UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
Of THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
1-10628 CIPSCO INCORPORATED 37-1260920
(An Illinois Corporation)
607 East Adams Street
Springfield, Illinois 62739
217-523-3600
1-3672 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY 37-0211380
(An Illinois Corporation)
607 East Adams Street
Springfield, Illinois 62739
217-523-3600
Indicate by check mark whether the Registrants (1) have 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 Registrants were required to
file such reports), and (2) have been subject to such filing
requirements for the past 90 days.
Yes X No
_______ _______
Indicate the number of shares outstanding of each of the issuers'
classes of common stock, as of the latest practicable date:
CIPSCO INCORPORATED Common stock, no par value, 34,069,542
shares outstanding at June 30, 1995
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
CIPSCO INCORPORATED at June 30, 1995
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CIPSCO INCORPORATED
AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
INDEX
PAGE NO.
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Item 5. Other Matters . . . . . . . . . . . . . . . . . 3
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . 3
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PART II. OTHER INFORMATION
ITEM 5. OTHER MATTERS
Reference is hereby made to the CIPSCO Incorporated and Central
Illinois Public Service Company Quarterly Report on Form 10-Q for
the quarterly period ending June 30, 1995, as filed by the
registrants with the Securities and Exchange Commission on August
14, 1995, (the "August 14, 10-Q"). The version of the Agreement
and Plan of Merger, dated as of August 11, 1995, by and among
CIPSCO Incorporated, Union Electric Company, Arch Holding Corp.
and Arch Merger Inc. (the "Merger Agreement") which was filed as
Exhibit 2(a) to the August 14 10-Q (the "August 14 Exhibit 2(a)")
and incorporated by reference into Item 5 of the August 14 10-Q
inadvertently contained a proviso in Section 9.3 thereof which
was not a part of the Merger Agreement and was not agreed to by
the parties thereto. The full text of the correct version of the
Merger Agreement is attached hereto as Exhibit 2(a), and
incorporated herein by reference. All references to the Merger
Agreement in Item 5 of the August 14 10-Q, including the
incorporation by reference into such Item of the Merger
Agreement, are hereby deemed to refer to the version of the
Merger Agreement filed herewith.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reference is hereby made to the Merger Agreement which was
filed as the August 14 Exