administrative agency, regulatory authority or other governmental
body having jurisdiction over the Company; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not
to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are defined in
that Article.
"ACT", when used with respect to any Holder of a Security, has the
meaning specified in Section 104.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "CONTROL" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
"AUTHENTICATING AGENT" means any Person (other than the Company or
an Affiliate of the Company) authorized by the Trustee to act on behalf of the
Trustee to authenticate one or more series of Securities.
"AUTHORIZED OFFICER" means the Chairman of the Board, the
President, any Vice President, the Treasurer or any other duly authorized
officer of the Company.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any committee thereof duly authorized to act in respect of matters
relating to this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or a duly authorized committee thereof, and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY", when used with respect to a Place of Payment or
any other particular location specified in the Securities or this Indenture,
means any day, other than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of Payment or other
location are generally authorized or required by law, regulation or executive
order to remain closed, except as may be otherwise specified as contemplated by
Section 301.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the date of execution and delivery of this Indenture
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body, if any, performing such duties at
such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
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<PAGE> 13
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by an Authorized Officer and delivered
to the Trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Indenture is located at 510 Locust Street, St. Louis, Missouri 63101.
"CORPORATION" means a corporation, association, company, joint
stock company or business trust.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DISCOUNT SECURITY" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 802.
"Interest" with respect to a Discount Security means interest, if any, borne by
such Security at a Stated Interest Rate.
"DOLLAR" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"ELIGIBLE OBLIGATIONS" means:
(a) with respect to Securities denominated in
Dollars, Government Obligations; or
(b) with respect to Securities denominated in a
currency other than Dollars or in a composite currency, such other
obligations or instruments as shall be specified with respect to
such Securities, as contemplated by Section 301.
"EVENT OF DEFAULT" has the meaning specified in Section 801.
"GOVERNMENTAL AUTHORITY" means the government of the United States
or of any State or Territory thereof or of the District of Columbia or of any
county, municipality or other political subdivision of any thereof, or any
department, agency, authority or other instrumentality of any of the foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed
by, the United States entitled to the benefit of the full faith
and credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest in
obligations described in clause (a) above or in any specific
interest or principal payments due in respect thereof; provided,
however, that the custodian of such obligations or specific
interest or principal payments shall be a bank or trust company
(which may include the Trustee or any Paying Agent) subject to
Federal or state supervision or examination with a combined
capital and surplus of at least $50,000,000; and provided,
further, that except as may be otherwise required by law, such
custodian shall be obligated
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<PAGE> 14
to pay to the holders of such certificates, depositary receipts or
other instruments the full amount received by such custodian in
respect of such obligations or specific payments and shall not be
permitted to make any deduction therefrom.
"HOLDER" means a Person in whose name a Security is registered in
the Security Register.
"INDENTURE" means this instrument as originally executed and
delivered and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of particular series of
Securities established as contemplated by Section 301.
"INTEREST PAYMENT DATE", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"MATURITY", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as provided in such Security or in this Indenture, whether at
the Stated Maturity, by declaration of acceleration, upon call for redemption
or otherwise.
"OFFICER'S CERTIFICATE" means a certificate signed by an
Authorized Officer and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may
be counsel for the Company, or other counsel acceptable to the Trustee.
"OUTSTANDING", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities deemed to have been paid in accordance with
Section 701; and
(c) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it and the Company
that such Securities are held by a bona fide purchaser or
purchasers in whose hands such Securities are valid obligations of
the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series or Tranche, have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
whether or not a quorum is present at a meeting of Holders of Securities,
(x) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company
or of such other obligor (unless the Company, such Affiliate
or such obligor owns all Securities Outstanding under this
Indenture, or all Outstanding Securities of each such series
and each such Tranche, as the case may be,
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<PAGE> 15
determined without regard to this clause (x)) shall be
disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction,
notice, consent or waiver or upon any such determination as
to the presence of a quorum, only Securities which the
Trustee knows to be so owned shall be so disregarded;
provided, however, that Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such
other obligor;
(y) the principal amount of a Discount Security that
shall be deemed to be Outstanding for such purposes shall be
the amount of the principal thereof that would be due and
payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant
to Section 802; and
(z) the principal amount of any Security which is
denominated in a currency other than Dollars or in a
composite currency that shall be deemed to be Outstanding
for such purposes shall be the amount of Dollars which could
have been purchased by the principal amount (or, in the case
of a Discount Security, the Dollar equivalent on the date
determined as set forth below of the amount determined as
provided in (y) above) of such currency or composite
currency evidenced by such Security, in each such case
certified to the Trustee in an Officer's Certificate, based
(i) on the average of the mean of the buying and selling
spot rates quoted by three banks which are members of the
New York Clearing House Association selected by the Company
in effect at 11:00 A.M. (New York time) in The City of New
York on the fifth Business Day preceding any such
determination or (ii) if on such fifth Business Day it shall
not be possible or practicable to obtain such quotations
from such three banks, on such other quotations or
alternative methods of determination which shall be as
consistent as practicable with the method set forth in (i)
above;
provided, further, that, in the case of any Security the principal of which is
payable from time to time without presentment or surrender, the principal
amount of such Security that shall be deemed to be Outstanding at any time for
all purposes of this Indenture shall be the original principal amount thereof
less the aggregate amount of principal thereof theretofore paid.
"PAYING AGENT" means any Person, including the Company, authorized
by the Company to pay the principal of and premium, if any, or interest, if
any, on any Securities on behalf of the Company.
"PERIODIC OFFERING" means an offering of Securities of a series
from time to time any or all of the specific terms of which Securities,
including without limitation the rate or rates of interest, if any, thereon,
the Stated Maturity or Maturities thereof and the redemption provisions, if
any, with respect thereto, are to be determined by the Company or its agents
upon the issuance of such Securities.
"PERSON" means any individual, corporation, partnership, joint
venture, trust or unincorporated organization or any Governmental Authority
thereof.
"PLACE OF PAYMENT", when used with respect to the Securities of
any series, or tranche thereof, means the place or places, specified as
contemplated by Section 301, at which, subject to Section
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<PAGE> 16
602, principal of and premium, if any, and interest, if any, on the Securities
of such series or tranche are payable.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed (to the extent lawful) to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"REQUIRED CURRENCY" has the meaning specified in Section 311.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and
delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means all obligations (other than
non-recourse obligations, the indebtedness issued under this Indenture, and
other indebtedness which is expressly made subordinate to or pari passu with
the indebtedness issued under this Indenture) of, or guaranteed or assumed by,
the Company for borrowed money, including both senior and subordinated
indebtedness for borrowed money (other than indebtedness issued under this
Indenture and other indebtedness which is expressly made subordinate to or pari
passu with the indebtedness issued under this Indenture), or for the payment of
money relating to any lease which is capitalized on the balance sheet of the
Company in accordance with generally accepted accounting principles as in
effect from time to time, or evidenced by bonds, debentures, notes or other
similar instruments, and in each case, amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligations, whether
existing as of the date of this Indenture or subsequently incurred by the
Company.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
the Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"STATED INTEREST RATE" means a rate (whether fixed or
variable) at which an obligation by its terms is stated to bear simple
interest. Any calculation or other determination to be made under this
Indenture by reference to the Stated Interest Rate on a Security shall be made
without regard to the effective interest cost to the Company of such Security
and without regard to the Stated Interest Rate on,
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<PAGE> 17
or the effective cost to the Company of, any other indebtedness the Company's
obligations in respect of which are evidenced or secured in whole or in part by
such Security.
"STATED MATURITY", when used with respect to any obligation or any
installment of principal thereof or interest thereon, means the date on which
the principal of such obligation or such installment of principal or interest
is stated to be due and payable (without regard to any provisions for
redemption, prepayment, acceleration, purchase or extension).
"SUCCESSOR CORPORATION" has the meaning set forth in Section 1101.
"TRANCHE" means a group of Securities which (a) are of the same
series and (b) have identical terms except as to principal amount and/or date
of issuance.
"TRUST INDENTURE ACT" means, as of any time, the Trust Indenture
Act of 1939, or any successor statute, as in effect at such time.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall means the Trustee with respect to Securities of that series.
"UNITED STATES" means the United States of America, its
Territories, its possessions and other areas subject to its political
jurisdiction.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall, if requested by the
Trustee, furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such Person,
such Person has made such examination or investigation as is
necessary to enable such Person to express an informed opinion as
to whether or not such covenant or condition has been complied
with; and
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<PAGE> 18
(d) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion are based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters
is in the possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates
of the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the
date or dates required with respect to the document or instrument for which it
is substituted. Anything in this Indenture to the contrary notwithstanding, if
any such corrective document or instrument indicates that action has been taken
by or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the
action so taken shall not be invalidated or otherwise rendered ineffective but
shall be and remain in full force and effect, except to the extent that such
action was a result of willful misconduct or bad faith. Without limiting the
generality of the foregoing, any Securities issued under the authority of such
defective document or instrument shall nevertheless be the valid obligations of
the Company entitled to the benefits of this Indenture equally and ratably with
all other Outstanding Securities, except as aforesaid.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided by this
Indenture to be made, given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed
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<PAGE> 19
by such Holders in person or by an agent duly appointed in writing
or, alternatively, may be embodied in and evidenced by the record
of Holders voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders duly called
and held in accordance with the provisions of Article Thirteen, or
a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both
are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any
such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments and so voting at
any such meeting. Proof of execution of any such instrument or of
a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this
Indenture and (subject to Section 901) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this
Section. The record of any meeting of Holders shall be proved in
the manner provided in Section 1306.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof or may be proved
in any other manner which the Trustee and the Company deem
sufficient. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
(c) The principal amount (except as otherwise contemplated
in clause (y) of the proviso to the definition of Outstanding) and
serial numbers of Securities held by any Person, and the date of
holding the same, shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made
upon such Security.
(e) Until such time as written instruments shall have been
delivered to the Trustee with respect to the requisite percentage
of principal amount of Securities for the action contemplated by
such instruments, any such instrument executed and delivered by or
on behalf of a Holder may be revoked with respect to any or all of
such Securities by written notice by such Holder or any subsequent
Holder, proven in the manner in which such instrument was proven.
(f) Securities of any series, or any Tranche thereof,
authenticated and delivered after any Act of Holders may, and
shall if required by the Trustee, bear a notation in form approved
by the Trustee as to any action taken by such Act of Holders. If
the Company shall so determine, new Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of
the Trustee and the Company, to such action may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series or
Tranche.
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(g) If the Company shall solicit from Holders any request,
demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by Board Resolution, fix in
advance a record date for the determination of Holders entitled to
give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but
only the Holders of record at the close of business on the record
date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of the Outstanding
Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be
computed as of the record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or the Company by the Trustee or by
any Holder, shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and delivered personally to an officer
or other responsible employee of the addressee, or transmitted by facsimile
transmission, telex or other direct written electronic means to such telephone
number or other electronic communications address as the parties hereto shall
from time to time designate, or transmitted by registered mail, charges
prepaid, to the applicable address set opposite such party's name below or to
such other address as either party hereto may from time to time designate:
If to the Trustee, to:
Boatmen's Trust Company
510 Locust Street
St. Louis, Missouri 63101
Attention: P.C. QuiBelle
Telephone: (314) 466-1356
Telecopy: (314) 466-2469
If to the Company, to:
Union Electric Company
1901 Chouteau Avenue
St. Louis, Missouri 63103
Attention: Treasurer
Telephone: (314) 621-3222
Telecopy: (314) 554-3066
Any communication contemplated herein shall be deemed to have been
made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission, telex or other direct
written electronic means, on the date of transmission, with receipt of
acknowledgment, and if transmitted by registered mail, on the date of receipt.
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SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given, and shall be deemed given, to Holders if in writing and
mailed, first-class postage prepaid, to each Holder affected by such event, at
the address of such Holder as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Indenture may be waived in writing by
the Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or conflicts
with another provision hereof which is required or deemed to be included in
this Indenture by, or is otherwise governed by, any of the provisions of the
Trust Indenture Act, such other provision shall control; and if any provision
hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture
Act shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings in this Indenture and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Securities, express or implied,
shall give to any Person, other than the parties hereto, their successors
hereunder, the Holders, and so long as the notice described
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<PAGE> 22
in Section 1513 hereof has not been given, the holders of Senior Indebtedness,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the law of any other jurisdiction shall be mandatorily applicable.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities other than a provision in Securities of any series, or any Tranche
thereof, or in the Board Resolution or Officer's Certificate which establishes
the terms of the Securities of such series or Tranche, which specifically
states that such provision shall apply in lieu of this Section) payment of
interest or principal and premium, if any, need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment, except that if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day in each case with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
and, if such payment is made or duly provided for on such Business Day, no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to such Business Day.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in substantially
the form or forms thereof established in the indenture supplemental hereto
establishing such series or in a Board Resolution establishing such series, or
in an Officer's Certificate pursuant to such supplemental indenture or Board
Resolution, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or the authorizations, orders or
regulations of any state regulatory agency having jurisdiction over the
Company, or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
If the form or forms of Securities of any series are established in a Board
Resolution or in an Officer's Certificate pursuant to a Board Resolution, such
Board Resolution and Officer's Certificate, if any, shall be delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such Securities.
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<PAGE> 23
Unless otherwise specified as contemplated by Section 301, the
Securities of each series shall be issuable in registered form. The definitive
Securities shall be produced in such manner as shall be determined by the
officers executing such Securities, as evidenced by their execution thereof.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
BOATMEN'S TRUST COMPANY
as Trustee
By: ______________________
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. Subject to
the last paragraph of this Section, prior to the authentication and delivery of
Securities of any series there shall be established by specification in a
supplemental indenture or in a Board Resolution, or in an Officer's Certificate
pursuant to a supplemental indenture or a Board Resolution:
(a) the title of the Securities of such series (which shall
distinguish the Securities of such series from Securities of all
other series);
(b) any limit upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 406 or 1206 and, except for any Securities which,
pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
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<PAGE> 24
(c) the Person or Persons (without specific identification)
to whom interest on Securities of such series, or any Tranche
thereof, shall be payable on any Interest Payment Date, if other
than the Persons in whose names such Securities (or one or more
Predecessor Securities) are registered at the close of business on
the Regular Record Date for such interest;
(d) the date or dates on which the principal of the
Securities of such series or any Tranche thereof, is payable or
any formulary or other method or other means by which such date or
dates shall be determined, by reference or otherwise (without
regard to any provisions for redemption, prepayment, acceleration,
purchase or extension);
(e) the rate or rates at which the Securities of such
series, or any Tranche thereof, shall bear interest, if any
(including the rate or rates at which overdue principal shall bear
interest, if different from the rate or rates at which such
Securities shall bear interest prior to Maturity, and, if
applicable, the rate or rates at which overdue premium or interest
shall bear interest, if any), or any formulary or other method or
other means by which such rate or rates shall be determined, by
reference or otherwise; the date or dates from which such interest
shall accrue; the Interest Payment Dates on which such interest
shall be payable and the Regular Record Date, if any, for the
interest payable on such Securities on any Interest Payment Date;
the right of the Company, if any, to extend the interest payment
periods and the duration of any such extension as contemplated by
Section 312 and the basis of computation of interest, if other
than as provided in Section 310;
(f) the place or places at which or methods by which (1) the
principal of and premium, if any, and interest, if any, on
Securities of such series, or any Tranche thereof, shall be
payable, (2) registration of transfer of Securities of such
series, or any Tranche thereof, may be effected, (3) exchanges of
Securities of such series, or any Tranche thereof, may be effected
and (4) notices and demands to or upon the Company in respect of
the Securities of such series, or any Tranche thereof, and this
Indenture may be served; the Security Registrar for such series;
and if such is the case, that the principal of such Securities
shall be payable without presentment or surrender thereof;
(g) the period or periods within which, or the date or dates
on which, the price or prices at which and the terms and
conditions upon which the Securities of such series, or any
Tranche thereof, may be redeemed, in whole or in part, at the
option of the Company and any restrictions on such redemptions,
including but not limited to a restriction on a partial redemption
by the Company of the Securities of any series, or any Tranche
thereof, resulting in delisting of such Securities from any
national exchange;
(h) the obligation or obligations, if any, of the Company to
redeem or purchase the Securities of such series, or any Tranche
thereof, pursuant to any sinking fund or other mandatory
redemption provisions or at the option of a Holder thereof and the
period or periods within which or the date or dates on which, the
price or prices at which and the terms and conditions upon which
such Securities shall be redeemed or purchased, in whole or in
part, pursuant to such obligation, and applicable exceptions to
the requirements of Section 404 in the case of mandatory
redemption or redemption at the option of the Holder;
(i) the denominations in which Securities of such series, or
any Tranche thereof, shall be issuable if other than denominations
of $1,000 and any integral multiple thereof;
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<PAGE> 25
(j) the currency or currencies, including composite
currencies, in which payment of the principal of and premium, if
any, and interest, if any, on the Securities of such series, or
any Tranche thereof, shall be payable (if other than in Dollars);
(k) if the principal of or premium, if any, or interest, if
any, on the Securities of such series, or any Tranche thereof, are
to be payable, at the election of the Company or a Holder thereof,
in a coin or currency other than that in which the Securities are
stated to be payable, the period or periods within which and the
terms and conditions upon which, such election may be made;
(l) if the principal of or premium, if any, or interest on
the Securities of such series, or any Tranche thereof, are to be
payable, or are to be payable at the election of the Company or a
Holder thereof, in securities or other property, the type and
amount of such securities or other property, or the formulary or
other method or other means by which such amount shall be
determined, and the period or periods within which, and the terms
and conditions upon which, any such election may be made;
(m) if the amount payable in respect of principal of or
premium, if any, or interest, if any, on the Securities of such
series, or any Tranche thereof, may be determined with reference
to an index or other fact or event ascertainable outside this
Indenture, the manner in which such amounts shall be determined to
the extent not established pursuant to clause (e) of this
paragraph;
(n) if other than the principal amount thereof, the portion
of the principal amount of Securities of such series, or any
Tranche thereof, which shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to Section 802;
(o) any Events of Default, in addition to those specified in
Section 801, with respect to the Securities of such series, and
any covenants of the Company for the benefit of the Holders of the
Securities of such series, or any Tranche thereof, in addition to
those set forth in Article Six;
(p) the terms, if any, pursuant to which the Securities of
such series, or any Tranche thereof, may be converted into or
exchanged for shares of capital stock or other securities of the
Company or any other Person;
(q) the obligations or instruments, if any, which shall be
considered to be Eligible Obligations in respect of the Securities
of such series, or any Tranche thereof, denominated in a currency
other than Dollars or in a composite currency, and any additional
or alternative provisions for the reinstatement of the Company's
indebtedness in respect of such Securities after the satisfaction
and discharge thereof as provided in Section 701;
(r) if the Securities of such series, or any Tranche
thereof, are to be issued in global form, (i) any limitations on
the rights of the Holder or Holders of such Securities to transfer
or exchange the same or to obtain the registration of transfer
thereof, (ii) any limitations on the rights of the Holder or
Holders thereof to obtain certificates therefor in definitive form
in lieu of temporary form and (iii) any and all other matters
incidental to such Securities;
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<PAGE> 26
(s) if the Securities of such series, or any Tranche
thereof, are to be issuable as bearer securities, any and all
matters incidental thereto which are not specifically addressed in
a supplemental indenture as contemplated by clause (g) of Section
1201;
(t) to the extent not established pursuant to clause (r) of
this paragraph, any limitations on the rights of the Holders of
the Securities of such Series, or any Tranche thereof, to transfer
or exchange such Securities or to obtain the registration of
transfer thereof; and if a service charge will be made for the
registration of transfer or exchange of Securities of such series,
or any Tranche thereof, the amount or terms thereof;
(u) any exceptions to Section 113, or variation in the
definition of Business Day, with respect to the Securities of such
series, or any Tranche thereof; and
(v) any other terms of the Securities of such series, or any
Tranche thereof, not inconsistent with the provisions of this
Indenture.
The Securities of each series, or any Tranche thereof, shall be
subordinated in the right of payment to Senior Indebtedness as provided in
Article Fifteen.
With respect to Securities of a series subject to a Periodic
Offering, the indenture supplemental hereto or the Board Resolution which
establishes such series, or the Officer's Certificate pursuant to such
supplemental indenture or Board Resolution, as the case may be, may provide
general terms or parameters for Securities of such series and provide either
that the specific terms of Securities of such series, or any Tranche thereof,
shall be specified in a Company Order or that such terms shall be determined by
the Company or its agents in accordance with procedures specified in a Company
Order as contemplated by the clause (b) of the third paragraph of Section 303.
SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, the Securities of
each series shall be issuable in denominations of $1,000 and any integral
multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, the Securities
shall be executed on behalf of the Company by an Authorized Officer and may
have the corporate seal of the Company affixed thereto or reproduced thereon
attested by any other Authorized Officer. The signature of any or all of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized Officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
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<PAGE> 27
The Trustee shall authenticate and deliver Securities of a series,
for original issue, at one time or from time to time in accordance with the
Company Order referred to below, upon receipt by the Trustee of:
(a) the instrument or instruments establishing the form or
forms and terms of such series, as provided in Sections 201 and
301;
(b) a Company Order requesting the authentication and
delivery of such Securities and, to the extent that the terms of
such Securities shall not have been established in an indenture
supplemental hereto or in a Board Resolution, or in an Officer's
Certificate pursuant to a supplemental indenture or Board
Resolution, all as contemplated by Sections 201 and 301, either
(i) establishing such terms or (ii) in the case of Securities of a
series subject to a Periodic Offering, specifying procedures,
acceptable to the Trustee, by which such terms are to be
established (which procedures may provide, to the extent
acceptable to the Trustee, for authentication and delivery
pursuant to oral or electronic instructions from the Company or
any agent or agents thereof, which oral instructions are to be
promptly confirmed electronically or in writing), in either case
in accordance with the instrument or instruments delivered
pursuant to clause (a) above;
(c) the Securities of such series, executed on behalf of the
Company by an Authorized Officer;
(d) an Opinion of Counsel to the effect that:
(i) that the form or forms of such Securities
have been duly authorized by the Company and have been
established in conformity with the provisions of this
Indenture;
(ii) that the terms of such Securities have
been duly authorized by the Company and have been
established in conformity with the provisions of this
Indenture; and
(iii) that such Securities, when authenticated
and delivered by the Trustee and issued and delivered
by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will
have been duly issued under this Indenture and will
constitute valid and legally binding obligations of
the Company, entitled to the benefits provided by this
Indenture, and enforceable in accordance with their
terms, subject, as to enforcement, to laws relating to
or affecting generally the enforcement of creditors'
rights, including, without limitation, bankruptcy and
insolvency laws and to general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law);
provided, however, that, with respect to Securities of a series subject to a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of such
Securities (provided that such Opinion of Counsel addresses the authentication
and delivery of all Securities of such series) and that in lieu of the opinions
described in clauses (ii) and (iii) above Counsel may opine that:
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<PAGE> 28
(x) when the terms of such Securities shall have been
established pursuant to a Company Order or Orders or
pursuant to such procedures (acceptable to the Trustee) as
may be specified from time to time by a Company Order or
Orders, all as contemplated by and in accordance with the
instrument or instruments delivered pursuant to clause (a)
above, such terms will have been duly authorized by the
Company and will have been established in conformity with
the provisions of this Indenture; and
(y) such Securities, when authenticated and delivered
by the Trustee in accordance with this Indenture and the
Company Order or Orders or specified procedures referred to
in paragraph (x) above and issued and delivered by the
Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will have been duly
issued under this Indenture and will constitute valid and
legally binding obligations of the Company, entitled to the
benefits provided by the Indenture, and enforceable in
accordance with their terms, subject, as to enforcement, to
laws relating to or affecting generally the enforcement of
creditors' rights, including, without limitation, bankruptcy
and insolvency laws and to general principles of equity
(regardless of whether such enforceability is considered in
a proceeding in equity or at law).
With respect to Securities of a series subject to a Periodic
Offering, the Trustee may conclusively rely, as to the authorization by the
Company of any of such Securities, the form and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of
Counsel and other documents delivered pursuant to Sections 201 and 301 and this
Section, as applicable, at or prior to the time of the first authentication of
Securities of such series unless and until such opinion or other documents have
been superseded or revoked or expire by their terms. In connection with the
authentication and delivery of Securities of a series subject to a Periodic
Offering, the Trustee shall be entitled to conclusively rely that the Company's
instructions to authenticate and deliver such Securities do not violate any
rules, regulations or orders of any Governmental Authority having jurisdiction
over the Company.
If the form or terms of the Securities of any series have been
established by or pursuant to a Board Resolution or an Officer's Certificate as
permitted by Sections 201 or 301, the Trustee shall not be required to
authenticate such Securities if the issuance of such Securities pursuant to
this Indenture will affect the Trustee's own rights, duties or immunities under
the Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, each Security
shall be dated the date of its authentication.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, no Security shall
be entitled to any benefit under this Indenture or be valid or obligatory for
any purpose unless there appears on such Security a certificate of
authentication substantially in the form provided for herein executed by the
Trustee or its agent by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder to the Company, or any
Person acting on its behalf, but shall never have been issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided
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<PAGE> 29
in Section 309 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, or
any Tranche thereof, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued, with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities;
provided, however, that temporary Securities need not recite specific
redemption, sinking fund, conversion or exchange provisions.
Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, after the
preparation of definitive Securities of such series or Tranche, the temporary
Securities of such series or Tranche shall be exchangeable, without charge to
the Holder thereof, for definitive Securities of such series or Tranche upon
surrender of such temporary Securities at the office or agency of the Company
maintained pursuant to Section 602 in a Place of Payment for such Securities.
Upon such surrender of temporary Securities, the Company shall, except as
aforesaid, execute and the Trustee shall authenticate and deliver in exchange
therefor definitive Securities of the same series and Tranche, of authorized
denominations and of like tenor and aggregate principal amount.
Until exchanged in full as hereinabove provided, temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and Tranche and of like
tenor authenticated and delivered hereunder.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept in each office designated
pursuant to Section 602, with respect to the Securities of each series or any
Tranche thereof, a register (all registers kept in accordance with this Section
being collectively referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Securities of such series or Tranche and the registration
of transfer thereof. The Company shall designate one Person to maintain the
Security Register for the Securities of each series on a consolidated basis,
and such Person is referred to herein, with respect to such series, as the
"Security Registrar." Anything herein to the contrary notwithstanding, the
Company may designate one or more of its offices as an office in which a
register with respect to the Securities of one or more series, or any Tranche
or Tranches thereof, shall be maintained, and the Company may designate itself
the Security Registrar with respect to one or more of such series. The
Security Register shall be open for inspection by the Trustee and the Company
at all reasonable times.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, upon surrender
for registration of transfer of any Security of such series or Tranche at the
office or agency of the Company maintained pursuant to Section 602 in a Place
of Payment for such series or Tranche, the Company shall execute, and the
Trustee shall authenticate and
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deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series and Tranche, of authorized denominations and
of like tenor and aggregate principal amount.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, any Security
of such series or Tranche may be exchanged at the option of the Holder, for one
or more new Securities of the same series and Tranche, of authorized
denominations and of like tenor and aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
All Securities delivered upon any registration of transfer or
exchange of Securities shall be valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Trustee or
the Security Registrar) be duly endorsed or shall be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee or the
Security Registrar, as the case may be, duly executed by the Holder thereof or
his attorney duly authorized in writing. Such registration of transfer or
exchange will be effected upon the Company, the Trustee or the Security
Registrar, as the case may be, being satisfied with the documents of title and
identity of the person making the request.
Unless otherwise specified as contemplated by Section 301 with
respect to Securities of any series, or any Tranche thereof, no service charge
shall be made for any registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 406 or 1206 not involving any transfer.
The Company shall not be required to execute or to provide for the
registration of transfer of or the exchange of (a) Securities of any series, or
any Tranche thereof, during a period beginning at the opening of business 15
days immediately preceding the day of a mailing of a notice of redemption
identifying the serial numbers of the Securities of such series or Tranche
called for redemption and ending at the close of business on the day of such
mailing or (b) any Security so selected for redemption, in whole or in part,
except the unredeemed portion of any Security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series, and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the destruction, loss or
theft of any Security and (b) such security or indemnity as may be reasonably
required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
is held by a Person purporting to be the owner of such Security, the Company
shall execute and the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same series and
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Tranche, and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone other than
the Holder of such new Security, and any such new Security shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, interest on
any Security which is payable, and is punctually paid or duly provided for, on
any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Subject to Section 312 any interest on any Security of any series
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the related Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a date (herein called a "Special
Record Date") for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security of such series and the date
of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more
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than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall promptly cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder of Securities of such series at the address of such
Holder as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date. The Trustee shall
be entitled to conclusively rely on the Company's instructions,
including any list of Holders as it appears in the Security
Register, with respect to any payment of Defaulted Interest under
this Section 307.
(b) The Company may make payment of any Defaulted Interest
on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section
305, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and (subject to Sections 305 and 307)
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
All Securities surrendered for payment, redemption, registration
of transfer or exchange shall, if surrendered to any Person other than the
Security Registrar, be delivered to the Security Registrar and, if not
theretofore canceled, shall be promptly canceled by the Security Registrar.
The Company may at any time deliver to the Security Registrar for cancellation
any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever or which the Company shall
not have issued and sold, and all Securities so delivered shall be promptly
canceled by the Security Registrar. No Securities shall be authenticated in
lieu of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities held
by the Security Registrar shall be disposed of in accordance with a Company
Order delivered to the Security Registrar and the Trustee, and the Security
Registrar shall promptly deliver a certificate of disposition to the Trustee
and the Company unless, by a Company Order, similarly
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delivered, the Company shall direct that canceled Securities be returned to it.
The Security Registrar shall promptly deliver evidence of any cancellation of a
Security in accordance with this Section 309 to the Trustee and the Company.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, or any Tranche thereof, interest on the Securities of
each series shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and on the basis of the actual number of days elapsed
within any month in relation to the deemed 30 days of such month.
SECTION 311. PAYMENT TO BE IN PROPER CURRENCY.
In the case of the Securities of any series, or any Tranche
thereof, denominated in any currency other than Dollars or in a composite
currency (the "Required Currency"), except as otherwise specified with respect
to such Securities as contemplated by Section 301, the obligation of the
Company to make any payment of the principal thereof, or the premium or
interest thereon, shall not be discharged or satisfied by any tender by the
Company, or recovery by the Trustee, in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
Trustee timely holding the full amount of the Required Currency then due and
payable. If any such tender or recovery is in a currency other than the
Required Currency, the Trustee may take such actions as it considers
appropriate to exchange such currency for the Required Currency. The costs and
risks of any such exchange, including without limitation the risks of delay and
exchange rate fluctuation, shall be borne by the Company, the Company shall
remain fully liable for any shortfall or delinquency in the full amount of
Required Currency then due and payable, and in no circumstances shall the
Trustee be liable therefor except in the case of its negligence or willful
misconduct.
SECTION 312. EXTENSION OF INTEREST PAYMENT PERIODS.
The Company shall have the right at any time, so long as the
Company is not in default in the payment of interest on the Securities of any
series hereunder, to extend interest payment periods on all Securities of one
or more series, or Tranches thereof, if so specified as contemplated by Section
301 with respect to such Securities and upon such terms as may be specified as
contemplated by Section 301 with respect to such securities.
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series, or any Tranche thereof, which are
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of such series or Tranche) in accordance with this Article.
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SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or an Officer's Certificate. The Company
shall, at least 45 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the principal amount of such
Securities to be redeemed. In the case of any redemption of Securities (a)
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture or (b) pursuant to an
election of the Company which is subject to a condition specified in the terms
of such Securities, the Company shall furnish the Trustee with an Officer's
Certificate evidencing compliance with such restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series, or any Tranche
thereof, are to be redeemed, the particular Securities to be redeemed shall be
selected by the Security Registrar from the Outstanding Securities of such
series or Tranche not previously called for redemption, by such method as shall
be provided for any particular series, or, in the absence of any such
provision, by such method of random selection as the Security Registrar shall
deem fair and appropriate and which may, in any case, provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
Securities of such series or Tranche or any integral multiple thereof) of the
principal amount of Securities of such series or Tranche of a denomination
larger than the minimum authorized denomination for Securities of such series
or Tranche; provided, however, that if, as indicated in an Officer's
Certificate, the Company shall have offered to purchase all or any principal
amount of the Securities then Outstanding of any series, or any Tranche
thereof, and less than all of such Securities as to which such offer was made
shall have been tendered to the Company for such purchase, the Security
Registrar, if so directed by Company Order, shall select for redemption all or
any principal amount of such Securities which have not been so tendered.
The Security Registrar shall promptly notify the Company and the
Trustee in writing of the Securities selected for redemption and, in the case
of any Securities selected to be redeemed in part, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 404. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in
Section 106 to the Holders of the Securities to be redeemed not less than 30
nor more than 60 days prior to the Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Securities of any series or Tranche
are to be redeemed, the
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identification of the particular Securities to be redeemed and the
portion of the principal amount of any Security to be redeemed in
part,
(d) that on the Redemption Date the Redemption Price,
together with accrued interest, if any, to the Redemption Date,
will become due and payable upon each such Security to be redeemed
and, if applicable, that interest thereon will cease to accrue on
and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities that
such surrender shall not be required,
(f) that the redemption is for a sinking or other fund, if
such is the case, and
(g) such other matters as the Company shall deem desirable or
appropriate.
Unless otherwise specified with respect to any Securities in
accordance with Section 301, with respect to any notice of redemption of
Securities at the election of the Company, unless, upon the giving of such
notice, such Securities shall be deemed to have been paid in accordance with
Section 701, such notice may state that such redemption shall be conditional
upon the receipt by the Paying Agent or Agents for such Securities, on or prior
to the date fixed for such redemption, of money sufficient to pay the principal
of and premium, if any, and interest, if any, on such Securities and that if
such money shall not have been so received such notice shall be of no force or
effect and the Company shall not be required to redeem such Securities. In the
event that such notice of redemption contains such a condition and such money
is not so received, the redemption shall not be made and within a reasonable
time thereafter notice shall be given, in the manner in which the notice of
redemption was given, that such money was not so received and such redemption
was not required to be made, and the Paying Agent or Agents for the Securities
otherwise to have been redeemed shall promptly return to the Holders thereof
any of such Securities which had been surrendered for payment upon such
redemption.
Notice of redemption of Securities to be redeemed at the election
of the Company, and any notice of non-satisfaction of a condition for
redemption as aforesaid, shall be given by the Company or, at the Company's
request, by the Security Registrar in the name and at the expense of the
Company. Notice of mandatory redemption of Securities shall be given by the
Security Registrar in the name and at the expense of the Company.
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been satisfied, the
Securities or portions thereof so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from and
after such date (unless, in the case of an unconditional notice of redemption,
the Company shall default in the payment of the Redemption Price and accrued
interest, if any) such Securities or portions thereof, if interest-bearing,
shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with such notice, such Security or portion thereof
shall be paid by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided, however, that no such
surrender shall be a condition to such payment if so specified as contemplated
by Section 301 with respect to such Security; and provided, further, that
except as otherwise specified as contemplated by Section 301 with respect to
such Security, any installment of interest on any Security
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the Stated Maturity of which installment is on or prior to the Redemption Date
shall be payable to the Holder of such Security, or one or more Predecessor
Securities, registered as such at the close of business on the related Regular
Record Date according to the terms of such Security and subject to the
provisions of Section 307.
SECTION 406. SECURITIES REDEEMED IN PART.
Upon the surrender of any Security which is to be redeemed only in
part at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), the Company shall execute,
and the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, a new Security or Securities of the same series and
Tranche, of any authorized denomination requested by such Holder and of like
tenor and in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE FIVE
SINKING FUNDS
SECTION 501. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of the Securities of any series, or any Tranche
thereof, except as otherwise specified as contemplated by Section 301 for
Securities of such series or Tranche.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series, or any Tranche thereof, is herein referred
to as a "mandatory sinking fund payment", and any payment in excess of such
minimum amount provided for by the terms of Securities of any series, or any
Tranche thereof, is herein referred to as an "optional sinking fund payment".
If provided for by the terms of Securities of any series, or any Tranche
thereof, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 502. Each sinking fund payment shall be
applied to the redemption of Securities of the series or Tranche in respect of
which it was made as provided for by the terms of such Securities.
SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver to the Paying Agent or Agents
Outstanding Securities (other than any previously called for redemption) of a
series or Tranche in respect of which a mandatory sinking fund payment is to be
made and (b) may apply as a credit Securities of such series or Tranche which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of such mandatory sinking fund payment;
provided, however, that no Securities shall be applied in satisfaction of a
mandatory sinking fund payment if such Securities shall have been previously so
applied. Securities so applied shall be received and credited for such purpose
by the Paying Agent or Agents at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.
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SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment date for
the Securities of any series, or any Tranche thereof, the Company shall deliver
to the Paying Agent or Agents an Officer's Certificate specifying:
(a) the amount of the next succeeding mandatory sinking fund
payment for such series or Tranche;
(b) the amount, if any, of the optional sinking fund payment
to be made together with such mandatory sinking fund payment;
(c) the aggregate sinking fund payment;
(d) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by the payment of cash;
(e) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by delivering and crediting
Securities of such series or Tranche pursuant to Section 502 and
stating the basis for such credit and that such Securities have
not previously been so credited, and the Company shall also
deliver to the Trustee any Securities to be so delivered. If the
Company shall not deliver such Officer's Certificate, the next
succeeding sinking fund payment for such series or Tranche shall
be made entirely in cash in the amount of the mandatory sinking
fund payment. Not less than 30 days before each such sinking fund
payment date the Paying Agent or Agents shall select the
Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 403 and cause notice of the
redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 404. Such notice
having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 405 and
406.
ARTICLE SIX
COVENANTS
SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay the principal of and premium, if any, and
interest, if any, on the Securities of each series in accordance with the terms
of such Securities and this Indenture.
SECTION 602. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for the
Securities of each series, or any Tranche thereof, an office or agency where
payment of such Securities shall be made, where the registration of transfer or
exchange of such Securities may be effected and where notices and demands to or
upon the Company in respect of such Securities and this Indenture may be
served. The
Company
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shall give prompt written notice to the Trustee of the location, and any change
in the location, of each such office or agency and prompt notice to the Holders
of any such change in the manner specified in Section 106. If at any time the
Company shall fail to maintain any such required office or agency in respect of
Securities of any series, or any Tranche thereof, or shall fail to furnish the
Trustee with the address thereof, payment of such Securities shall be made,
registration of transfer or exchange thereof may be effected and notices and
demands in respect thereof may be served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent for all such
purposes in any such event.
The Company may also from time to time designate one or more other
offices or agencies with respect to the Securities of one or more series, or
any Tranche thereof, for any or all of the foregoing purposes and may from time
to time rescind such designations; provided, however, that, unless otherwise
specified as contemplated by Section 301 with respect to the Securities of such
series or Tranche, no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes in each Place of Payment for such Securities in accordance with the
requirements set forth above. The Company shall give prompt written notice to
the Trustee, and prompt notice to the Holders in the manner specified in
Section 106, of any such designation or rescission and of any change in the
location of any such other office or agency.
Anything herein to the contrary notwithstanding, any office or
agency required by this Section may be maintained at an office of the Company,
in which event the Company shall perform all functions to be performed at such
office or agency.
SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to the Securities of any series, or any Tranche thereof, it shall, on
or before each due date of the principal of and premium, if any, and interest,
if any, on any of such Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal and
premium or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided. The Company shall
promptly notify the Trustee of any failure by the Company (or any other obligor
on such Securities) to make any payment of principal of or premium, if any, or
interest, if any, on such Securities.
Whenever the Company shall have one or more Paying Agents for the
Securities of any series, or any Tranche thereof, it shall, on or before each
due date of the principal of and premium, if any, and interest, if any, on such
Securities, deposit with such Paying Agents sums sufficient (without
duplication) to pay the principal and premium or interest so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent is the Trustee)
the Company shall promptly notify the Trustee of any failure by it so to act.
The Company shall cause each Paying Agent for the Securities of
any series, or any Tranche thereof, other than the Company or the Trustee, to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(a) hold all sums held by it for the payment of the
principal of and premium, if any, or interest, if any, on such
Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
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(b) give the Trustee notice of any failure by the Company
(or any other obligor upon such Securities) to make any payment of
principal of or premium, if any, or interest, if any, on such
Securities; and
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent and furnish
to the Trustee such information as it possesses regarding the
names and addresses of the Persons entitled to such sums.
The Company may at any time pay, or by Company Order direct any
Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent and,
if so stated in a Company Order delivered to the Trustee, in accordance with
the provisions of Article Seven; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of and premium,
if any, or interest, if any, on any Security and remaining unclaimed for two
years after such principal and premium, if any, or interest has become due and
payable shall be paid to the Company on Company Request, or, if then held by
the Company, shall be discharged from such trust; and, upon such payment or
discharge, the Holder of such Security shall, as an unsecured general creditor
and not as a Holder of an Outstanding Security, look only to the Company for
payment of the amount so due and payable and remaining unpaid, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such payment to the Company, may at the expense of the Company
cause to be mailed, on one occasion only, notice to such Holder that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing, any unclaimed balance of such
money then remaining will be paid to the Company.
SECTION 604. CORPORATE EXISTENCE.
Subject to the rights of the Company under Article Eleven, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence.
SECTION 605. MAINTENANCE OF PROPERTIES.
The Company shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) all its properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and shall cause (or, with respect to
property owned in common with others, make reasonable effort to cause) to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, in the judgment of the Company, may be necessary
so that the business carried on in connection therewith may be properly
conducted; provided, however, that nothing in this Section shall prevent the
Company from discontinuing, or causing the discontinuance of, the operation and
maintenance of any of its properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business.
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SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than June 1 in each year, commencing June 1, 1997 the
Company shall deliver to the Trustee an Officer's Certificate which need not
comply with Section 102, executed by the principal executive officer or the
principal financial officer or the principal accounting officer of the Company,
as to such officer's knowledge of the Company's compliance with all conditions
and covenants under this Indenture, such compliance to be determined without
regard to any period of grace or requirement of notice under this Indenture.
SECTION 607. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in (a) Section 602 or any additional
covenant or restriction specified with respect to the Securities of any series,
or any Tranche thereof, as contemplated by Section 301 if before the time for
such compliance the Holders of at least a majority in aggregate principal
amount of the Outstanding Securities of all series and Tranches with respect to
which compliance with Section 602 or such additional covenant or restriction is
to be omitted, considered as one class, shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition and (b) Section 604, 605, 606 or Article Eleven if
before the time for such compliance the Holders of at least a majority in
principal amount of Securities Outstanding under this Indenture shall, by Act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition; but, in the case of
(a) or (b), no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE SEVEN
SATISFACTION AND DISCHARGE
SECTION 701. SATISFACTION AND DISCHARGE OF SECURITIES.
(a) This Indenture shall upon Company Request cease to be of
further effect (except that Sections 304, 305, 306, 404, 503 (as
to notice of redemption), 602, 603, 907 and 915 and this Article
Seven shall survive), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(i) either
(1) all Securities theretofore authenticated
and delivered (other than (A) Securities which have
been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (B)
Securities deemed to have been paid in accordance with
Section 702(a)) have been delivered to the Trustee for
cancellation; or
(2) all Securities not theretofore delivered to
the Trustee for cancellation (other than Securities
described in clause (1)(A) above) shall be deemed to
have been paid in accordance with Section 702(a);
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(ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions
precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been
complied with.
(b) In the event there shall be Securities of two or more
series Outstanding hereunder, the Trustee shall be required to
execute an instrument acknowledging satisfaction and discharge of
this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the
other conditions thereto as required herein are met. In the event
there shall be two or more Trustees hereunder, then the
effectiveness of each such instrument from each Trustee hereunder
shall be conditioned upon receipt of such instruments from each
other Trustee hereunder.
(c) Upon satisfaction and discharge of this Indenture as
provided in this Section 701, the Trustee shall assign, transfer
and turn over to the Company, subject to the lien provided by
Section 907, any and all money, securities and other property then
held by the Trustee for the benefit of the Holders of the
Securities other than money and Eligible Obligations held by the
Trustee pursuant to Section 703.
SECTION 702. LEGAL AND COVENANT DEFEASANCE.
(a) On and after the date the Company shall have fulfilled
the conditions of Section 702(c), it shall be deemed to have paid
and discharged the entire indebtedness represented by any Security
or Securities of any series or Tranche, or any portion of the
principal amount thereof, and satisfied its obligations under this
Indenture with respect thereto (hereinafter, "Legal Defeasance").
Such Securities shall thereafter be deemed to be "Outstanding"
solely for the purposes of Section 703 hereof and the following
provisions of this Indenture shall survive with respect thereto:
(i) the rights of Holders of such Securities to receive, solely
from the trust fund described in Section 702(c), payments in
respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, or on the redemption date,
as the case may be, and (ii) the obligations of the Company and
the Trustee with respect to such Securities under Sections 304,
305, 306, 404, 503 (as to notice of redemption), 602, 603, 907 and
915 and this Article Seven. The Company may elect to effect a
Legal Defeasance under this Section 702(a) notwithstanding the
prior election to effect a Covenant Defeasance under Section
702(b) with respect to Securities or portions thereof of the same
series or Tranche.
(b) The Company shall be released from its obligations under
the covenants contained in Sections 604 (except with respect to
maintaining its corporate existence), 605 and 606 and Article
Eleven with respect to any Security or Securities of any series or
Tranche or any portion of the principal amount thereof (and under
any covenants inserted pursuant to Section 301(v), in any
supplemental indenture, Board Resolution or Officers' Certificate
establishing such Security), on and after the date the conditions
in Section 702(c) are satisfied (hereinafter, "Covenant
Defeasance"). Such Securities or portions thereof shall
thereafter be deemed not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all
other purposes hereunder.
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In the event of a Covenant Defeasance, the Company may omit to
comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein
to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event
of Default under Section 801(c) with respect to such Securities or
portions thereof, but, except as specified above, the remainder of
this Indenture and such Securities or portions thereof shall
continue to be in full force and effect.
(c) The following shall be the conditions to any defeasance
under this Section 702:
(i) there shall have been irrevocably deposited with
the Trustee, in trust: (1) money in an amount which shall
be sufficient, or (2) Eligible Obligations, which shall not
contain provisions permitting the redemption or other
prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any
regard to reinvestment thereof will provide moneys which,
together with the money, if any, deposited with or held by
the Trustee, shall be sufficient, or (3) a combination of
(1) or (2) which shall be sufficient, to pay when due the
principal of and premium, if any, and interest, if any, due
and to become due on such Securities or portions thereof;
provided, however, that (x) in the case of the provision for
payment or redemption of less than all the Securities of any
series or Tranche, such Securities or portions thereof shall
have been selected by the Security Registrar as provided
herein and, in the case of a redemption, the notice
requisite to the validity of such redemption shall have been
given or irrevocable authority shall have been given by the
Company to the Trustee to give such notice, under
arrangements satisfactory to the Trustee and (y) such money
or the proceeds of such Eligible Obligations shall either
(i) have been on deposit with the Trustee for a period of at
least 90 days, or (ii) the Trustee shall have received an
Opinion of Counsel reasonably satisfactory in form to the
Trustee to the effect that payments to Holders with such
moneys as proceeds are not recoverable as a preference under
any applicable United States federal or state law relating
to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors;
(ii) if such deposit shall have been made prior
to the Maturity of such Securities, the Company shall have
delivered to the Trustee a Company Order stating that the
money and Eligible Obligations deposited with the Trustee in
accordance with this Section shall be held by the Trustee,
in trust, as provided in Section 703;
(iii) if Eligible Obligations shall have been
deposited with the Trustee, the Company shall have delivered
to the Trustee an opinion of an independent public
accountant of nationally recognized standing, selected by
the Company, to the effect that the requirements set forth
in clause (i) above have been satisfied;
(iv) the Company shall have delivered to the
Trustee an Opinion of Counsel in the form described in
Section 702(d);
(v) the Company shall have delivered to the
Trustee an Officers' Certificate stating that all conditions
precedent herein relating to either the Legal Defeasance
under
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Section 702(a) or the Covenant Defeasance under Section
702(b), as the case may be, have been complied with; and
(vi) the deposit shall not result in the
Company, the Trustee or the trust being deemed an
"investment company" under the Investment Company Act of
1940, as amended.
(d) (i) In the case of Legal Defeasance under Section
702(a), there shall also be delivered to the Trustee either (x) an
Opinion of Counsel in a form reasonably satisfactory to the
Trustee to the effect that, based upon (A) an accompanying ruling
of the Internal Revenue Service issued to the Company, or (B) a
change in law or regulation occurring after the date hereof, the
Holders will not realize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance but will realize
income, gain or loss on the Securities, including payments of
interest thereon, in the same amounts, in the same manner and at
the same times as would have been the case if such Legal
Defeasance had not occurred, or (y) an instrument, in form
reasonably satisfactory to the Trustee, wherein the Company,
notwithstanding the payment and discharge, pursuant to Section
702(a) and (e), of its indebtedness in respect of Securities of
any series, or any portion of the principal amount thereof, shall
assume the obligation (which shall be absolute and unconditional)
to irrevocably deposit with the Trustee such additional sums of
money, if any, or additional Eligible Obligations (meeting the
requirements of subsection (c)(i) hereof), if any, or any
combination thereof, at such time or times, as shall be necessary,
together with the money and/or Eligible Obligations theretofore so
deposited, to pay when due the principal of and premium, if any,
and interest due and to become due on such Securities or portions
thereof; provided, however, that such instrument may state that
the obligation of the Company to make additional deposits as
aforesaid shall be subject to the delivery to the Company by the
Trustee of a notice asserting the deficiency accompanied by an
opinion of an independent public accountant of nationally
recognized standing, selected by the Trustee, showing the
calculation thereof ; and
(ii) In the case of Covenant Defeasance under
Section 702(b), there shall also be delivered to the Trustee
an Opinion of Counsel in a form reasonably satisfactory to
the Trustee to the effect that the Holders will not realize
income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance but will realize income,
gain or loss on the Securities, including payments of
interest thereon, in the same amounts, in the same manner
and at the same times as would have been the case if such
Covenant Defeasance had not occurred.
(e) In the event that the Company effects a Legal
Defeasance, upon receipt by the Trustee of money or Eligible
Obligations, or both, in accordance with Section 702(c), together
with the documents required by such paragraph, the Trustee shall,
upon receipt of a Company Request, acknowledge in writing that the
Security or Securities or portions thereof with respect to which
such deposit was made are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the
Company in respect thereof is deemed to have been satisfied and
discharged.
(f) If payment of less than all of the Securities of any
series, or any Tranche thereof, is to be provided for in the
manner and with the effect provided in this Section, the Security
Registrar shall select such Securities, or portions of principal
amount thereof in the manner
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specified by Section 403 for selection for redemption of less than
all the Securities of a series or Tranche.
(g) In the event that Securities which shall be deemed to
have been paid as a result of a Legal Defeasance (or with respect
to which a Covenant Defeasance has been effected) do not mature
and are not to be redeemed within the 60-day period commencing
with the date of the deposit with the Trustee of moneys or
Eligible Obligations, the Company shall, as promptly as
practicable, give a notice, in the same manner as a notice of
redemption with respect to such Securities, to the Holders of such
Securities to the effect that such deposit has been made and the
effect thereof.
(h) The Company shall pay, and shall indemnify the Trustee
and each Holder of Securities which are deemed to have been paid
as provided in this Section against any tax, fee or other charge
imposed on or assessed against the Eligible Obligations deposited
with the Trustee or the principal or interest received by the
Trustee in respect of such Eligible Obligations.
(i) Anything herein to the contrary notwithstanding, if, at
any time after a Legal Defeasance or a Covenant Defeasance is
effected pursuant to this Section (without regard to the
provisions of this paragraph (i)), the Trustee shall be required
to return the money or Eligible Obligations, or combination
thereof, deposited with it to the Company or its representative
under any applicable federal or state bankruptcy, insolvency or
other similar law, the indebtedness of the Company in respect of
such Security shall thereupon be deemed retroactively not to have
been satisfied and discharged, as aforesaid, and to remain
Outstanding, or, as the case may be, the obligations under the
above-mentioned covenants in respect of such Security shall
thereupon be deemed retroactively not to have been released.
SECTION 703. APPLICATION OF TRUST MONEY.
Neither the Eligible Obligations nor the money deposited with the
Trustee pursuant to Section 702(c)(i), nor the principal or interest payments
on any such Eligible Obligations, shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal of and
premium, if any, and interest, if any, on the Securities or portions of
principal amount thereof in respect of which such deposit was made, all
subject, however, to the provisions of Section 603; provided, however, that, so
long as there shall not have occurred and be continuing an Event of Default,
any cash received from such principal or interest payments on such Eligible
Obligations deposited with the Trustee, if not then needed for such purpose,
shall, to the extent practicable, be invested in Eligible Obligations of the
type described in Section 702(c)(i)(2) maturing at such times and in such
amounts as shall be sufficient to pay when due the principal of and premium, if
any, and interest, if any, due and to become due on such Securities or portions
thereof on and prior to the Maturity thereof, and interest earned from such
reinvestment shall be paid over to the Company as received by the Trustee, free
and clear of any trust, lien or pledge under this Indenture except the lien
provided by Section 907; and provided, further, that, so long as there shall
not have occurred and be continuing an Event of Default, any moneys held by the
Trustee in accordance with this Section on the Maturity of all such Securities
in excess of the amount required to pay the principal of and premium, if any,
and interest, if any, then due on such Securities shall be paid over to the
Company free and clear of any trust, lien or pledge under this Indenture except
the lien provided by Section 907.
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ARTICLE EIGHT
EVENTS OF DEFAULT; REMEDIES
SECTION 801. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events:
(a) failure to pay interest, if any, on any Security of such
series within sixty (60) days after the same becomes due and
payable (whether or not payment is prohibited by the provisions of
Article Fifteen hereof); provided, however, that a valid extension
of the interest payment period by the Company as contemplated in
Section 312 of this Indenture shall not constitute a failure to
pay interest for this purpose; or
(b) failure to pay the principal of or premium, if any, on
any Security of such series within three (3) Business Days after
its Maturity (whether or not payment is prohibited by the
provisions of Article Fifteen hereof); or
(c) failure to perform or breach of any covenant or warranty
of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or breach of which
is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit
of one or more series of Securities other than such series) for a
period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the Company
and the Trustee by the Holders of at least 33% in principal amount
of the Outstanding Securities of such series, a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder,
unless the Trustee, or the Trustee and the Holders of a principal
amount of Securities of such series not less than the principal
amount of Securities the Holders of which gave such notice, as the
case may be, shall agree in writing to an extension of such period
prior to its expiration; provided, however, that the Trustee, or
the Trustee and the Holders of such principal amount of Securities
of such series, as the case may be, shall be deemed to have agreed
to an extension of such period if corrective action is initiated
by the Company within such period and is being diligently pursued;
or
(d) the entry by a court having jurisdiction in the premises
of (1) a decree or order for relief in respect of the Company in
an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law
or (2) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition by one or
more Persons other than the Company seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official for the Company or for any substantial
part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order for relief or any such
other decree or order shall have remained unstayed and in effect
for a period of 90 consecutive days; or
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(e) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company in a case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become
due, or the authorization of such action by the Board of
Directors; or
(f) any other Event of Default specified with respect to
Securities of such series.
SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default shall have occurred and be continuing with
respect to Securities of any series at the time Outstanding, then in every such
case the Trustee or the Holders of not less than 33% in principal amount of the
Outstanding Securities of such series may declare the principal amount (or, if
any of the Securities of such series are Discount Securities, such portion of
the principal amount of such Securities as may be specified in the terms
thereof as contemplated by Section 301) of all of the Securities of such series
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon receipt by the Company of notice
of such declaration such principal amount (or specified amount) shall become
immediately due and payable (provided that the payment of principal of such
securities shall remain subordinated to the extent provided in Article Fifteen
hereof); provided, however, that if an Event of Default shall have occurred and
be continuing with respect to more than one series of Securities, the Trustee
or the Holders of not less than 33% in aggregate principal amount of the
Outstanding Securities of all such series, considered as one class, may make
such declaration of acceleration, and not the Holders of the Securities of any
one of such series.
At any time after such a declaration of acceleration with respect
to Securities of any series shall have been made and before a judgment or
decree for payment of the money due shall have been obtained by the Trustee as
hereinafter in this Article provided, the Event or Events of Default giving
rise to such declaration of acceleration shall, without further act, be deemed
to have been waived, and such declaration and its consequences shall, without
further act, be deemed to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the Trustee
a sum sufficient to pay
(1) all overdue interest on all Securities of such
series;
(2) the principal of and premium, if any, on any
Securities of such series which have become due otherwise
than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in such
Securities;
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(3) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities;
(4) all amounts due to the Trustee under Section 907;
and
(b) any other Event or Events of Default with respect to
Securities of such series, other than the non-payment of the
principal of Securities of such series which shall have become due
solely by such declaration of acceleration, shall have been cured
or waived as provided in Section 813.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
If an Event of Default described in clause (a) or (b) of Section
801 shall have occurred and be continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of the Securities of the
series with respect to which such Event of Default shall have occurred, the
whole amount then due and payable on such Securities for principal and premium,
if any, and interest, if any, and, to the extent permitted by law, interest on
premium, if any, and on any overdue principal and interest, at the rate or
rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover any amounts due to the Trustee
under Section 907.
If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to Securities of any series
shall have occurred and be continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and unpaid
in respect of the Securities and to file such other papers
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or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for amounts due to the
Trustee under Section 907) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amounts due it under Section 907.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders in respect of which such judgment has
been recovered.
SECTION 806. APPLICATION OF MONEY COLLECTED.
Subject to the provisions of Article Fifteen, any money collected
by the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or premium, if any, or
interest, if any, upon presentation of the Securities in respect of which or
for the benefit of which such money shall have been collected and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
First: To the payment of all amounts due the Trustee
under Section 907;
Second: To the payment of the amounts then due and unpaid
upon the Securities for principal of and premium, if any, and
interest, if any, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on
such Securities for principal, premium, if any, and interest, if
any, respectively; and
Third: To the Company.
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SECTION 807. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder shall have previously given written notice
to the Trustee of a continuing Event of Default with respect to
the Securities of such series;
(b) the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of all series in
respect of which an Event of Default shall have occurred and be
continuing, considered as one class, shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day period by
the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all series in respect of which an Event
of Default shall have occurred and be continuing, considered as
one class;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and (subject to
Section 307 and 312) interest, if any, on such Security on the Stated Maturity
or Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, and Trustee and
such Holder shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
such Holder shall continue as though no such proceeding had been instituted.
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SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 811. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 812. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be continuing in
respect of a series of Securities, the Holders of a majority in principal
amount of the Outstanding Securities of such series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Securities of such series; provided, however, that
if an Event of Default shall have occurred and be continuing with respect to
more than one series of Securities, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of all such series, considered
as one class, shall have the right to make such direction, and not the Holders
of the Securities of any one of such series; and provided, further, that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture, and could not involve the Trustee in
personal liability in circumstances where indemnity would not, in
the Trustee's sole discretion, be adequate, and
(b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 813. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(a) in the payment of the principal of or premium, if any,
or interest, if any, on any Security of such series, or
(b) in respect of a covenant or provision hereof which under
Section 1202 cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.
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Upon any such waiver, such default shall cease to exist, and any
and all Events of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 814. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the Outstanding Securities of all series in
respect of which such suit may be brought, considered as one class, or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of or premium, if any, or interest, if any, on any Security on or
after the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date).
SECTION 815. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE NINE
THE TRUSTEE
SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default
with respect to Securities of any series,
(1) the Trustee undertakes to perform, with respect to
Securities of such series, such duties and only such duties
as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may, with respect to Securities of such series,
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished
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to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Securities
of any series shall have occurred and be continuing, the Trustee
shall exercise, with respect to Securities of such series, such of
the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own wilful misconduct,
except that
(1) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a
majority in principal amount of the Outstanding Securities
of any one or more series, as provided herein, relating to
the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture
with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 902. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder
with respect to the Securities of any series to the Holders of Securities of
such series in the manner and to the extent required to do so by the Trust
Indenture Act, unless such default shall have been cured or waived; provided,
however, that in the case of any default of the character specified in Section
801(c), no such notice to Holders shall be given until at least 75 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time, or both, would
become, an Event of Default.
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SECTION 903. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 901 and to the applicable
provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party
or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company
Order, or as otherwise expressly provided herein, and any
resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the
request or direction of any Holder pursuant to this Indenture,
unless such Holder shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it
shall (subject to applicable legal requirements) be entitled to
examine, during normal business hours, the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and
(h) except as otherwise provided in Section 801, the Trustee
shall not be charged with knowledge of any Event of Default with
respect to the Securities of any series for which it is acting as
Trustee unless either (1) a Responsible Officer of the Trustee
shall have actual knowledge of the Event of Default or (2) written
notice of such Event of Default shall have
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been given to the Trustee by the Company, any other obligor on such
Securities or by any Holder of such Securities.
SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 905. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying Agent,
any Security Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and, subject
to Sections 908 and 913, may otherwise deal with the Company with the same
rights it would have if it were not the Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 906. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds, except to the extent required by law. The Trustee
shall be under no liability for interest on investment of any money received by
it hereunder except as expressly provided herein or otherwise agreed with, and
for the sole benefit of, the Company.
SECTION 907. COMPENSATION AND REIMBURSEMENT.
The Company shall
(a) pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, reimburse
the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except to the extent
that any such expense, disbursement or advance may be attributable
to its negligence, wilful misconduct or bad faith; and
(c) indemnify the Trustee and hold it harmless from and
against, any loss, liability or expense reasonably incurred by it
arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the performance
of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties
hereunder, except
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to the extent any such loss, liability or expense may be
attributable to its negligence, wilful misconduct or bad faith.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such other than
property and funds held in trust under Section 703 (except as otherwise
provided in Section 703). "Trustee" for purposes of this Section shall include
any predecessor Trustee; provided, however, that the negligence, wilful
misconduct or bad faith of any Trustee hereunder shall not affect the rights of
any other Trustee hereunder.
SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall either eliminate such
conflicting interest or resign to the extent, in the manner and with the
effect, and subject to the conditions, provided in the Trust Indenture Act and
this Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act
and to the extent permitted thereby, the Trustee, in its capacity as trustee in
respect of the Securities of any series, shall not be deemed to have a
conflicting interest arising from its capacity as trustee in respect of the
Securities of any other series.
SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the
laws of the United States, any State or Territory thereof or the
District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by
Federal or State authority, or
(b) if and to the extent permitted by the Commission by
rule, regulation or order upon application, a corporation or other
Person organized and doing business under the laws of a foreign
government, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
$50,000,000 or the Dollar equivalent of the applicable foreign
currency and subject to supervision or examination by authority of
such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable
to United States institutional trustees,
and, in either case, qualified and eligible under this Article and the Trust
Indenture Act. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 911.
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(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof
to the Company. If the instrument of acceptance by a successor
Trustee required by Section 911 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to
the Securities of any series by Act of the Holders of a majority
in principal amount of the Outstanding Securities of such series
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 908
after written request therefor by the Company or by any
Holder who has been a bona fide Holder for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 909 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or (y) subject to Section 814, any
Holder who has been a bona fide Holder for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause (other than as contemplated in clause (y) in
subsection (d) of this Section), with respect to the Securities of
one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to
the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the
applicable requirements of Section 911. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a
majority in principal amount of the outstanding Securities of such
series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 911, become the successor Trustee with
respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 911, any
Holder who has been a bona fide Holder of a Security
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of such series for at least six months may, on behalf of itself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) So long as no event which is, or after notice or lapse
of time, or both, would become, an Event of Default shall have
occurred and be continuing, and except with respect to a Trustee
appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities pursuant to subsection (e) of this
Section, if the Company shall have delivered to the Trustee (i) a
Board Resolution appointing a successor Trustee, effective as of a
date specified therein, and (ii) an instrument of acceptance of
such appointment, effective as of such date, by such successor
Trustee in accordance with Section 911, the Trustee shall be
deemed to have resigned as contemplated in subsection (b)of this
Section, the successor Trustee shall be deemed to have been
appointed by the Company pursuant to subsection (e) of this
Section and such appointment shall be deemed to have been accepted
as contemplated in Section 911, all as of such date, and all other
provisions of this Section and Section 911 shall be applicable to
such resignation, appointment and acceptance except to the extent
inconsistent with this subsection (f).
(g) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect to
the Securities of any series by mailing written notice of such
event by first-class mail, postage prepaid, to all Holders of
Securities of such series as their names and addresses appear in
the Security Register. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series
and the address of its corporate trust office.
SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of all series, every such
successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of
all sums owed to it, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more series shall
execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities,
shall contain such provisions as shall be deemed
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necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee
and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it
being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such
retiring Trustee, upon payment of all sums owed to it, shall duly
assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any instruments which fully vest in and confirm to
such successor Trustee all such rights, powers and trusts referred
to in subsection (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If the Trustee shall be or become a creditor of the Company or any
other obligor upon the Securities (other than by reason of a relationship
described in Section 311(b) of the Trust Indenture Act), the Trustee shall be
subject to any and all applicable provisions of the Trust Indenture Act
regarding the collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within
seven days after delivery of the goods or securities in
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currency or in checks or other orders drawn upon banks or bankers
and payable upon demand;
(b) the term "self-liquidating paper" means any draft, bill
of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing
the purchase, processing, manufacturing, shipment, storage or sale
of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods,
wares or merchandise or the receivables or proceeds arising from
the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by
the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of any applicable jurisdiction, the Company and the Trustee shall
have power to appoint, and, upon the written request of the Trustee or of the
Holders of at least thirty-three per centum (33%) in principal amount of the
Securities then outstanding, the Company shall for such purpose join with the
Trustee in the execution and delivery of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Trustee
either to act as co-trustee, jointly with the Trustee, or to act as separate
trustee, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons, in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Company does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or if an Event of Default shall have occurred and be continuing, the
Trustee alone shall have power to make such appointment.
Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following conditions:
(a) the Securities shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in respect of
the custody of securities, cash and other personal property held
by, or required to be deposited or pledged with, the Trustee
hereunder, shall be exercised solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed either by the Trustee or by the Trustee and
such co-trustee or separate trustee jointly, as shall be provided
in the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Trustee shall be
incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
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(c) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company, may accept
the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, if an Event of Default shall
have occurred and be continuing, the Trustee shall have power to
accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Company. Upon the
written request of the Trustee, the Company shall join with the
Trustee in the execution and delivery of all instruments and
agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in
this Section;
(d) no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee,
or any other such trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities of one or more series, or any Tranche thereof, which
shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series or Tranche issued upon original issuance, exchange, registration
of transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, any State or territory thereof or the
District of Columbia or the Commonwealth of Puerto Rico, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon
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receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, in accordance
with, and subject to the provisions of Section 907.
The provisions of Sections 308, 904 and 905 shall be applicable to
each Authenticating Agent.
If an appointment with respect to the Securities of one or more
series, or any Tranche thereof, shall be made pursuant to this Section, the
Securities of such series or Tranche may have endorsed thereon, in addition to
the Trustee's certificate of authentication, an alternate certificate of
authentication substantially in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
BOATMEN'S TRUST COMPANY
As Trustee
By______________________
Authorized Signatory
If all of the Securities of a series may not be originally issued
at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested by the Company in writing
(which writing need not comply with Section 102 and need not be accompanied by
an Opinion of Counsel), shall appoint, in accordance with this Section and in
accordance with such procedures as shall be acceptable to the Trustee, an
Authenticating Agent having an office in a Place of Payment designated by the
Company with respect to such series of Securities.
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ARTICLE TEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1001. LISTS OF HOLDERS.
Semiannually, not later than July 1 and January 1 in each year,
commencing July 1, 1997, and at such other times as the Trustee may request in
writing, the Company shall furnish or cause to be furnished to the Trustee
information as to the names and addresses of the Holders, and the Trustee shall
preserve such information and similar information received by it in any other
capacity and afford to the Holders access to information so preserved by it, all
to such extent, if any, and in such manner as shall be required by the Trust
Indenture Act; provided, however, that no such list need be furnished so long as
the Trustee shall be the Security Registrar.
SECTION 1002. REPORTS BY TRUSTEE AND COMPANY.
Not later than July 1 in each year, commencing July 1, 1997, the
Trustee shall transmit to the Holders and the Commission a report, dated as of
the next preceding May 1, with respect to any events and other matters
described in Section 313(a) of the Trust Indenture Act, in such manner and to
the extent required by the Trust Indenture Act. The Trustee shall transmit to
the Holders and the Commission, and the Company shall file with the Trustee
(within thirty (30) days after filing with the Commission in the case of
reports which pursuant to the Trust Indenture Act must be filed with the
Commission and furnished to the Trustee) and transmit to the Holders, such
other information, reports and other documents, if any, at such times and in
such manner, as shall be required by the Trust Indenture Act.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
SECTION 1101. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
corporation, or convey or otherwise transfer or lease its properties and assets
substantially as an entirety to any Person, unless
(a) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer, or which leases, the property and assets
of the Company substantially as an entirety shall be a Person
organized and existing under the laws of the United States, any
State thereof or the District of Columbia, and shall expressly
assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and premium, if any,
and interest, if any, on all Outstanding Securities and the
performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(b) immediately after giving effect to such transaction and
treating any indebtedness for borrowed money which becomes an
obligation of the Company as a result of such transaction as
having been incurred by the Company at the time of such
transaction, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, or other transfer or lease
and such supplemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such
transactions have been complied with.
SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, or other transfer or
lease of the properties and assets of the Company substantially as an entirety
in accordance with Section 1101, the successor corporation formed by such
consolidation or into which the Company is merged or the Person to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities Outstanding hereunder.
ARTICLE TWELVE
SUPPLEMENTAL INDENTURES
SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities, all as provided in
Article Eleven; or
(b) to add one or more covenants of the Company or other
provisions for the benefit of all Holders or for the benefit of
the Holders of, or to remain in effect only so long as there shall
be Outstanding, Securities of one or more specified series, or one
or more specified Tranches thereof, or to surrender any right or
power herein conferred upon the Company; or
(c) to add any additional Events of Default with respect to
all or any series of Securities Outstanding hereunder; or
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(d) to change or eliminate any provision of this Indenture
or to add any new provision to this Indenture; provided, however,
that if such change, elimination or addition shall adversely
affect the interests of the Holders of Securities of any series or
Tranche Outstanding on the date of such indenture supplemental
hereto in any material respect, such change, elimination or
addition shall become effective with respect to such series or
Tranche only pursuant to the provisions of Section 1202 hereof or
when no Security of such series or Tranche remains Outstanding; or
(e) to provide collateral security for the Securities; or
(f) to establish the form or terms of Securities of any
series or Tranche as contemplated by Sections 201 and 301; or
(g) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest,
if any, thereon and for the procedures for the registration,
exchange and replacement thereof and for the giving of notice to,
and the solicitation of the vote or consent of, the holders
thereof, and for any and all other matters incidental thereto; or
(h) to evidence and provide for the acceptance of
appointment hereunder by a separate or successor Trustee with
respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 911(b); or
(i) to provide for the procedures required to permit the
Company to utilize, at its option, a non-certificated system of
registration for all, or any series or Tranche of, the Securities;
or to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest,
if any, thereon and for the procedures for the registration,
exchange and replacement thereof and for the giving of notice to,
and the solicitation of the vote or consent of, the holders
thereof, and for any and all other matters incidental thereto; or
(j) to change any place or places where (1) the principal of
and premium, if any, and interest, if any, on all or any series of
Securities, or any Tranche thereof, shall be payable, (2) all or
any series of Securities, or any Tranche thereof, may be
surrendered for registration of transfer, (3) all or any series of
Securities, or any Tranche thereof, may be surrendered for
exchange and (4) notices and demands to or upon the Company in
respect of all or any series of Securities, or any Tranche
thereof, and this Indenture may be served; provided, however, that
any such place is located in New York, New York, or St. Louis,
Missouri; or
(k) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any
other provision herein, or to make any other changes to the
provisions hereof or to add other provisions with respect to
matters or questions arising under this Indenture, provided that
such other changes or additions shall not adversely affect the
interests of the Holders of Securities of any series or Tranche in
any material respect.
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Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Indenture or at any time thereafter shall be amended and
(x) if any such amendment shall require one or more
changes to any provisions hereof or the inclusion herein of
any additional provisions, or shall by operation of law be
deemed to effect such changes or incorporate such provisions
by reference or otherwise, this Indenture shall be deemed to
have been amended so as to conform to such amendment to the
Trust Indenture Act, and the Company and the Trustee may,
without the consent of any Holders, enter into an indenture
supplemental hereto to effect or evidence such changes or
additional provisions; or
(y) if any such amendment shall permit one or more
changes to, or the elimination of, any provisions hereof
which, at the date of the execution and delivery hereof or
at any time thereafter, are required by the Trust Indenture
Act to be contained herein, this Indenture shall be deemed
to have been amended to effect such changes or elimination,
and the Company and the Trustee may, without the consent of
any Holders, enter into an indenture supplemental hereto to
evidence such amendment hereof.
SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series then Outstanding
under this Indenture, considered as one class, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture; provided,
however, that if there shall be Securities of more than one series Outstanding
hereunder and if a proposed supplemental indenture shall directly affect the
rights of the Holders of Securities of one or more, but less than all, of such
series, then the consent only of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of all series so directly
affected, considered as one class, shall be required; and provided, further,
that if the Securities of any series shall have been issued in more than one
Tranche and if the proposed supplemental indenture shall directly affect the
rights of the Holders of Securities of one or more, but less than all, of such
Tranches, then the consent only of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of all Tranches so directly
affected, considered as one class, shall be required; and provided, further,
that no such supplemental indenture shall:
(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on (except as provided in
Section 312 hereof), any Security, or reduce the principal amount
thereof or the rate of interest thereon (or the amount of any
installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable upon the
redemption thereof, or reduce the amount of the principal of a
Discount Security that would be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 802,
or change the coin or currency (or other property), in which any
Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity of any Security (or, in
the case of redemption, on or after the Redemption Date), without,
in any such case, the consent of the Holder of such Security, or
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(b) reduce the percentage in principal amount of the
Outstanding Securities of any series or any Tranche thereof, the
consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with any provision of this
Indenture or of any default hereunder and its consequences, or
reduce the requirements of Section 1304 for quorum or voting,
without, in any such case, the consent of the Holders of each
Outstanding Security of such series or Tranche, or
(c) modify any of the provisions of this Section, Section
607 or Section 813 with respect to the Securities of any series,
or any Tranche thereof, or except to increase the percentages in
principal amount referred to in this Section or such other
Sections or to provide that other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of
each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 911(b)
and 1201(h).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or of one or more
Tranches thereof, or which modifies the rights of the Holders of Securities of
such series or Tranches with respect to such covenant or other provision, shall
be deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series or Tranche.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. A
waiver by a Holder of such Holder's right to consent under this Section shall
be deemed to be a consent of such Holder.
SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 901) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby. Any supplemental indenture
permitted by this Article may restate this Indenture in its entirety, and, upon
the execution and delivery thereof, any such restatement shall supersede this
Indenture as theretofore in effect for all purposes.
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SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series, or any Tranche thereof, authenticated
and delivered after the execution of any supplemental indenture pursuant to
this Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series or Tranche.
SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.
If the terms of any particular series of Securities shall have
been established in a Board Resolution or an Officer's Certificate pursuant to
a Board Resolution as contemplated by Section 301, and not in an indenture
supplemental hereto, additions to, changes in or the elimination of any of such
terms may be effected by means of a supplemental Board Resolution or Officer's
Certificate, as the case may be, delivered to, and accepted by, the Trustee;
provided, however, that such supplemental Board Resolution or Officer's
Certificate shall not be accepted by the Trustee or otherwise be effective
unless all conditions set forth in this Indenture which would be required to be
satisfied if such additions, changes or elimination were contained in a
supplemental indenture shall have been appropriately satisfied. Upon the
acceptance thereof by the Trustee, any such supplemental Board Resolution or
Officer's Certificate shall be deemed to be a "supplemental indenture" for
purposes of Section 1204 and 1206.
ARTICLE THIRTEEN
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of one or more, or all, series,
or any Tranche or Tranches thereof, may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series or Tranches.
SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of one or more, or all, series, or any Tranche or
Tranches thereof, for any purpose specified in Section 1301, to be
held at such time and at such place in St. Louis, Missouri, as the
Trustee shall determine, or, with the approval of the Company, at
any other place. Notice of every such meeting, setting forth the
time and the place of such meeting and in general terms the action
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proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180
days prior to the date fixed for the meeting.
(b) If the Trustee shall have been requested to call a
meeting of the Holders of Securities of one or more, or all,
series, or any Tranche or Tranches thereof, by the Company or by
the Holders of 33% in aggregate principal amount of all of such
series and Tranches, considered as one class, for any purpose
specified in Section 1301, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have given the notice of such meeting
within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of such
series and Tranches in the amount above specified, as the case may
be, may determine the time and the place in St. Louis, Missouri,
or in such other place as shall be determined or approved by the
Company, for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (a) of
this Section.
(c) Any meeting of Holders of Securities of one or more, or
all, series, or any Tranche or Tranches thereof, shall be valid
without notice if the Holders of all Outstanding Securities of
such series or Tranches are present in person or by proxy and if
representatives of the Company and the Trustee are present, or if
notice is waived in writing before or after the meeting by the
Holders of all Outstanding Securities of such series, or by such
of them as are not present at the meeting in person or by proxy,
and by the Company and the Trustee.
SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of
one or more, or all, series, or any Tranche or Tranches thereof, a Person shall
be (a) a Holder of one or more Outstanding Securities of such series or
Tranches, or (b) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Outstanding Securities of such series or
Tranches by such Holder or Holders. The only Persons who shall be entitled to
attend any meeting of Holders of Securities of any series or Tranche shall be
the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 1304. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Securities of the series and Tranches with respect to
which a meeting shall have been called as hereinbefore provided, considered as
one class, shall constitute a quorum for a meeting of Holders of Securities of
such series and Tranches; provided, however, that if any action is to be taken
at such meeting which this Indenture expressly provides may be taken by the
Holders of a specified percentage, which is less than a majority, in principal
amount of the Outstanding Securities of such series and Tranches, considered as
one class, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series and Tranches, considered as
one class, shall constitute a quorum. In the absence of a quorum within one
hour of the time appointed for any such meeting, the meeting shall, if convened
at the request of Holders of Securities of such series and Tranches, be
dissolved. In any other case the meeting may be adjourned for such period as
may be determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for such period as may be determined
by the chairman of the meeting prior to the adjournment of such adjourned
meeting. Except
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as provided by Section 1305(e), notice of the reconvening of any meeting
adjourned for more than 30 days shall be given as provided in Section 1302(a)
not less than ten days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series and Tranches which shall constitute a
quorum.
Except as limited by Section 1202, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of the
series and Tranches with respect to which such meeting shall have been called,
considered as one class; provided, however, that, except as so limited, any
resolution with respect to any action which this Indenture expressly provides
may be taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of such series and
Tranches, considered as one class, may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal
amount of the Outstanding Securities of such series and Tranches, considered as
one class.
Any resolution passed or decision taken at any meeting of Holders
of Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities of the series and Tranches with respect to which such
meeting shall have been held, whether or not present or represented at the
meeting.
SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS;
CONDUCT AND ADJOURNMENT OF MEETINGS.
(a) Attendance at meetings of Holders of Securities may be
in person or by proxy; and, to the extent permitted by law, any
such proxy shall remain in effect and be binding upon any future
Holder of the Securities with respect to which it was given unless
and until specifically revoked by the Holder or future Holder of
such Securities before being voted.
(b) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities in regard to
proof of the holding of such Securities and of the appointment of
proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the
manner specified in Section 104 and the appointment of any proxy
shall be proved in the manner specified in Section 104. Such
regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof.
(c) The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall have
been called by the Company or by Holders as provided in Section
1302(b), in which case the Company or the Holders of Securities of
the series and Tranches calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in aggregate
principal amount
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of the Outstanding Securities of all series and Tranches
represented at the meeting, considered as one class.
(d) At any meeting each Holder or proxy shall be entitled to
one vote for each $1 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security or proxy.
(e) Any meeting duly called pursuant to Section 1302 at
which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of all series and Tranches
represented at the meeting, considered as one class; and the
meeting may be held as so adjourned without further notice.
SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders
shall be by written ballots on which shall be subscribed the signatures of the
Holders or of their representatives by proxy and the principal amounts and
serial numbers of the Outstanding Securities, of the series and Tranches with
respect to which the meeting shall have been called, held or represented by
them. The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports of all votes cast at the meeting. A record of the
proceedings of each meeting of Holders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 1302 and, if applicable, Section 1304. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
SECTION 1307. ACTION WITHOUT MEETING.
In lieu of a vote of Holders at a meeting as hereinbefore
contemplated in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by Holders
by written instruments as provided in Section 104.
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 1401. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Securities, or any part thereof,
or for any claim based thereon or otherwise in respect
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thereof, or of the indebtedness represented thereby, or upon any obligation,
covenant or agreement under this Indenture, against any incorporator,
stockholder, officer or director, as such, past, present or future of the
Company or of any predecessor or successor corporation (either directly or
through the Company or a predecessor or successor corporation), whether by
virtue of any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
agreed and understood that this Indenture and all the Securities are solely
corporate obligations, and that no personal liability whatsoever shall attach
to, or be incurred by, any incorporator, stockholder, officer or director,
past, present or future, of the Company or of any predecessor or successor
corporation, either directly or indirectly through the Company or any
predecessor or successor corporation, because of the indebtedness hereby
authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Indenture or in any of the Securities or to be
implied herefrom or therefrom, and that any such personal liability is hereby
expressly waived and released as a condition of, and as part of the
consideration for, the execution of this Indenture and the issuance of the
Securities.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of the Securities of each series, by its acceptance
thereof, likewise covenants and agrees, that the payment of the principal of
and premium, if any, and interest, if any, on each and all of the Securities is
hereby expressly subordinated, to the extent and in the manner set forth in
this Article, in right of payment to the prior payment in full of all Senior
Indebtedness.
Each Holder of the Securities of each series, by its acceptance
thereof, authorizes and directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article, and appoints the Trustee its attorney-in-fact for any and all
such purposes.
SECTION 1502. PAYMENT OVER OF PROCEEDS OF SECURITIES.
In the event (a) of any insolvency or bankruptcy proceedings or
any receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 1503, that a default shall have occurred with respect to
the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, and such default shall have continued
beyond the period of grace, if any, in respect thereof and shall not have been
cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Securities of any series shall have been declared
due and payable pursuant to Section 801 and such declaration shall not have
been rescinded and annulled as provided in Section 802, then:
(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or
provision shall be made for such payment in money or money's
worth, before the Holders of any of the Securities are entitled to
receive a payment
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on account of the principal of or interest on the indebtedness
evidenced by the Securities, including, without limitation, any
payments made pursuant to Articles Four and Five;
(2) any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or
securities, to which any Holder or the Trustee would be entitled
except for the provisions of this Article, shall be paid or
delivered by the Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of such Senior Indebtedness
or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each,
to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or
distribution is made to the Holders of the indebtedness evidenced
by the Securities or to the Trustee under this Indenture; and
(3) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities, in respect
of principal of or interest on the Securities or in connection
with any repurchase by the Company of the Securities, shall be
received by the Trustee or any Holder before all Senior
Indebtedness is paid in full, or provision is made for such
payment in money or money's worth, such payment or distribution in
respect of principal of or interest on the Securities or in
connection with any repurchase by the Company of the Securities
shall be paid over to the holders of such Senior Indebtedness or
their representative or representatives or to the trustee or
trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness may have been issued,
ratably as aforesaid, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness
shall have been paid in full, after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness.
Notwithstanding the foregoing, at any time after the 123rd day
following the date of deposit of cash or Eligible Obligations pursuant to
Section 701 (provided all conditions set out in such Section shall have been
satisfied), the funds so deposited and any interest thereon will not be subject
to any rights of holders of Senior Indebtedness including, without limitation,
those arising under this Article Fifteen; provided that no event described in
clauses (d) and (e) of Section 801 with respect to the Company has occurred
during such 123-day period.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan or reorganization or readjustment which are
subordinate in right of payment to all Senior Indebtedness which may at the
time be outstanding to the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article. The consolidation
of the Company with, or the merger of the Company into, another corporation or
the liquidation or dissolution of the Company following the conveyance or
transfer of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article
Eleven hereof shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 1502 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eleven hereof. Nothing in
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Section 1501 or in this Section 1502 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 907.
SECTION 1503. DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.
Any failure by the Company to make any payment on or perform any
other obligation in respect of Senior Indebtedness, other than any indebtedness
incurred by the Company or assumed or guaranteed, directly or indirectly, by
the Company for money borrowed (or any deferral, renewal, extension or
refunding thereof) or any other obligation as to which the provisions of this
Section shall have been waived by the Company in the instrument or instruments
by which the Company incurred, assumed, guaranteed or otherwise created such
indebtedness or obligation, shall not be deemed a default under clause (b) of
Section 1502 if (i) the Company shall be disputing its obligation to make such
payment or perform such obligation and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Company which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) in the event that a
judgment that is subject to further review or appeal has been issued, the
Company shall in good faith be prosecuting an appeal or other proceeding for
review and a stay or execution shall have been obtained pending such appeal or
review.
SECTION 1504. SUBROGATION.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash (or securities or other
property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, the Holders of the Securities shall be subrogated to the rights
of the holders of Senior Indebtedness to receive any further payments or
distributions of cash, property or securities of the Company applicable to the
holders of the Senior Indebtedness until all amounts owing on the Securities
shall be paid in full; and such payments or distributions of cash, property or
securities received by the Holders of the Securities, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of
such Senior Indebtedness shall, as between the Company, its creditors other
than the holders of Senior Indebtedness, and the Holders, be deemed to be a
payment by the Company to or on account of Senior Indebtedness, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of the Senior Indebtedness, on the other hand.
SECTION 1505. OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
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<PAGE> 74
Upon any payment or distribution of assets or securities of the
Company referred to in this Article, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such dissolution, winding up, liquidation or reorganization
proceedings are pending for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto or to this Article.
SECTION 1506. PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY.
Upon the maturity of the principal of any Senior Indebtedness by
lapse of time, acceleration or otherwise, all matured principal of Senior
Indebtedness and interest and premium, if any, thereon shall first be paid in
full before any payment of principal or premium or interest, if any, is made
upon the Securities or before any Securities can be acquired by the Company or
any sinking fund payment is made with respect to the Securities (except that
required sinking fund payments may be reduced by Securities acquired before
such maturity of such Senior Indebtedness).
SECTION 1507. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all rights set forth in this
Article with respect to any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness. Nothing in this
Article shall deprive the Trustee of any of its rights as such holder.
SECTION 1508. NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION.
Notwithstanding the provisions of this Article or any other
provision of the Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee unless and until the Trustee shall have received
written notice thereof from the Company, from a Holder or from a holder of any
Senior Indebtedness or from any representative or representatives of such
holder and, prior to the receipt of any such written notice, the Trustee shall
be entitled, subject to Section 901, in all respects to assume that no such
facts exist; provided, however, that, if prior to the fifth Business Day
preceding the date upon which by the terms hereof any such moneys may become
payable for any purpose, or in the event of the execution of an instrument
pursuant to Section 702 acknowledging satisfaction and discharge of this
Indenture, then if prior to the second Business Day preceding the date of such
execution, the Trustee shall not have received with respect to such moneys the
notice provided for in this Section, then, anything herein contained to the
contrary notwithstanding, the Trustee may, in its discretion, receive such
moneys and/or apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary, which may be received by
it on or after such date; provided, however, that no such application shall
affect the obligations under this Article of the persons receiving such moneys
from the Trustee.
SECTION 1509. MODIFICATION, EXTENSION, ETC., OF SENIOR INDEBTEDNESS.
The holders of Senior Indebtedness may, without affecting in any
manner the subordination of the payment of the principal of and premium, if
any, and interest, if any, on the Securities, at any time or from time to time
and in their absolute discretion, agree with the Company to change the manner,
place or terms of payment, change or extend the time of payment of, or renew or
alter, any Senior Indebtedness, or amend or supplement any instrument pursuant
to which any Senior Indebtedness is
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issued, or exercise or refrain from exercising any other of their rights under
the Senior Indebtedness including, without limitation, the waiver of default
thereunder, all without notice to or assent from the Holders or the Trustee.
SECTION 1510. TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR
INDEBTEDNESS.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and objectives
as are specifically set forth in this Indenture, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if it shall mistakenly pay over or deliver to the
Holders or the Company or any other Person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
SECTION 1511. PAYING AGENTS OTHER THAN THE TRUSTEE.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article in addition to or in place of the Trustee;
provided, however, that Sections 1507, 1508 and 1510 shall not apply to the
Company if it acts as Paying Agent.
SECTION 1512. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
SECTION 1513. EFFECT OF SUBORDINATION PROVISIONS; TERMINATION.
Notwithstanding anything contained herein to the contrary, other
than as provided in the immediately succeeding sentence, all the provisions of
this Indenture shall be subject to the provisions of this Article, so far as
the same may be applicable thereto.
Notwithstanding anything contained herein to the contrary, the
provisions of this Article Fifteen shall be of no further effect, and the
Securities shall no longer be subordinated in right of payment to the prior
payment of Senior Indebtedness, if the Company shall have delivered to the
Trustee a notice to such effect. Any such notice delivered by the Company
shall not be deemed to be a supplemental indenture for purposes of Article
Twelve hereof.
___________________________
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
UNION ELECTRIC COMPANY
By: /s/ DONALD E. BRANDT
-----------------------------
[SEAL]
ATTEST:
/s/ JAMES C. THOMPSON
- ------------------------------
BOATMEN'S TRUST COMPANY, Trustee
By: /s/ J. RECTOR
-----------------------------------
[SEAL]
ATTEST:
/s/ P. C. QUIBELLE
- -------------------------------
<PAGE> 77
STATE OF MISSOURI )
) ss.:
CITY OF ST. LOUIS )
On the 10th day of December , 1996, before me personally came
Donald E. Brandt , to me known, who, being by me duly sworn, did depose and say
that he is the Sr. Vice President-Finance and Corporate Services of Union
Electric Company, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.
/s/ BARBARA LUNGWITZ
Notary Public
[Notarial Seal]
BARBARA LUNGWITZ
NOTARY PUBLIC - NOTARY SEAL
STATE OF MISSOURI
CITY OF ST. LOUIS
MY COMMISSION EXPIRES: SEPTEMBER 2, 1999
STATE OF MISSOURI )
) ss.:
CITY OF ST. LOUIS )
On the 10th day of December , 1996, before me personally came
Jerry L. Rector , to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of Boatmen's Trust Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ JOY MARIE LINCOLN
---------------------------
Notary Public
[Notarial Seal]
JOY MARIE LINCOLN
NOTARY PUBLIC - STATE OF MISSOURI
ST. LOUIS COUNTY
MY COMMISSION EXPIRES OCT. 16, 1998
<PAGE> 1
EXHIBIT 4.37
RESOLVED, that the transaction negotiated with Lehman
Brothers Inc. for the purchase from Union Electric Company (the
"Company") of $65,500,000 aggregate principal amount of the
Company's SKIS (as defined herein), to be issued pursuant to an
Indenture (For Unsecured Subordinated Debt Securities) dated as
of December 1, 1996 (the "Subordinated Indenture") from the
Company to Boatmen's Trust Company, as trustee (the "Subordinated
Indenture Trustee"), which transaction provides for an interest
rate to be borne by the securities of 7.69%, is hereby approved
and accepted and the execution and delivery of the Subordinated
Indenture be and hereby is approved, ratified and confirmed; that
the execution and delivery of the Underwriting Agreement dated
December 10, 1996 by the officers of the Company, providing for a
consideration of $64,845,000 to be paid to the Company for the
SKIS, be and hereby is approved, ratified and confirmed; and such
officers be and hereby are authorized to take all such further
actions as they may deem necessary or desirable in order to carry
into effect the terms and provisions of such Subordinated
Indenture and Underwriting Agreement.
RESOLVED, that:
(i) the securities to be issued under the Subordinated
Indenture shall be designated "7.69% Subordinated Capital
Income Securities (Series A Subordinated Deferrable
Interest Debentures)" (the "SKIS"); all capitalized terms
used in these resolutions and not defined herein shall
have the meaning set forth in the Subordinated Indenture;
(ii) the SKIS shall be limited in aggregate principal
amount to $65,500,000 at any time Outstanding;
(iii) the SKIS shall mature and the principal thereof
shall be due and payable on December 15, 2036, together
with all accrued and unpaid interest thereon to, but not
including, such date;
(iv) the SKIS shall bear interest from the date of
original issuance (which is anticipated to be December 16,
1996) at the rate of 7.69% per annum payable semi-annually
in arrears on June 15 and December 15 of each year (each,
an "Interest Payment Date") commencing June 15, 1997. The
amount of interest payable for any such period will be
computed on the basis of a 360-day year of twelve 30-day
months. Interest on the SKIS will accrue from the date of
original issuance but if interest has been paid on such
SKIS, then from the most recent Interest Payment Date
through which interest has been paid. In the event that
any Interest Payment Date is not a Business Day, then
payment of interest payable on such date will be made on
the next succeeding date which is a Business Day (and
without any interest or other payment in respect of such
delay), with the same force and effect as if made on such
Interest Payment Date;
(v) each installment of interest on the SKIS shall be
payable to the Person in whose name such SKIS are
registered at the close of business on the Business Day
next preceding the corresponding Interest Payment Date
(the "Regular Record Date") for the SKIS. Any installment
of interest on the SKIS not punctually paid or duly
provided for shall forthwith cease to be payable to the
Holders on such Regular Record Date, and may be paid to
the
<PAGE> 2
-2-
person in whose name the SKIS is registered at the close of
business on a Special Record Date to be fixed by the
Subordinated Indenture Trustee for the payment of such
defaulted interest, notice whereof shall be given to the
Holders of the SKIS not less than 10 days prior to such
Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements
of any securities exchange on which the SKIS may be listed,
and upon such notice as may be required by such exchange,
all as more fully provided in the Subordinated Indenture;
(vi) the principal and each installment of interest on the
SKIS shall be payable at the office or agency of the
Company in St. Louis, Missouri. For so long as the SKIS
are registered in the name of The Depository Trust Company
("DTC") or its nominee, the principal and the interest due
on the SKIS will be payable by the Company or its agent to
DTC for payment to its participants for subsequent
disbursement to beneficial owners. The Company will
initially be the Paying Agent and the Registrar for the
SKIS;
(vii) the SKIS will not be redeemable prior to December
15, 2006; thereafter, the SKIS will be redeemable at the
option of the Company, in whole or in part, at any time on
or after December 15, 2006 at the following redemption
prices (in each case expressed in percentages of principal
amount):
If Redeemed During 12 Month Period Redemption
Beginning December 15 Price
2006 . . . . . . . . . . . 103.845%
2007 . . . . . . . . . . . 103.461%
2008 . . . . . . . . . . . 103.076%
2009 . . . . . . . . . . . 102.692%
2010 . . . . . . . . . . . 102.307%
2011 . . . . . . . . . . . 101.923%
2012 . . . . . . . . . . . 101.538%
2013 . . . . . . . . . . . 101.154%
2014 . . . . . . . . . . . 100.769%
2015 . . . . . . . . . . . 100.385%
2016 and thereafter . . . 100.000%
in each case, upon not less than 30 nor more than 60 days'
notice, together with accrued interest to, but not
including, the date fixed for redemption;
(viii) so long as any SKIS are Outstanding, the failure of
the Company to pay interest on any SKIS within 60 days
after the same becomes due and payable (whether or not
payment is prohibited by the provisions of Article Fifteen
of the Subordinated Indenture) shall constitute an Event
of Default; provided, however, that a valid extension of
the interest payment period by the Company as contemplated
in Section 312 of the Subordinated Indenture and paragraph
(ix) of these Board Resolutions shall not constitute a
failure to pay interest for this purpose;
<PAGE> 3
-3-
(ix) pursuant to Section 312 of the Subordinated
Indenture, the Company shall have the right, at any time
and from time to time during the term of the SKIS, to
extend the interest payment period to a period not
exceeding 10 consecutive semi- annual periods (an
"Extended Interest Payment Period"), and at the end of
such Extended Interest Payment Period, the Company shall
pay all interest accrued and unpaid (together with
interest thereon at the same rate as specified for the
SKIS to the extent permitted by applicable law) through
the last day of such Extended Interest Payment Period
provided that if any principal amount of the SKIS is paid
on such day, then not including interest for such day with
respect to such amount; provided, however, that during
such Extended Interest Payment Period, the Company shall
not declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any
of its capital stock or make any guarantee payments with
respect to the foregoing. Prior to the termination of any
such Extended Interest Payment Period, the Company may
further extend the interest payment period, provided that
such Extended Interest Payment Period together with all
such previous and further extensions thereof may not
exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the SKIS. Upon the termination of
any Extended Interest Payment Period and the payment of
all amounts then due, the Company may select a new
Extended Interest Payment Period, subject to the above
requirements. No interest during an Extended Interest
Payment Period, except at the end thereof, shall be due
and payable;
(x) the Company shall give the Holders of the SKIS and the
Subordinated Indenture Trustee written notice of its
selection of such Extended Interest Payment Period ten
(10) Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date and (ii) the date the
Company is required to give notice to Holders of the SKIS
(or, if applicable, to the New York Stock Exchange or
other applicable self-regulatory organization) of the
record or payment date of such interest payment, but in
any event not less than two Business Days prior to such
record date. The semi-annual period in which any notice is
given pursuant to this paragraph shall constitute one of
the 10 semi-annual periods which comprise the maximum
Extended Interest Payment Period;
(xi) the SKIS will be originally issued in global form
payable to Cede & Co., and will, unless and until the SKIS
are exchanged in whole or in part for certificated SKIS
registered in the names of the various beneficial holders
thereof, contain restrictions on transfer, substantially
as described in the form of SKIS; and
(xii) the SKIS shall have such other terms and provisions
as are provided in the form of subordinated debt security
attached hereto and made a part hereof, and shall be
issued in such form.
<PAGE> 4
[FORM OF SUBORDINATED DEBT SECURITY]
No. 1
Cusip No. _________________
(See legend at the end of this Security for restrictions on
transferability and change of form)
UNION ELECTRIC COMPANY
____% SUBORDINATED CAPITAL INCOME SECURITIES
(SERIES A SUBORDINATED DEFERRABLE INTEREST DEBENTURES)
UNION ELECTRIC COMPANY, a corporation duly organized and existing under
the laws of the State of Missouri (herein referred to as the "Company," which
term includes any successor Person under the Indenture), for value received,
hereby promises to pay CEDE & CO., or registered assigns, the principal sum of
SIXTY-FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS on December 15, 2036, to pay
interest on said principal sum from December 16, 1996 or from the most recent
Interest Payment Date through which interest has been paid or duly provided
for, semi-annually in arrears on June 15 and December 15 of each year,
commencing June 15, 1997 at the rate of ____% per annum to, but not including,
the date on which the principal hereof is paid or made available for payment.
The amount of interest payable on any Interest Payment Date shall be computed
on the basis of a 360-day year of twelve 30-day months. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
Business Day next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture referred
to herein.
Payment of the principal of and interest on this Security will be made at
the office or agency of the Company maintained for that purpose in St. Louis,
Missouri, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Security set
forth herein, which further provisions for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to herein by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
UNION ELECTRIC COMPANY
By:____________________
ATTEST:
_______________________________________
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
BOATMEN'S TRUST COMPANY, as Trustee
By:_________________________
Authorized Signatory
ILLINOIS COMMERCE COMMISSION
Identification No. 5968
<PAGE> 5
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or more
series under an Indenture, dated as of December 1, 1996, as amended (herein
called the "Indenture," which term shall have the meaning assigned to it in
such instrument), between the Company and Boatmen's Trust Company, as Trustee
(herein called the Trustee, which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture, including the Board
Resolutions filed with the Trustee on December 11, 1996 creating the series
designated on the face hereof, for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, limited in aggregate principal
amount to $65,500,000.
The Securities of this series are not subject to redemption prior to
December 15, 2006; thereafter, the Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, at any
time on or after December 15, 2006 as a whole or in part, at the election of
the Company, at the following Redemption Prices (in each case expressed in
percentages of principal amount):
If Redeemed During 12 Month Period Redemption
Beginning December 15 Price
2006 . . . . . . . . . . . . . %
2007 . . . . . . . . . . . . .
2008 . . . . . . . . . . . . .
2009 . . . . . . . . . . . . .
2010 . . . . . . . . . . . . .
2011 . . . . . . . . . . . . .
2012 . . . . . . . . . . . . .
2013 . . . . . . . . . . . . .
2014 . . . . . . . . . . . . .
2015 . . . . . . . . . . . . .
2016 and thereafter . . . . . . . 100%
together in the case of any such redemption with accrued interest to, but not
including, the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holder of such
Security, or one or more Predecessor Securities, of record at the close of
business on the related Regular Record Date referred to on the face hereof, all
as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinated and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such Holder upon said provisions.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security upon compliance with certain conditions set forth
in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
<PAGE> 6
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than a majority in aggregate
principal amount of the Securities of this series at the time Outstanding shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of Securities of this series at the time Outstanding
a direction inconsistent with such request, and shall have failed to institute
any such proceeding, for 60 days after receipt of such notice, request and
offer of indemnity. The foregoing shall not apply to any suit instituted by the
Holder of this Security for the enforcement of any payment of principal hereof
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
The Company shall have the right at any time and from time to time during
the term of the Securities of this series to extend the interest payment period
to a period not exceeding 10 consecutive semi-annual periods (an "Extended
Interest Payment Period"), and at the end of such Extended Interest Payment
Period, the Company shall pay all interest then accrued and unpaid (together
with interest thereon at the same rate as specified for the Securities of this
series to the extent permitted by applicable law) through the last day of such
Extended Interest Payment Period provided that if any principal amount of this
Security is paid on such day, then not including interest for such day with
respect to such principal amount; provided, however, that during such Extended
Interest Payment Period the Company shall not declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of its capital stock or make any guarantee payments with respect to the
foregoing. Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend the interest payment period, provided
that such Extended Interest Payment Period, together with all such previous and
further extensions thereof, may not exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity of the Securities of this series. Upon the
termination of any such Extended Interest Payment Period and the payment of all
amounts then due, the Company may select a new Extended Interest Payment
Period, subject to the above requirements. No interest during an Extended
Interest Payment Period, except at the end thereof, shall be due and payable.
The Company shall give the Holder of this Security notice of its selection of
such Extended Interest Payment Period as provided in the Indenture.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor and of authorized
denominations, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the absolute
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
LEGEND
Unless and until this Security is exchanged in whole or in part for
certificated Securities registered in the names of the various beneficial
holders hereof as then certified to the Trustee by The Depository Trust Company
or its successor (the "Depositary"), this Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized representative of
the Depositary to the Company or its agent for registration of transfer,
exchange or payment, and any certificates to be issued is registered in the
name of Cede & Co., or such other name as requested by an authorized
representative of the Depositary and any amount payable thereunder is made
payable to Cede & Co., or such other name, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.
This Security may be exchanged for certificated Securities registered in
the names of the various beneficial owners hereof if (a) the Depositary is at
any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, or (b) the Company
elects to issue certificated Securities to beneficial owners (as certified to
the Company by the Depositary).
<PAGE> 1
EXHIBIT 12(a)
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- ---------
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C>
Net Income for the Period . . . . . . . $302,748 $297,160 $320,757 $314,107 $304,876
Add:
Taxes Based on Income . . . . . . . . . 197,009 182,716 203,827 207,734 196,210
Fixed Charges:
Interest on Debt . . . . . . . . . . 125,798 124,430 135,608 129,239 128,375 (*)
Amortization of Premium
and Discount, Less
Expense, on Debt; and
Bond Defeasance Cost . . . . . . 9,521 5,170 5,504 5,502 4,269
Rentals (See Note) . . . . . . . . . 908 1,314 1,299 3,330 3,458
Total Fixed Charges . . . . . 136,227 130,914 142,411 138,071 136,102
Earnings Available for Fixed
Charges . . . . . . . . . . . . . . . $635,984 $610,790 $666,995 $659,912 $637,188
Ratio of Earnings to Fixed
Charges . . . . . . . . . . . . . . . 4.66 4.66 4.68 4.78 4.68
</TABLE>
(*) Total annual interest charges on all bonds for the twelve months ended
December 31, 1996 was $112,425,000. Note: Represents the interest factor
applicable to rentals.
<PAGE> 1
EXHIBIT 12(b)
PAGE 1 of 2
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1992 1993 1994 1995 1996
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C>
Net income for the period . . . . . . . $302,748 $297,160 $320,757 $314,107 $304,876
Add:
Taxes based on income . . . . . . 197,009 182,716 203,827 207,734 196,210
Fixed charges (see below) . . . . 136,227 130,914 142,411 138,071 136,102
-------- -------- -------- -------- --------
Earnings available for fixed
charges and preferred stock
dividend requirements of Company . . $635,984 $610,790 $666,995 $659,912 $637,188
======== ======== ======== ======== ========
Fixed charges:
Interest on debt . . . . . . . . $125,798 $124,430 $135,608 $129,239 $128,375
Amortization of premium and
discount, less expense, on
debt; and bond defeasance
cost . . . . . . . . . . . . . 9,521 5,170 5,504 5,502 4,269
Rentals (see note) . . . . . . . 908 1,314 1,299 3,330 3,458
-------- -------- -------- -------- --------
Total fixed charges . . . . . . $136,227 $130,914 $142,411 $138,071 $136,102
Preferred stock dividend requirements
of Company* (Adjusted for income
tax effect) . . . . . . . . . . . . 21,852 21,537 20,514 20,808 20,612
-------- -------- -------- -------- --------
Total fixed charges and preferred
stock dividend requirements . . . . $158,079 $152,451 $162,925 $158,879 $156,714
======== ======== ======== ======== ========
Ratio of earnings to fixed charges
and preferred stock dividends . . . 4.02 4.01 4.09 4.15 4.06
======== ======== ======== ======== ========
</TABLE>
Note: Represents the interest factor applicable to rentals.
* See following page for supporting computation.
<PAGE> 2
EXHIBIT 12(b)
PAGE 2 of 2
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C>
Computation of preferred stock
dividend requirements of Company,
adjusted for income tax effect*
Preferred stock dividend require-
ments of Company, as shown on
statement of earnings . . . . . $ 14,058 $ 14,087 $ 13,252 $ 13,250 $ 13,249
Less deductible preferred stock
dividends** . . . . . . . . . . . 2,085 1,973 1,816 1,816 1,816
-------- -------- -------- --------- --------
Non-deductible preferred stock
dividends . . . . . . . . . . . . $ 11,973 $ 12,114 $ 11,436 $ 11,434 $ 11,433
======== ======== ======== ========= ========
Excess of net income before income
taxes over net income (percentage)
See note below . . . . . . . 65.1% 61.5% 63.5% 66.1% 64.4%
-------- -------- -------- --------- --------
Income tax effect on non-deductible
preferred stock dividends* . . . $7,794 $ 7,450 $ 7,262 $ 7,558 $ 7,363
Add:
Deductible preferred stock
dividends (above) . . . . . . . 2,085 1,973 1,816 1,816 1,816
Non-deductible preferred stock
dividends (above) . . . . . . . 11,973 12,114 11,436 11,434 11,433
-------- -------- -------- --------- --------
Preferred stock dividend requirements
of Company, adjusted for income
tax effect . . . . . . . . . . . $ 21,852 $ 21,537 $ 20,514 $ 20,808 $ 20,612
======== ======== ======== ========= ========
Note: Calculated as follows -
Net income before income
taxes . . . . . . . . . . . . $499,757 $479,876 $524,584 $ 521,841 $501,086
Less net income . . . . . . . . 302,748 297,160 320,757 314,107 304,876
-------- -------- -------- --------- --------
Excess - Taxes based on
income . . . . . . . . . . . $197,009 $182,716 $203,827 $207,734 $196,210
======== ======== ======== ========= ========
- Percentage of net income .. 65.1% 61.5% 63.5% 66.1% 64.4%
======== ======== ======== ========= ========
</TABLE>
* Income tax adjustment to reflect pre-tax earnings required to meet
preferred stock dividend.
** Dividends deductible on federal income tax return.
<PAGE> 1
REPORT OF INDEPENDENT ACCOUNTANTS
[PRICE WATERHOUSE LLP LETTERHEAD]
February 4, 1997
To the Stockholders and Board of Directors of Union Electric Company
In our opinion, the accompanying balance sheet and the related statements
of income, long-term debt, preferred stock, retained earnings, and cash flows
appearing on pages 22-36 of this report present fairly, in all material
respects, the financial position of Union Electric Company at December 31, 1996
and 1995, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
16
<PAGE> 2
UE 1996 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Union Electric is an investor-owned regulated public utility that supplies
electric and gas services to 1.3 million customers in a 24,500 square-mile area
in Missouri (including metropolitan St. Louis) and Illinois.
MERGER
Union Electric and CIPSCO Incorporated (CIPSCO) entered into a Merger Agreement
(Agreement) dated August 11, 1995. The Agreement was approved by the
shareholders of both companies in December 1995. The merged entity is expected
to realize $644 million in net savings over 10 years from combining certain
operations of the two companies and is expected to adopt Union Electric's
dividend payment level. However, the merger is conditioned upon, among other
things, receipt of certain regulatory and governmental approvals. At this time,
the merger is expected to be consummated by the end of 1997. See Note 2 -
Merger Agreement under Notes to Financial Statements for further information.
RESULTS OF OPERATIONS
Common stock earnings for 1996, 1995 and 1994 were $292 million ($2.86 per
share), $301 million ($2.95 per share) and $308 million ($3.01 per share),
respectively. Earnings and earnings per share fluctuated due to many
conditions, primarily: weather variations, electric rate reductions, credits to
electric customers, sales growth, fluctuating operating costs, including
Callaway nuclear refueling outages, merger-related expenses, changes in
interest expense and changes in income and property taxes.
The impacts of the more significant items affecting revenues, costs and
earnings during the past several years are analyzed and discussed below:
OPERATING REVENUES
<TABLE>
<CAPTION>
ELECTRIC Variation from Prior Year
- -------------------------------------------------------------------
(Millions of Dollars) 1996 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C>
Rate variations $(19.6) $(13.7) $ --
Credit to customers (14.7) (32.6) --
Effect of abnormal
weather (63.2) 52.8 (33.9)
Growth and other 95.0 38.4 37.5
Interchange sales 9.2 (28.1) 13.7
- -------------------------------------------------------------------
$ 6.7 $ 16.8 $ 17.3
===================================================================
</TABLE>
The increase in 1996 electric revenues was due to a 3.5% increase in
kilowatthour sales over the year-ago period, partly offset by the 1.8% rate
decrease for Missouri electric customers and the net increase in customer
credits recorded during 1996 versus 1995. See Note 3 - Regulatory Matters under
Notes to Financial Statements for further information. The kilowatthour sales
increase reflected strong economic growth in Union Electric's service area and
increased interchange sales opportunities, partially offset by milder weather
during the period. Residential and commercial sales each rose 3% over 1995,
while industrial sales grew 2% and interchange sales increased 7%.
The increase in 1995 electric revenues was due to increased retail
kilowatthour sales compared to 1994, mainly due to unusually hot weather in the
third quarter and sales growth reflecting our healthy service area economy.
Weather-sensitive residential and commercial sales increased 6% and 3%,
respectively, over 1994, and industrial sales grew 3%. This increase was
partially offset by the one-time $30 million credit, the rate decrease and a 17%
decline in interchange sales due to decreased interchange sales opportunities.
See Note 3 - Regulatory Matters under Notes to Financial Statements for further
information.
The increase in 1994 electric revenues reflected growth in sales to
commercial and industrial customers of 4% and 2%, respectively, and increased
interchange sales of 9%, partially offset by reduced sales to residential
customers of 2%, primarily due to milder weather in the first and third quarters
of 1994, compared to 1993.
OPERATING EXPENSES
<TABLE>
<CAPTION>
FUEL AND PURCHASED POWER Variation from Prior Year
- ---------------------------------------------------------------------------
(Millions of Dollars) 1996 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Fuel:
Variation in generation $ 15.1 $1.2 $ 52.6
Price (17.9) (.8) (76.9)
Generation efficiencies
and other 2.5 1.8 (2.0)
Purchased power
variation 8.3 5.2 (43.5)
- ---------------------------------------------------------------------------
$ 8.0 $7.4 $(69.8)
===========================================================================
</TABLE>
The increase in 1996 fuel and purchased power costs was driven mainly by
higher kilowatthour sales, partially offset by lower fuel prices due to the use
of lower-cost coal. The
17
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
increase in 1995 fuel and purchased power costs reflected increased purchased
power costs due to greater kilowatthour sales during the hot 1995 summer and the
need for replacement power during Callaway's spring refueling outage. The
decrease in 1994 fuel and purchased power costs reflected lower fuel prices,
resulting from the increased use of low-sulfur coal at our fossil plants and
greater generation at our nuclear plant due to the absence of a refueling outage
in 1994. Higher generation, resulting in greater fuel costs, was offset in part
by reduced purchased power costs.
Other operating expense variations in 1994 through 1996 reflected
recurring factors such as growth, inflation, and wage and benefit increases. In
1996, operations expenses, other than fuel and purchased power costs, increased
$25 million primarily due to a 26% rise in natural gas purchased for resale
(due to higher sales and gas prices), and increased employee benefits, injuries
and damages, and consulting expenses. In 1995, operations expenses, other than
fuel and purchased power costs, decreased $17 million, mainly due to a 15%
reduction in natural gas purchased for resale (due primarily to lower gas
prices) and decreases in employee benefits, injuries and damages, and insurance
expenses. These decreases were partially offset by increased labor and material
and supplies expenses. In 1994, operations expenses, other than fuel and
purchased power costs, decreased $10 million, primarily due to a 10% reduction
in natural gas purchased for resale (due to lower sales and gas prices), and
decreases in labor and employee benefits expenses. These decreases were
partially offset by increased injuries and damages, consulting and
communications expenses.
In 1996, maintenance expenses increased $2 million primarily due to
increased labor expenses at Callaway and the fossil plants. In 1995,
maintenance expenses increased $24 million, mainly due to increased power plant
maintenance expenses partially offset by reduced distribution system
maintenance expenses. Callaway Plant's maintenance expenses increased $17
million primarily due to the spring 1995 nuclear refueling outage. Maintenance
expenses at other power plants increased $11 million primarily due to scheduled
maintenance outages. In 1994, maintenance expenses increased $8 million, mainly
caused by additional maintenance expenses at the fossil plants and greater
tree-trimming expenses, partly offset by lower Callaway Plant maintenance
expenses (no refueling outage in 1994) and reduced labor expenses.
Depreciation expense increased $8 million in 1996, $7 million in 1995, and
$6 million in 1994, due to increased depreciable property.
TAXES
Income tax expense from operations decreased $12 million in 1996 principally
due to lower pre-tax income and a lower effective income tax rate. Income tax
expense from operations increased $3 million in 1995 primarily due to a higher
effective income tax rate partially offset by lower pre-tax income. The $27
million increase in 1994 income tax expense resulted from higher pre-tax income
and a higher effective Missouri income tax rate.
In 1996, other taxes charged to operating expenses increased $1 million due
to increased real estate and payroll taxes. In 1995, other taxes charged to
operating expenses increased $2 million due to increased gross receipts taxes
from greater electric revenues and increased real estate taxes. In 1994, other
taxes charged to operating expenses rose $4 million due to increased real estate
taxes and greater corporate franchise taxes.
OTHER INCOME AND DEDUCTIONS
Miscellaneous, net increased $1 million for 1996, primarily due to reduced
merger-related expenses. Miscellaneous, net decreased $6 million for 1995,
primarily due to merger-related expenses. Merger-related expenses totaled $8
million and $9 million in 1996 and 1995, respectively. See Note 2 - Merger
Agreement, under Notes to Financial Statements for further information.
Miscellaneous, net decreased $4 million for 1994, primarily due to increased
charitable contributions.
INTEREST
Interest expense for 1996 decreased $2 million primarily due to lower debt
outstanding during the year and lower rates on variable-rate long-term debt. In
1995, interest expense declined $6 million as decreases in other interest
expense were partly offset by higher interest rates on variable-rate long-term
debt. In 1994, interest expense
18
<PAGE> 4
UE 1996 ANNUAL REPORT
increased $12 million generally due to a greater amount of total debt
outstanding and overall higher interest rates on variable-rate debt.
BALANCE SHEET
The $55 million increase in other current and accrued liabilities at December
31, 1996, compared to December 31, 1995, was primarily due to the timing of the
payments of the $47 million customer credit. See Note 3 - Regulatory Matters,
under Notes to Financial Statements for further information.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $605 million for 1996, compared
to $640 million and $544 million for 1995 and 1994, respectively.
Cash flows used in investing activities totaled $363 million, $341 million
and $333 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Expenditures in 1996 for constructing new or improving existing
facilities, purchasing rail cars and complying with the Clean Air Act were $325
million. In addition, the Company spent $51 million to acquire nuclear fuel.
The Company completed Callaway Plant construction in late 1984. The need
for additional base load electric generating capacity is not anticipated until
after the year 2013. Under the Clean Air Act Amendments of 1990, the Company is
required to reduce total annual sulfur dioxide emissions significantly by the
year 2000. Significant reductions in nitrogen oxide are also required. By
switching to low-sulfur coal and early banking of emission credits, the Company
anticipates that it can comply with the requirements of the law without
significant revenue increases because the related capital costs, estimated at
about $300 million, are largely offset by lower fuel costs. As of year-end
1996, about 84% of the Clean Air Act-related capital costs have been expended.
CAPITAL REQUIREMENTS
- ----------------------------------------------------------------------------
ACTUAL FORECAST
- ----------------------------------------------------------------------------
(Millions of Dollars) 1996 1997 1998 1999 2000 2001
- ----------------------------------------------------------------------------
Construction Expenditures $325 $250 $258 $266 $275 $284
============================================================================
In December 1996, the Environmental Protection Agency proposed new air
quality standards for ozone and particulate matter. The proposed standards, if
ultimately adopted, would result in increased clean air related capital costs
and operating expenses. However, the Company is unable to predict whether any
new air quality standards will be adopted, or what impact any new standards
would have on the Company's future financial condition, results of operations
or liquidity.
See Note 13 - Callaway Nuclear Plant under Notes to Financial Statements
for a discussion of Callaway Plant decommissioning costs.
Cash flows used in financing activities were $238 million for 1996,
compared to $299 million and $211 million for 1995 and 1994, respectively. The
Company's principal financing activities during 1996 included the redemption of
$35 million of First Mortgage Bonds and $8 million of short-term debt bank
loans, and the payment of dividends. In addition, on December 16, 1996, Union
Electric issued $65.5 million of Subordinated Deferrable Interest Debentures,
7.69% Series, due 2036. The Company used the proceeds to redeem certain series
of preferred stock in January 1997.
FIRST MORTGAGE BOND RATINGS
- ---------------------------------------------------
Duff & Phelps AA-
- ---------------------------------------------------
Moody's A1
- ---------------------------------------------------
Standard & Poor's AA-
- ---------------------------------------------------
The Company plans to continue utilizing short-term debt to support normal
operations and other temporary requirements. The Company is authorized by the
Federal Energy Regulatory Commission (FERC) to have up to $600 million of
short-term unsecured debt instruments outstanding at any one time. Short-term
borrowings consist of bank loans (maturities generally on an overnight basis)
and commercial paper (maturities generally within 10 to 45 days). At December
31, 1996, the Company had committed bank lines of credit aggregating $179
million (of which $168 million were unused at such date) which make available
interim financing at various rates of interest based on LIBOR, the bank
certificate of deposit rate, or other options. The lines of credit are
renewable annually at
19
<PAGE> 5
MANAGEMENTS'S DISCUSSION AND ANALYSIS
various dates throughout the year. The Company also has bank credit agreements
due 1999 which permit the borrowing of up to $300 million and $200 million on a
long-term basis. At December 31, 1996, no such borrowings were outstanding.
Additionally, the Company has a lease agreement which provides for the
financing of nuclear fuel. At December 31, 1996, the maximum amount which could
be financed under the agreement was $120 million. Cash provided from financing
for 1996 included issuances under the lease for nuclear fuel of $44 million
offset in part by $35 million of redemptions. At December 31, 1996 $106 million
was financed under the lease. See Note 6 - Nuclear Fuel Lease under Notes to
Financial Statements for further information.
CONTINGENCIES
See Note 12 - Contingencies under Notes to Financial Statements for material
issues existing at December 31, 1996.
DIVIDENDS
On October 11, 1996, the Board of Directors increased the quarterly common
stock dividend to 63.5 cents per share from 62.5 cents, raising the indicated
annualized common stock dividend to $2.54 per share. Common stock dividends
paid in 1996 resulted in a pay out rate of 88% of the Company's earnings to
common stockholders. Dividends paid to common stockholders in relation to net
cash provided by operating activities for the same period were 42%.
The Board of Directors does not set specific targets or payout parameters
for dividend payments. In its annual review of dividend payments, however, the
Board considers various issues including the Company's historic earnings and
cash flow; projected earnings, cash flow and potential cash flow requirements;
dividend increases at other utilities; return on investments with similar risk
characteristics; and overall business considerations.
RATE MATTERS
See Note 3 - Regulatory Matters under Notes to Financial Statements for further
information.
INDUSTRY RESTRUCTURING
Changes enacted and being considered at the federal and state levels continue
to change the structure of the industry and utility regulation, as well as
encourage increased competition. At the federal level, the Energy Policy Act of
1992 reduced various restrictions on the operation and ownership of independent
power producers and gave the FERC the authority to order electric utilities to
provide transmission access to third parties.
On April 24, 1996, the FERC issued Order 888 and Order 889 which are
intended to promote competition in the wholesale electric market. The FERC
requires transmission-owning public utilities, such as the Company, to provide
transmission access and service to others in a manner similar and comparable to
that which the utility has by virtue of ownership. Order 888 requires that a
single tariff be used by the utility in providing transmission service. Order
888 also provides for the recovery of stranded costs.
Order 889 established the standards of conduct and information
requirements that transmission owners must adhere to in doing business under
the open access rule. Under Order 889, utilities must obtain transmission
service for their own use in the same manner their customers will obtain
service, thus mitigating market power through control of transmission
facilities. In addition, under Order 889, utilities must separate their
merchant function (buying and selling wholesale power) from their transmission
and reliability functions.
The Company believes that Order 888 and Order 889, which relate to its
wholesale business, will not have a material adverse effect on its financial
condition, results of operations or liquidity.
In addition, certain states are considering proposals that would
restructure the industry at the retail level. In Missouri, where 92% of the
Company's retail electric revenues are derived, there has been no significant
legislative action regarding industry restructuring to date, nor has retail
wheeling been allowed in the state. However, the joint stipulation agreement
submitted to the Missouri Public Service Commission in July 1996 as part of the
Company's proposed merger with CIPSCO includes a provision that would require
the Company to file a proposal for a 100-megawatt experimental retail wheeling
pilot program in Missouri. (See Note 3 - Regulatory Matters under Notes to
Financial Statements.)
In Illinois, the state General Assembly formed the Joint Committee on
Electric Utility Reform (Joint Committee) in May 1995 to study utility
deregulation and issue a recom-
20
<PAGE> 6
UE 1996 ANNUAL REPORT
mendation. The Joint Committee did not issue a final recommendation
during 1996. However, in November 1996, the Illinois Coalition for Responsible
Electricity Choice (Coalition ) proposed legislation to restructure the
Illinois electric industry. The Coalition is comprised of most of the state's
investor-owned utilities, including the Company, and various business and
consumer groups. The proposed legislation provides for an electric rate freeze
through 1999; an annual 1.5% residential electric rate reduction from 2000 to
2004; retail choice for customers (large utility users would have this option
in 2000, with all other customers being phased in through 2005); recovery of
transition costs; and retail wheeling pilot programs. Other forms of
legislation have been proposed as well.
The Company is unable to predict the timing or ultimate outcome of the
various industry restructuring initiatives being considered. The potential
negative financial consequences of industry restructuring include the
impairment and writedown of certain assets, including regulatory assets, lower
revenues, reduced profit margins and increased costs of capital. At this time,
the Company is unable to predict the impact of potential industry restructuring
matters on the Company's future financial condition, results of operations or
liquidity.
OUR STRATEGY
The Company's management and Board of Directors recognize the increasing
probability of more competition in the future, and although the Company cannot
accurately predict the timing or nature of this competition, the Company
operates its business assuming this competition will occur. Union Electric's
basic business strategy is 1) to improve the Company's competitive position by
continually enhancing customer service; 2) to maintain competitive electric
rates; 3) to reduce costs to the lowest levels possible without compromising
customer service, employee safety, environmental stewardship, fair
returns to stockholders or fair rewards to employees; and 4) to continue to
expand our core business.
ACCOUNTING MATTERS
In October 1996 the American Institute of Certified Public Accountants issued
Statement of Position 96-1, "Environmental Remediation Liabilities" (SOP 96-1).
This statement establishes standards for the recognition, measurement, display
and disclosure of environmental remediation liabilities. SOP 96-1 is effective
January 1, 1997, and is not expected to have a material effect on the Company's
financial position or results of operations upon adoption.
EFFECTS OF INFLATION AND CHANGING PRICES
The current replacement cost of the Company's utility plant substantially
exceeds its recorded historical cost. Under existing regulatory practice, only
the historical cost of plant is recoverable from customers. As a result, cash
flows designed to provide recovery of historical plant costs through
depreciation may not be adequate to replace plant in future years. However,
past practice indicates Union Electric will be allowed to earn on and to
recover the increased cost of replacing facilities when this occurs. The impact
on common stockholders is mitigated to the extent depreciable property is
financed with debt that is repaid with dollars of less purchasing power.
SAFE HARBOR STATEMENT
Statements made in this annual report to stockholders which are not based on
historical facts are forward-looking and, accordingly, involve risks and
uncertainties that could cause actual results to differ materially from those
discussed. Although such forward-looking statements have been made in good
faith and are based on reasonable assumptions, there is no assurance that the
expected results will be achieved. These statements include (without
limitation) statements as to future expectations, beliefs, plans, strategies,
objectives, events, conditions and financial performance. In connection with
the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of
1995, the Company is providing the following cautionary statement to identify
important factors that could cause actual results to differ materially from
those anticipated. Factors include, but are not limited to, the effects of:
regulatory actions; changes in laws and other governmental actions;
competition; business and economic conditions; weather conditions; fuel prices
and availability; generation plant performance; monetary and fiscal policies;
and legal and administrative proceedings.
21
<PAGE> 7
STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Thousands of Dollars Except Shares and Per Share Amounts)
- -----------------------------------------------------------------------------------------------
Year Ended December 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES:
Electric $2,160,815 $2,154,109 $2,137,355
Gas 99,064 87,814 86,109
Steam 485 441 474
- ----------------------------------------------------------------------------------------------
TOTAL OPERATING REVENUES 2,260,364 2,242,364 2,223,938
OPERATING EXPENSES:
- ----------------------------------------------------------------------------------------------
Operations:
Fuel and purchased power 512,831 504,815 497,384
Other 443,654 419,121 435,666
- ----------------------------------------------------------------------------------------------
956,485 923,936 933,050
Maintenance 223,632 221,609 197,760
Depreciation and nuclear decommissioning 241,298 233,237 226,045
Income taxes 197,369 209,541 206,421
Other taxes 213,266 212,145 210,476
- ----------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 1,832,050 1,800,468 1,773,752
- ----------------------------------------------------------------------------------------------
OPERATING INCOME 428,314 441,896 450,186
- ----------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS:
- ----------------------------------------------------------------------------------------------
Allowance for equity funds used during
construction 6,492 6,827 5,767
Miscellaneous, net (4,293) (5,981) 403
- ----------------------------------------------------------------------------------------------
TOTAL OTHER INCOME AND DEDUCTIONS, NET 2,199 846 6,170
- ----------------------------------------------------------------------------------------------
INCOME BEFORE INTEREST CHARGES 430,513 442,742 456,356
- ----------------------------------------------------------------------------------------------
INTEREST CHARGES:
- ----------------------------------------------------------------------------------------------
Interest 132,644 134,741 141,112
Allowance for borrowed funds used
during construction (7,007) (6,106) (5,513)
- ----------------------------------------------------------------------------------------------
NET INTEREST CHARGES 125,637 128,635 135,599
- ----------------------------------------------------------------------------------------------
NET INCOME 304,876 314,107 320,757
- ----------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS 13,249 13,250 13,252
- ----------------------------------------------------------------------------------------------
EARNINGS ON COMMON STOCK $ 291,627 $ 300,857 $ 307,505
- ----------------------------------------------------------------------------------------------
EARNINGS PER SHARE OF COMMON STOCK
(based on average shares outstanding) $ 2.86 $ 2.95 $ 3.01
- ----------------------------------------------------------------------------------------------
DIVIDENDS PER SHARE OF COMMON STOCK $ 2.51 $ 2.455 $ 2.395
- ----------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 102,123,834 102,123,834 102,123,834
=============================================================================================
</TABLE>
See Notes to Financial Statements on pages 29 through 36.
<PAGE> 8
UE 1996 ANNUAL REPORT
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Thousands of Dollars)
- --------------------------------------------------------------------------------
Year Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING:
- --------------------------------------------------------------------------------
Net income $304,876 $ 314,107 $320,757
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 231,743 223,705 216,731
Amortization of nuclear fuel 37,792 35,140 44,267
Allowance for funds used during construction (13,499) (12,933) (11,280)
Postretirement benefit accrual -- 11,923 24,680
Deferred income taxes, net 4,948 (5,628) (18,430)
Deferred investment tax credits, net (6,182) (6,181) (6,182)
Changes in assets and liabilities:
Receivables, net (11,028) (41,405) 23,020
Materials and supplies (18,866) 11,914 (10,643)
Accounts and wages payable 4,732 108,997 (94,180)
Taxes accrued 3,832 (5,722) 10,710
Interest accrued and dividends declared (1,379) (9,654) 14,657
Other, net 67,723 15,249 29,966
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 604,692 639,512 544,073
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING:
- --------------------------------------------------------------------------------
Construction expenditures (325,110) (311,253) (314,050)
Allowance for funds used during construction 13,499 12,933 11,280
Nuclear fuel expenditures (51,176) (42,444) (30,458)
- --------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (362,787) (340,764) (333,228)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING:
- --------------------------------------------------------------------------------
Dividends on preferred and common stock (269,272) (263,964) (257,838)
Environmental bond funds -- 4,443 12,583
Redemptions -
Nuclear fuel lease (34,819) (70,420) (32,137)
Short-term debt (8,300) -- (59,600)
Long-term debt (35,000) (38,000) (25,000)
Preferred stock (26) (26) (26)
Issuances -
Nuclear fuel lease 43,884 49,134 51,386
Short-term debt -- 19,600 --
Long-term debt 65,500 -- 100,000
- --------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (238,033) (299,233) (210,632)
- --------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,872 (485) 213
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,025 1,510 1,297
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,897 $ 1,025 $ 1,510
- --------------------------------------------------------------------------------
Cash and cash equivalents include cash on hand and temporary
investments purchased with a maturity of three months or less.
- --------------------------------------------------------------------------------
Cash paid during the periods:
Interest (net of amount capitalized) $120,745 $131,635 $ 108,319
Income taxes $193,043 $226,458 $ 217,417
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on pages 29 through 36.
23
<PAGE> 9
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
(Thousands of Dollars)
- --------------------------------------------------------------------------------
December 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
PROPERTY AND PLANT, AT ORIGINAL COST:
- --------------------------------------------------------------------------------
Electric $8,630,628 $8,319,632
Gas 185,867 174,231
Other 35,965 35,033
- --------------------------------------------------------------------------------
8,852,460 8,528,896
Less accumulated depreciation and amortization 3,656,890 3,465,699
- --------------------------------------------------------------------------------
5,195,570 5,063,197
Construction work in progress:
Nuclear fuel in process 96,147 85,916
Other 90,953 125,934
- --------------------------------------------------------------------------------
TOTAL PROPERTY AND PLANT, NET 5,382,670 5,275,047
REGULATORY ASSETS:
- --------------------------------------------------------------------------------
Deferred income taxes 692,171 732,580
Other 178,760 193,593
- --------------------------------------------------------------------------------
TOTAL REGULATORY ASSETS 870,931 926,173
DEFERRED CHARGES AND OTHER ASSETS:
- --------------------------------------------------------------------------------
Nuclear decommissioning trust fund 96,601 73,838
Unamortized debt expense 10,591 11,293
Other 27,377 20,101
- --------------------------------------------------------------------------------
TOTAL DEFERRED CHARGES AND OTHER ASSETS 134,569 105,232
CURRENT ASSETS:
- --------------------------------------------------------------------------------
Cash 4,897 1,025
Accounts receivable - trade (less allowance for doubtful
accounts of $5,195 and $6,925, at respective dates) 192,868 191,520
Unbilled revenue 76,190 82,098
Other accounts and notes receivable 37,190 21,602
Materials and supplies, at average cost -
Fossil fuel 63,651 46,381
Construction and maintenance 94,517 92,921
Other 13,326 12,470
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 482,639 448,017
- --------------------------------------------------------------------------------
TOTAL ASSETS $6,870,809 $6,754,469
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on pages 29 through 36.
24
<PAGE> 10
UE 1996 ANNUAL REPORT
BALANCE SHEET
CAPITAL AND LIABILITIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of Dollars)
- --------------------------------------------------------------------------------
December 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
CAPITALIZATION:
- --------------------------------------------------------------------------------
Common stock, $5 par value, authorized 150,000,000
shares - outstanding 102,123,834 shares (excluding
42,990 shares at par value in treasury) $510,619 $510,619
Other paid-in capital, principally premium on
common stock 717,669 717,669
Retained earnings (see accompanying statement) 1,126,513 1,090,909
- --------------------------------------------------------------------------------
Total common stockholders' equity 2,354,801 2,319,197
Preference stock, $1 par value, authorized 7,500,000
shares - none outstanding
- --------------------------------------------------------------------------------
Preferred stock not subject to mandatory redemption
(see accompanying statement) 218,497 218,497
Preferred stock subject to mandatory redemption
(see accompanying statement) 624 650
- --------------------------------------------------------------------------------
Long-term debt 1,808,253 1,773,192
Unamortized discount and premium on debt (9,582) (9,579)
- --------------------------------------------------------------------------------
Total long-term debt (see accompanying statement) 1,798,671 1,763,613
- --------------------------------------------------------------------------------
TOTAL CAPITALIZATION 4,372,593 4,301,957
ACCUMULATED DEFERRED INCOME TAXES 1,318,404 1,357,689
- --------------------------------------------------------------------------------
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 160,342 166,524
- --------------------------------------------------------------------------------
REGULATORY LIABILITY 203,822 216,502
- --------------------------------------------------------------------------------
ACCUMULATED PROVISION FOR NUCLEAR DECOMMISSIONING 98,274 75,511
- --------------------------------------------------------------------------------
OTHER DEFERRED CREDITS AND LIABILITIES 156,913 150,600
- --------------------------------------------------------------------------------
CONSTRUCTION, COMMITMENTS AND CONTINGENCIES
(Notes 11, 12 and 13)
- --------------------------------------------------------------------------------
CURRENT LIABILITIES:
- --------------------------------------------------------------------------------
Current maturity of long-term debt 73,966 69,462
Accounts payable 170,383 169,012
Wages payable 39,966 36,605
Bank loans 11,300 19,600
Accumulated deferred income taxes 43,933 27,429
Income taxes accrued 35,505 29,986
Other taxes accrued 16,040 17,727
Interest accrued 45,173 46,244
Dividends declared 3,004 3,312
Other 121,191 66,309
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 560,461 485,686
- --------------------------------------------------------------------------------
TOTAL CAPITAL AND LIABILITIES $6,870,809 $6,754,469
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on pages 29 through 36.
25
<PAGE> 11
LONG-TERM DEBT
<TABLE>
<CAPTION>
(Thousands of Dollars)
- ---------------------------------------------------------------------------------------
December 31, 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
FIRST MORTGAGE BONDS - Note (a)
5 1/2% Series due 1997 $ -- $ 40,000
5 5/8% Series due 1997 -- 5,000
6 3/4% Series due 1999 100,000 100,000
8.33% Series due 2002 75,000 75,000
7.65% Series due 2003 100,000 100,000
6 7/8% Series due 2004 188,000 188,000
7 3/8% Series due 2004 85,000 85,000
6 3/4% Series due 2008 148,000 148,000
7.40% Series due 2020 - note (b) 60,000 60,000
8 3/4% Series due 2021 125,000 125,000
8% Series due 2022 85,000 85,000
8 1/4% Series due 2022 104,000 104,000
7.15% Series due 2023 75,000 75,000
7% Series due 2024 100,000 100,000
5.45% Series due 2028 - note (b) 44,000 44,000
- ---------------------------------------------------------------------------------------
MISSOURI ENVIRONMENTAL IMPROVEMENT
- ---------------------------------------------------------------------------------------
Revenue bonds 1984 Series A due 2014 - note (c) 80,000 80,000
1984 Series B due 2014 - note (c) 80,000 80,000
1985 Series A due 2015 - note (d) 70,000 70,000
1985 Series B due 2015 - note (d) 56,500 56,500
1991 Series due 2020 - note (d) 42,585 42,585
1992 Series due 2022 - note (d) 47,500 47,500
- ---------------------------------------------------------------------------------------
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
- ---------------------------------------------------------------------------------------
7.69% Series A due 2036 - note (e) 65,500 --
- ---------------------------------------------------------------------------------------
UNSECURED LOANS - Notes (f) (g) -- --
- ---------------------------------------------------------------------------------------
NUCLEAR FUEL LEASE - Note (h) 77,168 62,607
- ---------------------------------------------------------------------------------------
LONG-TERM DEBT 1,808,253 1,773,192
- ---------------------------------------------------------------------------------------
UNAMORTIZED DISCOUNT AND PREMIUM ON DEBT (9,582) (9,579)
- ---------------------------------------------------------------------------------------
TOTAL LONG-TERM DEBT $1,798,671 $1,763,613
- ---------------------------------------------------------------------------------------
</TABLE>
(a) At December 31, 1996, substantially all of the property and plant was
mortgaged under, and subject to liens of, the respective indentures
pursuant to which the bonds were issued.
(b) Environmental Improvement Series.
(c) On June 1 of each year, the interest rate is established for the
following year, or alternatively at the option of the Company, may be
fixed until maturity. A per annum rate of 3.65% is effective for the year
ending May 31, 1997. Thereafter, the interest rates will depend on market
conditions and the selection of an annual versus remaining life rate by
the Company. The average interest rate for the year ended December 31,
1996, was 3.80%.
(d) Interest rates, and the periods during which such rates apply, vary
depending on the Company's selection of certain defined rate modes.
The average interest rates for the year 1996, for 1985 Series A, 1985
Series B, 1991 Series and 1992 Series bonds were 3.45%, 3.52%, 3.68%,
and 3.67%, respectively.
(e) During the term of the debentures, the Company may, under certain
circumstances, defer the payment of interest for up to five years.
(f) A bank credit agreement due 1999 permits the Company to borrow up to $200
million. Interest rates will vary depending on market conditions and the
Company's selection of various options under the agreement. At December
31, 1996, no such borrowings were outstanding.
(g) A bank credit agreement due 1999 permits the Company to borrow or to
support commercial paper borrowings up to $300 million. Interest rates
will vary depending on market conditions. At December 31, 1996, no such
borrowings were outstanding.
(h) At December 31, 1996, and 1995, $29 million and $34 million,
respectively, were included under current maturity of long-term debt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements on pages 29 through 36.
26
<PAGE> 12
UE 1996 ANNUAL REPORT
PREFERRED STOCK
<TABLE>
<CAPTION>
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------
December 31, 1996 1995
- -----------------------------------------------------------------------------------------------
PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION:
- -----------------------------------------------------------------------------------------------
Preferred stock outstanding without par value
(entitled to cumulative dividends) - note (a)
Redemption Price
(per share)
<S> <C> <C> <C>
Stated value of $100 per share -
$7.64 Series - 330,000 shares $103.82 - note (b) $ 33,000 $ 33,000
$7.44 Series - 330,001 shares 101.00 - note (c) 33,000 33,000
$6.40 Series - 300,000 shares 101.50 - note (c) 30,000 30,000
$5.50 Series A - 14,000 shares 110.00 1,400 1,400
$5.50 Series B - 3,000 shares 103.50 - note (c) 300 300
$4.75 Series - 20,000 shares 102.176 2,000 2,000
$4.56 Series - 200,000 shares 102.47 20,000 20,000
$4.50 Series - 213,595 shares 110.00 - note (d) 21,359 21,359
$4.30 Series - 40,000 shares 105.00 4,000 4,000
$4.00 Series - 150,000 shares 105.625 15,000 15,000
$3.70 Series - 40,000 shares 104.75 4,000 4,000
$3.50 Series - 130,000 shares 110.00 13,000 13,000
Stated value of $25.00 per share -
$1.735 Series - 1,657,500 shares 25.00 - note (e) 41,438 41,438
- -----------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCK NOT SUBJECT
TO MANDATORY REDEMPTION $ 218,497 $ 218,497
- -----------------------------------------------------------------------------------------------
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION:
- -----------------------------------------------------------------------------------------------
Preferred stock outstanding without par value
(entitled to cumulative dividends) - note (a)
Stated value of $100 per share -
$6.30 Series - 6,240 and 6,500
shares at respective dates, due 2020 $100.00 - note(c) $ 624 $ 650
- -----------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCK SUBJECT
TO MANDATORY REDEMPTION $ 624 $ 650
- -----------------------------------------------------------------------------------------------
(a) Authorized Union Electric Company total preferred stock - 25,000,000 shares.
(b) Beginning February 15, 2003, eventually declining to $100 per share.
(c) The Company redeemed this series on January 21, 1997.
(d) In the event of voluntary liquidation, $105.50.
(e) On or after August 1, 1998.
- -----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on pages 29 through 36.
27
<PAGE> 13
STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
(Thousands of Dollars)
- --------------------------------------------------------------------------------
Year Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Period $1,090,909 $1,040,766 $ 977,880
- --------------------------------------------------------------------------------
Add:
Net income 304,876 314,107 320,757
- --------------------------------------------------------------------------------
1,395,785 1,354,873 1,298,637
- --------------------------------------------------------------------------------
Deduct:
Preferred stock dividends* 12,941 13,250 13,252
Common stock cash dividends -
$2.51, $2.455 and $2.395 256,331 250,714 244,586
per share, respectively
Capital stock expense -- -- 33
- --------------------------------------------------------------------------------
269,272 263,964 257,871
- --------------------------------------------------------------------------------
BALANCE AT CLOSE OF PERIOD $1,126,513 $1,090,909 $1,040,766
- --------------------------------------------------------------------------------
</TABLE>
(Under mortgage indentures as amended, $34,435,000 of total retained earnings
was restricted against payment of common dividends -- except those payable in
common stock, leaving $1,092,078,000 of free and unrestricted retained earnings
at December 31, 1996.)
*Preferred stock dividends include dividends declared, applicable to subsequent
periods.
SELECTED QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(Thousands of Dollars Except Per Share Amounts)
- --------------------------------------------------------------------------------
Operating Operating Net Earnings on Earnings Per
Revenues Income Income Common Stock Share of Stock
QUARTER ENDED: Outstanding
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 31, 1996 $495,570 $ 69,754 $ 40,140 $ 36,828 $0.36
March 31, 1995 475,053 67,306 38,224 34,911 0.34
June 30, 1996 545,444 95,646 63,947 60,634 0.59
June 30, 1995 547,800 107,160 76,035 72,722 0.71
September 30, 1996 743,666 213,974 184,966 181,655 1.78
September 30, 1995 756,565 213,523 172,607 169,295 1.66
December 31, 1996 475,684 48,940 15,823 12,510 0.13
December 31, 1995 462,946 53,907 27,241 23,929 0.24
- --------------------------------------------------------------------------------
</TABLE>
The first and second quarters of 1996 included credits to Missouri electric
customers which reduced net income and earnings on common stock approximately
$13.5 million and $32 million, or 8c. per share and 18c. per share,
respectively. In addition, a 1.8% 1995 rate decrease for Missouri electric
customers reduced net income and earnings on common stock for the first, second
and third quarters of 1996 by $4.2 million, $5.2 million and $2.5 million, or
4c. per share, 5c. per share and 3c. per share, respectively. Fourth quarter
1996 included Callaway plant refueling expenses which decreased net income and
earnings on common stock approximately $18 million, or 18c. per share. Second
quarter 1995 included Callaway plant refueling expenses which decreased net
income and earnings on common stock approximately $20 million, or 20c. per
share. Third quarter 1995 reflected a one-time credit to Missouri electric
customers which reduced net income and earnings on common stock approximately
$18 million, or 18c. per share. In addition, the 1995 rate decrease reduced net
income and earnings on common stock $4 million, or 4c. per share, in both the
third and fourth quarters of 1995. Also, merger-related expenses of $9 million,
which were classified in other income and deductions, reduced net income and
earnings on common stock approximately 9c. per share in the third quarter of
1995. Other changes in quarterly earnings are due to the effect of weather on
sales and other factors that are characteristic of public utility operations.
- --------------------------------------------------------------------------------
See Notes to Financial Statements on pages 29 through 36.
28
<PAGE> 14
UE 1996 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The Company is regulated by the Missouri Public Service Commission (MoPSC),
Illinois Commerce Commission (ICC), and the Federal Energy Regulatory
Commission (FERC). The accounting policies of the Company are in accordance
with the ratemaking practices of the regulatory authorities having jurisdiction
and, as such, conform to generally accepted accounting principles, as applied
to regulated public utilities. Following is a description of the Company's
significant accounting policies:
PROPERTY AND PLANT
The cost of additions to and betterments of units of property and plant is
capitalized. Cost includes labor, material, applicable taxes, and overheads,
plus an allowance for funds used during construction. Maintenance expenditures
and the renewal of items not considered units of property are charged to income
as incurred. When units of depreciable property are retired, the original cost
and removal cost, less salvage, are charged to accumulated depreciation.
DEPRECIATION
Depreciation is provided over the estimated lives of the various classes of
depreciable property by applying composite rates on a straight-line basis. The
provision for depreciation in 1996, 1995 and 1994 was approximately 3% of the
average depreciable cost.
NUCLEAR FUEL
The cost of nuclear fuel is amortized to fuel expense on a unit-of-production
basis. Spent fuel disposal cost is charged to expense based on kilowatthours
sold.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the tax consequences of
transactions that have been treated differently for financial reporting and tax
return purposes, measured using statutory tax rates.
Investment tax credits utilized in prior years were deferred and are being
amortized over the useful lives of the properties to which they relate.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
Allowance for funds used during construction (AFC) is a utility industry
accounting practice whereby the cost of borrowed funds and the cost of equity
funds (preferred and common stockholders' equity) applicable to the Company's
construction program are capitalized as a cost of construction. This
accounting practice offsets the effect on earnings of the cost of financing
current construction, and treats such financing costs in the same manner as
construction charges for labor and materials.
Under accepted rate-making practice, cash recovery of AFC, as well as
other construction costs, occurs when completed projects are placed in service
and reflected in customer rates.
AFC rates are determined by the Company consistent with the methodology
prescribed by the FERC. Average annual AFC rates were 9.0% in 1996, 9.3% in
1995 and 8.9% in 1994.
UNAMORTIZED DEBT DISCOUNT, PREMIUM AND EXPENSE
Discount, premium and expense associated with long-term debt are amortized over
the lives of the related issues.
REVENUE
The Company accrues on its books estimated, but unbilled, revenue.
Operating Revenues include excise taxes of $99.3 million, $99.2 million
and $97.9 million for the years 1996, 1995 and 1994, respectively.
STOCK COMPENSATION PLANS
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (ABP 25) in accounting for its plans.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions. Such estimates and assumptions may affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to prior-year financial statements to
conform with 1996 reporting (see Note 3 - Regulatory Matters).
NOTE 2 - MERGER AGREEMENT
On August 11, 1995, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement) with CIPSCO Incorporated (CIPSCO) and Ameren Corporation
(Ameren), a newly formed entity, 50% owned by the Company and 50% owned by
CIPSCO, pursuant to which, among other things, the Company and CIPSCO will be
merged with Ameren (the Merger). Subsequent to the Merger, the Company and
Central Illinois Public Service Company (CIPS) and CIPSCO Investment Company
(wholly owned subsidiaries of CIPSCO), will continue as wholly owned operating
subsidiaries of
29
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
Ameren. As a result of the Merger, each outstanding share of the Company's
common stock will be converted into the right to receive one share of
Ameren Common Stock; each outstanding share of the Company's preferred stock
will remain outstanding and unchanged; and each outstanding share of CIPSCO's
common stock will be converted into the right to receive 1.03 shares of Ameren
Common Stock (or cash in lieu of fractional shares). The Merger is expected to
be tax-free for income tax purposes and will be accounted for under the
"pooling of interests" method of accounting.
With their execution and delivery of the Merger Agreement, the Company and
CIPSCO entered into stock option agreements, pursuant to one of which the
Company granted CIPSCO the right, upon the terms and subject to the conditions
set forth therein, to purchase up to 6,983,233 shares of the Company's common
stock at a price of $35.94 per share. Pursuant to the other agreements, CIPSCO
granted the Company the right, upon the terms and subject to the conditions set
forth therein, to purchase up to 6,779,838 shares of CIPSCO common stock at a
price of $37.02 per share. These options will expire upon consummation of the
Merger.
After the Merger, Ameren will become a registered public utility holding
company under the Public Utility Holding Company Act of 1935, as
amended. In December 1995, the Merger was approved by the shareholders of
Union Electric and CIPSCO. However, the Merger is still conditioned upon,
among other things, receipt of certain regulatory and governmental approvals
(See Note 3 - Regulatory Matters).
The following unaudited pro forma financial information reflects the
effects of combining Union Electric and CIPSCO into Ameren under the pooling of
interests method of accounting.
Year ended December 31 (in thousands except per share amounts):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(Unaudited) 1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues $3,333,505 $3,240,923 $3,269,471
Net income $ 371,684 $ 372,872 $ 391,459
Earnings per share $ 2.71 $ 2.72 $ 2.85
- -----------------------------------------------------------------------------
</TABLE>
The pro forma financial information consolidates the financial results of
Electric Energy Inc. (EEI), which will be 60% owned by Ameren subsequent to the
merger as a result of the current ownership interests in EEI by Union Electric
and CIPS.
NOTE 3 - REGULATORY MATTERS
On July 21, 1995, the MoPSC approved an agreement involving the
Company's Missouri electric rates. The agreement decreased rates 1.8% for all
classes of Missouri retail electric customers, effective August 1, 1995,
reducing annual revenues by about $30 million and reducing annual earnings by
approximately 18 cents per share. In addition, a one-time $30 million credit
to retail Missouri electric customers reduced 1995 earnings approximately 18
cents per share. Also included is a three-year experimental alternative
regulation plan that provides that earnings in any future years in excess of a
12.61% regulatory return on equity (ROE) will be shared equally between
customers and stockholders, and earnings above a 14% ROE will be credited to
customers. The formula for computing the credit uses twelve-month results
ending June 30, rather than calendar year earnings. The agreement also
provides that no party shall file for a general increase or decrease in the
Company's Missouri retail electric rates prior to July 1, 1998, except that the
Company may file for an increase if certain adverse events occur. During 1996,
the Company recorded a $47 million credit for the first year of the plan, which
reduced earnings by $28 million, or 27 cents per share. This credit was
reflected as a reduction in electric revenues. At this time, the Company is
unable to determine whether it will be required to make any future credits to
its customers under the agreement.
In 1995, the Company filed an application with the MoPSC for approval of
the Merger. On July 12, 1996, a joint agreement was filed with the MoPSC that
recommends approval of the merger between the Company and CIPSCO. The Company,
the Missouri Public Service Commission staff, the Office of the Public Counsel,
several customer groups and others signed the agreement. Agreement provisions
include a new three-year experimental alternative regulation plan that would
run from July 1, 1998, through June 30, 2001. Like the current plan, the new
plan provides that earnings over a 12.61% ROE up to a 14% ROE would be shared
equally between customers and shareholders. The new three-year plan would also
return to customers 90% of all earnings above a 14% ROE up to a 16% ROE.
Earnings above a 16% ROE would be credited entirely to customers. Other
agreement provisions include: recovery over a 10-year period of the Missouri
portion of an estimated $71.5 million of merger-related expenses; a Missouri
electric rate decrease, effective September 1, 1998, based on the
weather-adjusted average annual credits to customers under the current
experimental alternative regulation plan; and an experimental retail wheeling
pilot program for 100 megawatts of electric power. Also, as part of the
agreement, the Company would not seek to recover in Missouri the merger
premium. The exclusion of the merger premium from rates would not result in a
charge to earnings. On September 25, 1996, the MoPSC ordered that additional
information be filed in November 1996 in connection with the merger proceeding.
In 1995, the Company and CIPSCO filed joint applications for approval of
the merger with the ICC and the FERC. In those applications, the
Company and CIPSCO are requesting a sharing of merger savings, net of merger
premium and merger expenses, between ratepayers and shareholders for the first
10 years subsequent to the Merger.
30
<PAGE> 16
UE 1996 ANNUAL REPORT
On November 7, 1996, a Hearing Examiner for the ICC issued a proposed
order in connection with the Company and CIPSCO's merger proceedings. In the
proposed order, the Hearing Examiner recommended that the merger between the
Company and CIPSCO be approved. In addition, the Hearing Examiner recommended
that a decision on the Company and CIPSCO's proposals for sharing net merger
savings be made after the merger. The Company and CIPSCO would be required to
file a rate case or alternative regulation plan within one year after closing
of the merger whereby an appropriate sharing of net merger savings between
stockholders and customers would be determined at that time. On January 27,
1997, the ICC ordered that additional information be filed in connection with
the merger proceedings.
On October 16, 1996, the FERC set the proposed merger for hearing. The
FERC directed the presiding administrative law judge (ALJ) in the case to issue
an initial decision no later than April 30, 1997.
On December 18, 1996, the FERC issued Order 592 relating to the
Commission's merger policy. The Company believes its proposed merger with
CIPSCO meets the criteria set forth in Order 592, but the effect of this order
on the timing of the ALJ's initial decision is uncertain.
In October 1996 the Company and CIPSCO filed an application with the
Securities and Exchange Commission for approval of the Merger pursuant to the
Public Utility Holding Company Act of 1935.
At this time, the Company expects to receive all required regulatory
approvals and to complete the merger by the end of 1997.
On April 24, 1996, the FERC issued Order 888 and Order 889 related to the
industry's wholesale electric business. On July 9, 1996, the Company filed an
open access tariff under Order 888. On September 25, 1996, the FERC set the
open access tariff filing for hearing. The hearings are scheduled to begin May
1997.
In October 1996 the Company resolved various financial reporting matters
with the FERC. The resolution of these matters resulted in the
reclassification of certain costs from electric plant and nuclear fuel in
process to other regulatory assets, as well as the reclassification of
interchange sales from purchased power expenses to electric revenues. These
reclassifications were made to all prior-year financial statements to conform
with 1996 reporting. These reclassifications did not have a material effect on
the Company's financial position, results of operations or liquidity.
In accordance with SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation," the Company has deferred certain costs pursuant to
actions of its regulators, and is recovering such costs in electric rates
charged to customers.
At December 31, the Company had recorded the following regulatory assets
and regulatory liability (in thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
REGULATORY ASSETS:
Income taxes $692,171 $732,580
Callaway costs 111,088 115,079
Contract termination costs 19,490 25,806
DOE decommissioning assessment 17,916 19,505
Unamortized loss on reacquired debt 30,266 33,203
- -----------------------------------------------------------------------------
Total regulatory assets $870,931 $926,173
- -----------------------------------------------------------------------------
REGULATORY LIABILITY:
Income taxes $203,822 $216,502
- -----------------------------------------------------------------------------
</TABLE>
INCOME TAXES: SEE NOTE 8 - INCOME TAXES.
CALLAWAY COSTS: Represents Callaway nuclear plant operations and maintenance
expenses, property taxes and carrying costs incurred between the plant
in-service date and the date the plant was reflected in rates. These costs are
being amortized over the remaining life of the plant (through 2024).
CONTRACT TERMINATION COSTS: Represents costs incurred for terminating a nuclear
fuel purchase contract. These costs are being amortized over the remaining
life of the terminated contract (through 2001).
DEPARTMENT OF ENERGY (DOE) DECOMMISSIONING ASSESSMENT: Represents fees
assessed by the DOE to decommission its uranium enrichment facility. These
costs are being amortized through 2007 as payments are made to the DOE.
UNAMORTIZED LOSS ON REACQUIRED DEBT: Represents losses related to refunded
debt. These amounts are being amortized over the lives of the related new debt
issues or the remaining lives of the old debt issues if no new debt was issued.
The Company continually assesses the recoverability of its regulatory
assets. Under current accounting standards, regulatory assets are written off
to earnings when it is no longer probable that such amounts will be recovered
through future revenues.
NOTE 4 - DEBT RETIREMENT PROVISIONS
During the five years from December 31, 1996, the amounts of debt maturities
totaling $174 million are: $74 million in 1997; and $100 million in 1999.
Amounts for years subsequent to 1997 do not include nuclear fuel lease payments
since the amounts of such payments are not currently determinable.
NOTE 5 - SHORT-TERM BORROWINGS
Short-term borrowings of the Company consist of bank loans (maturities
generally on an overnight basis) and commercial paper (maturities generally
within 10-45 days). At December 31, 1996, $11.3 million of bank loans were
outstanding. The weighted average interest rates on borrowings outstanding at
December 31, 1996 and 1995, were 7.1% and 6.1%, respectively.
31
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
At December 31, 1996, the Company had committed bank lines of credit
aggregating $179 million (of which $168 million were unused) which make
available interim financing at various rates of interest based on LIBOR, the
bank certificate of deposit rate, or other options. These lines of credit are
renewable annually at various dates throughout the year.
NOTE 6 - NUCLEAR FUEL LEASE
The Company has a lease agreement which provides for the financing of nuclear
fuel. At December 31, 1996, the maximum amount that could be financed under
the agreement was $120 million. Pursuant to the terms of the lease, the Company
has assigned to the lessor certain contracts for purchase of nuclear fuel. The
lessor obtains, through the issuance of commercial paper or from direct loans
under a committed revolving credit agreement from commercial banks, the
necessary funds to purchase the fuel and make interest payments when due.
The Company is obligated to reimburse the lessor for all expenditures for
nuclear fuel, interest and related costs. Obligations under this lease become
due as the nuclear fuel is consumed at the Company's Callaway nuclear plant.
The Company reimbursed the lessor $37.5 million during 1996, $34.1 million
during 1995 and $34.5 million during 1994.
The Company has capitalized the cost, including certain interest costs, of
the leased nuclear fuel and has recorded the related lease obligation. During
the years 1996, 1995 and 1994, the total interest charges under the lease were
$5.8 million, $5.8 million and $5.2 million, respectively (based on average
interest rates of 5.7%, 6.1% and 4.7%, respectively) of which $3.4 million,
$2.5 million and $2.7 million, respectively, were capitalized.
NOTE 7 - PREFERRED STOCK
The Company retired 260 shares, $6.30 Series preferred stock in each of the
years 1996, 1995 and 1994.
On January 21, 1997, the Company redeemed $63.9 million of preferred stock
(see Statement of Preferred Stock for preferred stock series redeemed).
NOTE 8 - INCOME TAXES
Total income tax expense for 1996 resulted in an effective tax rate of 39% on
earnings before income taxes (40% in 1995 and 39% in 1994).
Principal reasons such rates differ from the statutory federal rate:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
STATUTORY FEDERAL INCOME
TAX RATE 35% 35% 35%
Increases (Decreases) from:
Depreciation differences 2 2 1
State tax 4 4 4
Miscellaneous, net (2) (1) (1)
- --------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATE 39% 40% 39%
================================================================================
</TABLE>
Income tax expense components (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TAXES CURRENTLY PAYABLE
(PRINCIPALLY FEDERAL):
Included in operating
expenses $199,391 $222,492 $232,811
Included in other income -
Miscellaneous, net (1,947) (2,949) (4,373)
- --------------------------------------------------------------------------------
197,444 219,543 228,438
DEFERRED TAXES
(PRINCIPALLY FEDERAL):
Included in operating
expenses -
Depreciation differences 2,097 4,767 (1,485)
Postretirement benefits -- (9,022) (9,928)
Other 2,063 (2,515) (8,795)
Included in other income -
Depreciation differences 693 752 816
Other 95 390 963
- --------------------------------------------------------------------------------
4,948 (5,628) (18,429)
DEFERRED INVESTMENT TAX
CREDITS, AMORTIZATION
Included in operating
expenses (6,182) (6,181) (6,182)
- --------------------------------------------------------------------------------
TOTAL INCOME TAX EXPENSE $196,210 $207,734 $203,827
================================================================================
</TABLE>
The Company recognizes the income tax effects of temporary differences.
Prior to 1993, in accordance with accepted ratemaking practice, deferred income
taxes were not provided for certain temporary differences flowed through to
customers and the equity component of AFC. In accordance with SFAS No. 109,
"Accounting for Income Taxes," a regulatory asset, representing the probable
recovery from customers of future income taxes which is expected to occur when
temporary differences reverse, was recorded along with a corresponding deferred
tax liability. Also, a regulatory liability, recognizing the lower expected
revenue resulting from reduced income taxes associated with amortizing
accumulated deferred investment tax credits, was recorded.
32
<PAGE> 18
UE 1996 ANNUAL REPORT
The Company adjusts its deferred tax liabilities for changes enacted in
tax laws or rates. Recognizing that regulators will probably reduce future
revenues for deferred tax liabilities initially recorded at rates in excess of
the current statutory rate, reductions in the deferred tax liability were
credited to the regulatory liability.
Temporary differences gave rise to the following deferred tax assets and
deferred tax liabilities at December 31 (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated Deferred Income Taxes:
Depreciation $ 826 $ 819
Regulatory asset, net 488 516
Capitalized taxes and expenses 107 113
Deferred benefit costs (48) (52)
Disallowed plant costs (11) (11)
- --------------------------------------------------------------------------------
Total net accumulated deferred
income tax liabilities $1,362 $1,385
- --------------------------------------------------------------------------------
</TABLE>
NOTE 9 - RETIREMENT BENEFITS
The Company has non-contributory, defined-benefit retirement plans covering
substantially all of its employees. Benefits are based on the employees' years
of service and compensation. The Company's funding policy is to contribute
annually at least the minimum amount required by government funding standards,
but not more than can be deducted for federal income taxes. Plan assets consist
principally of common stocks and fixed income securities.
Pension costs for the years 1996, 1995 and 1994, were $28 million, $26
million and $31 million, respectively, of which 19% was charged to construction
accounts in 1996 , 20% in 1995 and 18% in 1994.
Funded status of the plans at December 31 (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ACTUARIAL PRESENT VALUE
OF BENEFIT OBLIGATION:
Vested benefit obligation $661 $679 $552
- --------------------------------------------------------------------------------
Accumulated benefit obligation $752 $758 $622
- --------------------------------------------------------------------------------
Projected benefit obligation
for service rendered to date $919 $913 $779
Less: Plan assets at fair value 924 847 706
- --------------------------------------------------------------------------------
(Excess) Deficiency of plan assets versus
projected benefit obligation (5) 66 73
Unrecognized net gain 96 22 18
Prior service cost not yet
recognized in net periodic
pension cost (76) (82) (89)
Unrecognized net assets
at transition 8 9 10
- --------------------------------------------------------------------------------
ACCRUED PENSION COST $ 23 $ 15 $ 12
================================================================================
</TABLE>
Components of pension costs (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 22 $ 19 $ 21
Interest cost on projected
benefit obligation 65 66 60
Actual return on plan assets (107) (166) 8
Net amortization and deferral 48 107 (58)
- --------------------------------------------------------------------------------
PENSION COST $ 28 $ 26 $ 31
================================================================================
</TABLE>
Assumptions for actuarial present value of projected benefit obligations:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
DISCOUNT RATE AT MEASUREMENT DATE 7.5% 7.25% 8.5%
INCREASE IN FUTURE COMPENSATION 4.5% 4.25% 5.5%
PLAN ASSETS LONG-TERM RATE OF RETURN 8.5% 8.5% 8.5%
- --------------------------------------------------------------------------------
</TABLE>
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees. Substantially
all of the Company's employees may become eligible for those benefits if they
reach retirement age while working for the Company. The Company's funding
policy is to contribute annually the net periodic cost. Plan assets consist
principally of common stocks and fixed income securities.
The Company accrues the expected postretirement benefit costs during
employees' years of service. Postretirement benefit costs were $44 million for
each of the years 1996 and 1995 and $46 million for 1994, of which
approximately 19% was charged to construction accounts in each of the three
years. The Company's transition obligation at December 31, 1996, is being
amortized over the next 16 years.
In August 1994, the MoPSC authorized the recovery of postre-tirement
benefit costs in rates to the extent that such costs are funded. In December
1995, the Company established two external trust funds for retiree healthcare
and life insurance benefits. For both 1995 and 1994, actual claims paid were
approximately $15 million. In 1996, claims were paid out of the plan trust
funds.
Funded status of the plans at December 31 (in millions):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ACCUMULATED POSTRETIREMENT BENEFIT
OBLIGATION:
Active employees eligible for benefits $ 38 $ 74 $ 42
Retired employees 193 211 188
Other active employees 80 32 60
- --------------------------------------------------------------------------------
Total benefit obligation 311 317 290
Less: Plan assets at fair market value 47 14 --
- --------------------------------------------------------------------------------
Accumulated postretirement benefit
obligation in excess of plan assets 264 303 290
Unrecognized - transition obligation (200) (213) (225)
- gain/(loss) 19 (7) 4
- --------------------------------------------------------------------------------
POSTRETIREMENT BENEFIT LIABILITY $ 83 $ 83 $ 69
================================================================================
</TABLE>
33
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
Components of net periodic postretirement benefit costs
(in millions):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $12 $10 $11
Interest cost on projected
benefit obligation 22 24 21
Actual return on plan assets (4) -- --
Amortization - transition obligation 12 12 13
- unrecognized (gain)/loss (1) (2) 1
Deferred gain 3 -- --
- -----------------------------------------------------------------------------
Net periodic cost $44 $44 $46
- -----------------------------------------------------------------------------
</TABLE>
Assumptions for the obligation measurements:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate at measurement date 7.5% 7.25% 8.5%
Plan assets long-term rate of return 8.5% 8.5% --
Medical cost trend rate- initial 8.25% 9.25% 11.0%
- ultimate 5.25% 5.25% 6.0%
Ultimate medical cost trend rate
expected in year 2000 2000 2000
</TABLE>
- -----------------------------------------------------------------------------
A 1% increase in the medical cost trend rate is estimated to increase the
net periodic cost and the accumulated postretirement benefit obligation by
approximately $3 million and $23 million, respectively.
NOTE 10 - STOCK OPTION PLANS
In April, 1995, the Company's shareholders approved a Long-Term
Incentive Plan (the Plan) for eligible employees, as determined by the Human
Resources Committee of the Board. The Plan provides for the grant of options,
performance awards, restricted stock, dividend equivalents and stock
appreciation rights. Under the terms of the Plan, options may be granted at a
price not less than the fair market value of the shares at the date of grant.
Granted options vest over a period of five years, beginning at the date of
grant, and provide for acceleration of exercisability of the options upon the
occurrence of certain events, including retirement. Outstanding options expire
on various dates through 2006. Under the Plan, subject to adjustment as
provided in the Plan, 2.5 million shares have been authorized to be issued or
delivered. The Company expects to make open market purchases of its common
stock to meet the requirements of the Plan.
Summary of stock options:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1995
- -----------------------------------------------------------------------------
<S> <C>
Options outstanding at beginning of the year --
Options granted during the year 142,500
Options exercised during the year --
Options expired/cancelled during the year --
- -----------------------------------------------------------------------------
Options outstanding at end of the year 142,500
- -----------------------------------------------------------------------------
Options exercisable at end of the year 9,800
- -----------------------------------------------------------------------------
Exercise price range of options granted $35 1/2 -$35 7/8
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996
- -----------------------------------------------------------------------------
<S> <C>
Options outstanding at beginning of the year 142,500
Options granted during the year 165,590
Options exercised during the year --
Options expired/cancelled during the year 700
- -----------------------------------------------------------------------------
Options outstanding at end of the year 307,390
- -----------------------------------------------------------------------------
Options exercisable at end of the year 39,710
- -----------------------------------------------------------------------------
Exercise price of options granted $ 43
- -----------------------------------------------------------------------------
</TABLE>
In accordance with APB 25, no compensation cost has been recognized for
the Company's stock compensation plans. In 1996, Union Electric adopted the
disclosure-only method under SFAS 123, "Accounting for Stock-Based
Compensation." If the fair value based accounting method under this statement
had been used to account for stock-based compensation cost, the effects on 1996
and 1995 net income and earnings per share would have been immaterial.
NOTE 11 - COMMITMENTS
The Company is engaged in a construction program under which expenditures
averaging approximately $267 million, including AFC, are anticipated during
each of the next five years.
The Company has commitments for the purchase of coal under long-term
contracts. Coal contract commitments, including transportation costs, for 1997
through 2001 are estimated to total $789 million (excluding contract escalation
provisions). Total coal purchases, including transportation costs, for 1996,
1995 and 1994 were $270 million, $293 million and $268 million, respectively.
The Company also has existing contracts with pipeline and natural gas suppliers
to provide natural gas for distribution and electric generation. Gas-related
contracted cost commitments for 1997 through 2001 are estimated to total $99
million. Total delivered natural gas costs for 1996, 1995 and 1994 were $64
million, $60 million and $63 million, respectively. The Company's nuclear fuel
commitments for 1997 through 2001, including uranium concentrates, conversion,
enrichment and fabrication, are expected to total $126 million, and are
expected to be financed under the nuclear fuel lease. Nuclear fuel
expenditures for 1996, 1995 and 1994 were $51 million, $42 million and $30
million, respectively. In addition, the Company has long-term contracts with
other utilities to purchase electric capacity. These commitments for 1997
through 2001 are estimated to total $201 million. During 1996, 1995 and 1994,
electric capacity purchases were $44 million, $42 million and $38 million,
respectively.
34
<PAGE> 20
UE 1996 ANNUAL REPORT
NOTE 12 - CONTINGENCIES
The Company's insurance coverage for its Callaway Plant at December 31, 1996
(in millions):
TYPE AND SOURCE OF COVERAGE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maximum Maximum
Coverages Assessments
for Single
Incidents
- --------------------------------------------------------------------------------
<S> <C> <C>
Public Liability:
American Nuclear Insurers $ 200.0 $ --
Pool Participation 8,720.3 79.3(a)
- --------------------------------------------------------------------------------
$8,920.3(b) $79.3
- --------------------------------------------------------------------------------
Nuclear Worker Liability:
American Nuclear Insurers $200.0(c) $ 3.1
- --------------------------------------------------------------------------------
Property Damage:
American Nuclear Insurers $ 500.0 $ --
Nuclear Electric Insurance Ltd. 2,250.0(d) 13.0
- --------------------------------------------------------------------------------
$2,750.0 $13.0
- --------------------------------------------------------------------------------
Replacement Power:
Nuclear Electric Insurance Ltd. $419.1(e) $ 3.3
- --------------------------------------------------------------------------------
</TABLE>
(a) Retrospective premium under the Price-Anderson liability provisions of
the Atomic Energy Act of 1954, as amended, (Price-Anderson). Subject to
retrospective assessment with respect to loss from an incident at any U.S.
reactor, payable at $10 million per year.
(b) Limit of liability for each incident under Price-Anderson.
(c) Total industry potential liability from workers claiming exposure to the
hazard of nuclear radiation. The policy includes an automatic
reinstatement thereby providing total coverage of $400 million.
(d) Includes premature decommissioning costs.
(e) Weekly indemnity of $3.1 million, for 52 weeks which commences after the
first 21 weeks of an outage, plus $2.5 million per week for 104 weeks
thereafter.
Price-Anderson limits the liability for claims from an incident involving
any licensed U.S. nuclear facility. The limit is based on the number of
licensed reactors and is adjusted at least every five years based on the
Consumer Price Index. Utilities owning a nuclear reactor cover this exposure
through a combination of private insurance and mandatory participation in a
financial protection pool as established by Price-Anderson.
If losses from a nuclear incident at Callaway Plant exceed the limits of,
or are not subject to, insurance, or if coverage is not available, the Company
will self-insure the risk. Although the Company has no reason to anticipate a
serious nuclear incident, if one did occur it could have a material but
undeterminable adverse effect on the Company's financial position, results of
operations or liquidity.
Under the Clean Air Act Amendments of 1990, the Company is required to
reduce total annual sulfur dioxide emissions significantly by the year 2000.
Significant reductions in nitrogen oxide are also required. By switching to
low-sulfur coal and early banking of emission credits, the Company anticipates
that it can comply with the requirements of the law without significant revenue
increases because the related capital costs, estimated at about $300 million,
are largely offset by lower fuel costs. As of year-end 1996, about 84% of the
Clean Air Act-related capital costs had been expended.
As of December 31, 1996, the Company was designated a potentially
responsible party (PRP) by federal and state environmental protection agencies
at four hazardous waste sites. Other hazardous waste sites have been identified
for which the Company may be responsible but has not been designated a PRP. The
Company continually reviews the remediation costs that may be required for all
of these sites. However, such costs are not expected to have a material adverse
effect on the Company's financial position, results of operations or liquidity.
Regulatory changes enacted and being considered at the federal and state
levels continue to change the structure of the industry and utility regulation,
as well as encourage increased competition. At this time, the Company is unable
to predict the impact of these changes on the Company's future financial
condition, results of operations or liquidity.
The Company is involved in legal and administrative proceedings before
various courts and agencies with respect to matters arising in the ordinary
course of business, some of which involve substantial amounts. The Company
believes that the final disposition of these proceedings will not have a
material adverse effect on its financial position, results of operations or
liquidity.
NOTE 13 - CALLAWAY NUCLEAR PLANT
Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the
permanent storage and disposal of spent nuclear fuel. DOE currently charges one
mill per nuclear generated kilowatthour sold for future disposal of spent fuel.
Electric rates charged to customers provide for recovery of such costs. DOE is
not expected to have its permanent storage facility for spent fuel available
until at least 2015. The Company has sufficient storage capacity at the
Callaway Plant site until 2005 and has viable storage alternatives under
consideration. Each alternative will likely require Nuclear Regulatory
Commission approval and may require other regulatory approvals. The delayed
availability of DOE's disposal facility is not expected to adversely affect the
continued operation of Callaway Plant.
Electric rates charged to customers provide for recovery of Callaway Plant
decommissioning costs over the life of the plant, based on an assumed 40-year
life, ending with expiration of the plant's operating license in 2024. The
Callaway site is assumed to be decommissioned using the DECON (immediate
dismantlement) method. Decommissioning costs, including decontamination,
dismantling and site restoration, are estimated to be $420 million in current
year dollars and are expected to escalate approximately 4% per year through the
end of decommissioning activity in 2033. Decommissioning cost is charged to
depreciation expense over Callaway's service life and
35
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
amounted to $6.7 million in each of the years 1996, 1995 and 1994. Every three
years, the MoPSC requires the Company to file updated cost studies for
decommissioning Callaway, and electric rates may be adjusted at such times to
reflect changed estimates. The latest study was performed in 1996. Costs
collected from customers are deposited in an external trust fund to provide for
Callaway's decommissioning. Fund earnings are expected to average 9.25%
annually through the date of decommissioning. If the assumed return on trust
assets is not earned, the Company believes it is probable that such earnings
deficiency will be recovered in rates. Trust fund earnings, net of expenses,
appear on the balance sheet as increases in nuclear decommissioning trust fund
and in the accumulated provision for nuclear decommissioning.
The staff of the Securities and Exchange Commission has questioned certain
of the current accounting practices of the electric utility industry, regarding
the recognition, measurement and classification of decommissioning costs for
nuclear generating stations in the financial statements of electric utilities.
In response to these questions, the Financial Accounting Standards Board has
agreed to review the accounting for removal costs, including decommissioning.
If current electric utility industry accounting practices for such
decommissioning are changed, (1) the annual provisions for decommissioning
could increase, and (2) trust fund income from the external decommissioning
trusts could be reported as investment income rather than as a reduction to
decommissioning expense. The Company does not expect that changes in the
accounting for nuclear decommissioning costs will have a material effect on its
financial position, results of operations or liquidity.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value.
CASH AND TEMPORARY INVESTMENTS/SHORT-TERM BORROWINGS
The carrying amounts approximate fair value because of the short-term maturity
of these instruments.
NUCLEAR DECOMMISSIONING TRUST FUND
The fair value of the Company's nuclear decommissioning trust fund is estimated
based on quoted market prices for securities.
PREFERRED STOCK
The fair value of the Company's preferred stock outstanding is estimated based
on the quoted market prices for the same or similar issues.
LONG-TERM DEBT
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of comparable maturities.
Carrying amounts and estimated fair values of preferred stock and long-term
debt at December 31 (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996 1996 1995 1995
Carrying Fair Value Carrying Fair Value
Amount Amount
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred stock $219,121 $ 191,669 $ 219,147 $ 188,175
Long-term debt $1,808,253 $1,846,948 $1,773,192 $1,876,424
</TABLE>
- -----------------------------------------------------------------------------
The Company has investments in debt and equity securities that are held in
trust funds for the purpose of funding the nuclear decommissioning of the
Callaway nuclear plant (see Note 13 - Callaway Nuclear Plant). The Company has
classified these investments in debt and equity securities as available for
sale and has recorded all such investments at their fair market value at
December 31, 1996 and 1995. In 1996, 1995 and 1994, the proceeds from the sale
of investments were $19.6 million, $9.4 million and $22.2 million,
respectively. Using the specific identification method to determine cost, the
gross realized gains on those sales were approximately $1 million for 1996,
1995 and 1994. Net realized and unrealized gains and losses are reflected in
accumulated provision for nuclear decommissioning on the Balance Sheet, which
is consistent with the method used by the Company to account for the
decommissioning costs recovered in rates.
Costs and fair values of investments in debt and equity securities in the
nuclear decommissioning trust fund at December 31 (in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996 Gross Unrealized
- -----------------------------------------------------------------------------
Security type Cost Gain (Loss) Fair Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt securities $28,599 $ 1,888 $-- $30,487
Equity securities 40,343 21,790 -- 62,133
Cash equivalents 3,981 -- -- 3,981
- -----------------------------------------------------------------------------
$72,923 $23,678 $-- $96,601
- -----------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------
1995 Gross Unrealized
- -----------------------------------------------------------------------------
Security type Cost Gain (Loss) Fair Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt securities $22,138 $ 2,642 $-- $24,780
Equity securities 37,936 9,170 -- 47,106
Cash equivalents 1,952 -- -- 1,952
- -----------------------------------------------------------------------------
$62,026 $11,812 $-- $73,838
- -----------------------------------------------------------------------------
</TABLE>
The contractual maturities of investments in debt securities at
December 31, 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Cost Fair Value
- -----------------------------------------------------------------------------
<S> <C> <C>
1 year to 5 years $ 2,295 $ 2,500
5 years to 10 years 2,843 2,979
Due after 10 years 23,461 25,008
- -----------------------------------------------------------------------------
$28,599 $30,487
- -----------------------------------------------------------------------------
</TABLE>
This report and the financial statements contained herein are submitted for the
information of the stockholders of the Company and are not intended to induce,
or for use in connection with, any sale or purchase of any securities of the
Company.
36
<PAGE> 22
UE 1996 ANNUAL REPORT
OPERATING STATISTICS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC OPERATING REVENUES (000):
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Residential $ 840,459 $ 843,038 $ 800,117 $ 817,713 $ 754,667
Commercial 732,797 725,438 705,505 684,446 676,761
Industrial 382,927 379,363 368,450 373,353 410,370
Wholesale 67,663 64,847 61,985 59,160 57,226
Interchange 148,842 139,657 167,822 154,033 84,905
Miscellaneous 35,466 34,404 33,476 31,308 30,443
Credit to customers (47,339) (32,638) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ELECTRIC OPERATING REVENUES $ 2,160,815 $ 2,154,109 $ 2,137,355 $2,120,013 $ 2,014,372
- --------------------------------------------------------------------------------------------------------------------------------
KILOWATTHOUR SALES (000,000):
- --------------------------------------------------------------------------------------------------------------------------------
Residential 11,549 11,229 10,619 10,867 9,690
Commercial 12,111 11,757 11,393 10,989 10,553
Industrial 8,685 8,486 8,203 8,003 9,030
Wholesale 1,794 1,726 1,623 1,580 1,488
Interchange 7,000 6,534 7,713 7,404 4,840
Miscellaneous 137 137 137 139 145
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL KILOWATTHOUR SALES 41,276 39,869 39,688 38,982 35,746
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC CUSTOMERS (End of year):
- --------------------------------------------------------------------------------------------------------------------------------
Residential 998,200 991,791 985,609 976,390 972,153
Commercial 132,968 130,557 128,505 126,542 125,196
Industrial 6,150 6,276 6,228 6,605 6,530
Wholesale 16 17 17 17 19
Miscellaneous 1,588 1,628 1,628 1,630 1,599
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ELECTRIC CUSTOMERS 1,138,922 1,130,269 1,121,987 1,111,184 1,105,497
- --------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL CUSTOMER DATA (Average):
Kilowatthours used 11,616 11,352 10,833 11,151 9,864
Annual electric bill $845.32 $ 852.27 $ 816.25 $ 839.11 $ 768.20
Revenue per kilowatthour 7.28 cents 7.51 cents 7.54 cents 7.52 cents 7.79 cents
- --------------------------------------------------------------------------------------------------------------------------------
GROSS INSTANTANEOUS
PEAK DEMAND (Kilowatts) 8,085,000 7,965,000 7,430,000 7,540,000 7,135,000
- --------------------------------------------------------------------------------------------------------------------------------
CAPABILITY AT TIME OF PEAK,
INCLUDING NET PURCHASES (Kilowatts) 9,120,000 8,714,000 8,469,000 8,597,000 8,407,000
- --------------------------------------------------------------------------------------------------------------------------------
GENERATING CAPABILITY AT
TIME OF PEAK (Kilowatts) 8,244,000 8,184,000 8,057,000 7,963,000 7,868,000
- --------------------------------------------------------------------------------------------------------------------------------
COAL BURNED (Tons) 14,064,000 12,714,000 11,444,000 9,803,000 10,314,000
- --------------------------------------------------------------------------------------------------------------------------------
PRICE PER TON OF COAL (Average) $ 20.59 $ 22.59 $ 24.49 $ 31.66 $ 31.96
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 23
SELECTED FINANCIAL INFORMATION
(Thousands of Dollars Except Shares and Per Share Amounts and Ratios)
<TABLE>
<CAPTION>
1996 1995 1994 1993
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS (Year Ended December 31):
- ------------------------------------------------------------------------------------------------------------------------------
Operating revenues $ 2,260,364 $ 2,242,364 $ 2,223,938 $ 2,220,037
Operating expenses 1,832,050 1,800,468 1,773,752 1,808,740
Operating income 428,314 441,896 450,186 411,297
Callaway rate phase-in plans -- -- -- --
Deferred costs disallowed -- -- -- --
Loss on cancellation of
Callaway Unit No. 2, net -- -- -- --
Allowance for all funds used
during construction 13,499 12,933 11,280 11,544
Gain on sales of electric property, net -- -- -- --
Miscellaneous, net (4,293) (5,981) 403 3,919
Interest (132,644) (134,741) (141,112) (129,600)
Net income 304,876 314,107 320,757 297,160
Preferred stock dividends 13,249 13,250 13,252 14,087
Earnings on common stock 291,627 300,857 307,505 283,073
Average common shares outstanding 102,123,834 102,123,834 102,123,834 102,123,834
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS, OBLIGATIONS AND EQUITY CAPITAL (At December 31):
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 6,870,809 $ 6,754,469 $ 6,624,701 $ 6,595,570
Long-term debt obligations 1,798,671 1,763,613 1,823,489 1,766,655
Preferred stock subject to
mandatory redemption 624 650 676 702
Preferred stock not subject to
mandatory redemption 218,497 218,497 218,497 218,497
Common equity 2,354,801 2,319,197 2,269,054 2,206,168
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL INDICES (Year Ended December 31):
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per share of common stock
(based on average shares outstanding) $ 2.86 $ 2.95 $ 3.01 $ 2.77
Cash dividends per share of common stock $ 2.51 $ 2.455 $ 2.395 $ 2.335
Return on average common stock equity 12.59% 13.23% 13.84% 13.01%
Ratio of earnings to fixed charges (a) 4.68 4.78 4.68 4.66
Book value per common share $ 23.06 $ 22.71 $ 22.22 $ 21.60
- ------------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATIOS (At December 31):
- ------------------------------------------------------------------------------------------------------------------------------
Common equity 53.9% 53.9% 52.6% 52.6%
Preferred stock not subject to
mandatory redemption 5.0 5.1 5.1 5.2
Preferred stock subject to
mandatory redemption -- -- -- --
Long-term debt 41.1 41.0 42.3 42.2
- ------------------------------------------------------------------------------------------------------------------------------
100.0% 100.0% 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Earnings used in computing the ratio of earnings to fixed charges consist
of net income plus fixed charges (interest on debt, amortization of debt
discount, premium and expense and a portion of rentals representative of
the interest factor) and income taxes.
38
<PAGE> 24
UE 1996 ANNUAL REPORT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
$ 2,100,026 $ 2,179,510 $ 2,104,210 $ 2,066,722 $2,090,810 $1,976,454 $1,856,635
1,688,009 1,696,697 1,646,670 1,600,254 1,606,656 1,488,000 1,337,025
412,017 482,813 457,540 466,468 484,154 488,454 519,610
60 107 237 227 2,408 92,791 59,861
-- -- -- -- -- (23,169) --
-- -- -- (30,196) -- -- --
8,022 8,519 14,145 17,908 14,885 20,477 15,812
18,099 -- -- -- -- -- --
(131) (2,718) 9,881 7,769 (10,648) (15,714) 3,947
(135,319) (167,209) (187,584) (176,571) (199,241) (228,961) (247,409)
302,748 321,512 294,219 285,605 291,558 333,878 351,821
14,058 14,059 14,693 19,134 30,425 36,522 49,245
288,690 307,453 279,526 266,471 261,133 297,356 302,576
102,123,834 102,123,834 102,123,834 102,123,834 102,123,834 102,123,834 102,123,834
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
$ 5,797,363 $ 5,733,479 $ 5,702,341 $ 5,760,322 $5,827,246 $5,957,811 $5,895,211
1,659,553 1,730,277 1,948,024 2,106,776 2,188,614 2,357,615 2,436,092
728 754 780 806 60,832 64,608 165,384
217,784 217,784 218,004 227,582 279,784 354,784 354,784
2,164,020 2,106,155 2,021,299 1,954,481 1,895,360 1,837,156 1,743,189
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
$ 2.83 $ 3.01 $ 2.74 $ 2.61 $2.56 $2.91 $2.96
$ 2.26 $ 2.18 $ 2.10 $ 2.02 $1.94 $1.92 $1.86
13.70% 14.99% 14.16% 14.03% 14.08% 16.79% 18.16%
4.66 4.21 3.57 3.63 3.35 3.30 2.79
$ 21.19 $ 20.62 $ 19.79 $ 19.14 $18.56 $17.99 $17.07
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
53.5% 51.9% 48.3% 45.6% 42.8% 39.8% 37.1%
5.4 5.4 5.2 5.3 6.3 7.7 7.6
-- -- -- -- 1.4 1.4 3.5
41.1 42.7 46.5 49.1 49.5 51.1 51.8
- ---------------------------------------------------------------------------------------------------------------
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 25
INVESTOR INFORMATION
Annual Meeting
The Annual Meeting of Stockholders will convene at 9 a.m. Tuesday, April
22, 1997, at Powell Symphony Hall, 718 North Grand Boulevard, St. Louis,
Missouri.
Common Stock and Dividend Information
The company's common stock is listed on the New York Stock Exchange
(ticker symbol: UEP). Common stockholders of record totaled 110,083 at December
31, 1996. Union Electric has paid cash dividends on common stock for 91
consecutive years, since 1906.
The following includes the high and low sales prices and the dividends
paid per common share during the past two years:
<TABLE>
<CAPTION>
1996 Price Range
- --------------------------------------------------------------------------
Quarter Ended High Low Dividends Paid
- --------------------------------------------------------------------------
<S> <C> <C> <C>
March 31 $44 1/8 $38 7/8 62 1/2 cents
June 30 41 1/4 38 1/8 62 1/2
September 30 40 5/8 36 62 1/2
December 31 40 1/8 36 7/8 63 1/2
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1995 Price Range
- --------------------------------------------------------------------------
Quarter Ended High Low Dividends Paid
- --------------------------------------------------------------------------
<S> <C> <C> <C>
March 31 $38 1/4 $34 3/4 61 cents
June 30 37 7/8 35 61
September 30 37 5/8 34 5/8 61
December 31 42 37 3/8 62 1/2
- --------------------------------------------------------------------------
</TABLE>
DRPlus
Through DRPlus -- UE's dividend reinvestment and stock purchase plan --
the company's stockholders, customers and employees can:
- - make cash investments by check or automatic cash payment, totaling up to
$60,000, in UE common stock annually
- - reinvest their dividends in UE common stock -- or receive UE dividends in
cash
- - place UE common stock certificates in safekeeping and receive regular account
statements...all without paying any fees.
This is not an offer to sell, or a solicitation of an offer to buy, any
securities.
Direct Deposit of Dividends
All registered UEstockholders can have their cash dividends automatically
credited to their bank accounts. This service gives stockholders immediate
access to their dividend on the dividend payment date and eliminates the
possibility of lost or stolen dividend checks.
Union Electric's Web Site
To obtain UEP's daily stock price, recent financial statistics and other
information about the company, visit UE's home page on the internet. UE's web
site address is: http://www.ue.com
Investor Services
The company's Investor Services representatives are available to help you
each business day from 7:30 a.m. to 4:30 p.m. (Central Time). Please write or
call:
Union Electric Company
Investor Services Department
P.O. Box 66887
St. Louis, MO 63166-6887
St. Louis area 554-3502
Toll-free 1-800-255-2237
Office
1901 Chouteau Avenue
St. Louis, MO 63103
314-621-3222
Stock and First Mortgage Bond Transfer Agent
and Registrar
Union Electric Company
Trustees for First Mortgage Bonds
Boatmen's Trust Company
St. Louis, MO
Harris Trust and Savings Bank and D.G. Donovan,
Co-Trustees
Chicago, IL
41
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 2-96198) and
the Registration Statements on Form S-8 (No. 33-60330 and No. 33-64359) of
Union Electric Company of our report dated February 4, 1997, which appears on
page 16 of Union Electric Company's 1996 Annual Report to Shareholders, which
is incorporated by reference in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 13 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 4, 1997
<PAGE> 1
Exhibit 24
CERTIFIED COPY OF RESOLUTION ADOPTED AT THE
REGULAR MEETING OF THE BOARD OF DIRECTORS OF
UNION ELECTRIC COMPANY
HELD ON FRIDAY, DECEMBER 13, 1996
RESOLVED, that the proper officers and directors of this
Company be and hereby are authorized and directed to execute the
1996 Annual Report Form 10-K ("Form 10-K") and such amendments
thereto as they may deem necessary or desirable; that the name of
any officer or director of the Company required to sign such Form
10-K or any amendment thereto, may be signed by C. W. Mueller
and/or Donald E. Brandt and/or James C. Thompson, and/or the duly
appointed substitute thereof, pursuant to duly executed powers of
attorney providing said named persons with, among other things,
full power of substitution and revocation; and that the officers
of this Company be and hereby are authorized and directed to file
such Form 10-K and any amendments thereto with the Securities and
Exchange Commission when executed by or on behalf of the proper
officers and the directors of the Company.
I hereby certify that the foregoing
is a true and correct copy of resolution
adopted at the regular meeting of the
Board of Directors of Union Electric
Company, held pursuant to due notice on
Friday, December 13, 1996, at the
General Office Building of the Company,
St. Louis, Missouri, and that such
resolution is still in full force and
effect.
March 24, 1997
/s/ James C. Thompson
Secretary
[CORPORATE SEAL]
<PAGE> 2
POWER OF ATTORNEY
WHEREAS, UNION ELECTRIC COMPANY, a Missouri corporation (herein
referred to as the "Company"), is required to file with the Securities and
Exchange Commission, under the provisions of the Securities Exchange Act of
1934, as amended, its annual report on Form 10-K for the year ended December
31, 1996; and
WHEREAS, each of the below undersigned holds the office or offices
in the Company set opposite his or her name;
NOW, THEREFORE, each of the undersigned hereby constitutes and
appoints Charles W. Mueller and/or Donald E. Brandt and/or James C. Thompson
the true and lawful attorneys-in-fact of the undersigned, for and in the name,
place and stead of the undersigned, to affix the name of the undersigned to
said Form 10-K and any amendments thereto, and, for the performance of the same
acts, each with power to appoint in their place and stead and as their
substitute, one or more attorneys-in-fact for the undersigned, with full power
of revocation; hereby ratifying and confirming all that said attorneys-in-fact
may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
this 14th day of February 1997:
Charles W. Mueller, President, Chief
Executive Officer and Director
(Principal Executive Officer) /s/ Charles W. Mueller
-----------------------------
William E. Cornelius, Director /s/ William E. Cornelius
-----------------------------
Thomas A. Hays, Director /s/ Thomas A. Hays
-----------------------------
Thomas H. Jacobsen, Director /s/ Thomas H. Jacobsen
-----------------------------
Richard A. Liddy, Director /s/ Richard A. Liddy
-----------------------------
John Peters MacCarthy, Director /s/ John Peters MacCarthy
-----------------------------
Paul L. Miller, Jr., Director /s/ Paul L. Miller, Jr.
-----------------------------
Robert H. Quenon, Director /s/ Robert H. Quenon
-----------------------------
Harvey Saligman, Director /s/ Harvey Saligman
-----------------------------
Janet McAfee Weakley, Director /s/ Janet McAfee Weakley
-----------------------------
Donald E. Brandt, Principal Financial
and Accounting Officer /s/ Donald E. Brandt
-----------------------------
STATE OF MISSOURI )
) SS.
CITY OF ST. LOUIS )
On this 14th day of February, 1997, before me, the undersigned
Notary Public in and for said State, personally appeared the above- named
officers and directors of Union Electric Company, known to me to be the persons
described in and who executed the foregoing power of attorney and acknowledged
to me that they executed the same as their free act and deed for the purposes
therein stated.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal.
/s/ Barbara Lungwitz
-----------------------------------
BARBARA LUNGWITZ
NOTARY PUBLIC - NOTARY SEAL
STATE OF MISSOURI
CITY OF ST. LOUIS
MY COMMISSION EXPIRES: SEPTEMBER 2, 1999
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 5,382,670
<OTHER-PROPERTY-AND-INVEST> 96,601
<TOTAL-CURRENT-ASSETS> 482,639
<TOTAL-DEFERRED-CHARGES> 37,968
<OTHER-ASSETS> 870,931
<TOTAL-ASSETS> 6,870,809
<COMMON> 510,619
<CAPITAL-SURPLUS-PAID-IN> 717,669
<RETAINED-EARNINGS> 1,126,513
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,354,801
598
218,497
<LONG-TERM-DEBT-NET> 1,721,503
<SHORT-TERM-NOTES> 11,300
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 45,000
26
<CAPITAL-LEASE-OBLIGATIONS> 77,168
<LEASES-CURRENT> 28,966
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,412,950
<TOT-CAPITALIZATION-AND-LIAB> 6,870,809
<GROSS-OPERATING-REVENUE> 2,260,364
<INCOME-TAX-EXPENSE> 197,369
<OTHER-OPERATING-EXPENSES> 1,634,681
<TOTAL-OPERATING-EXPENSES> 1,832,050
<OPERATING-INCOME-LOSS> 428,314
<OTHER-INCOME-NET> 2,199
<INCOME-BEFORE-INTEREST-EXPEN> 430,513
<TOTAL-INTEREST-EXPENSE> 125,637
<NET-INCOME> 304,876
13,249
<EARNINGS-AVAILABLE-FOR-COMM> 291,627
<COMMON-STOCK-DIVIDENDS> 256,331
<TOTAL-INTEREST-ON-BONDS> 112,425
<CASH-FLOW-OPERATIONS> 604,692
<EPS-PRIMARY> $2.86
<EPS-DILUTED> $2.86
</TABLE>
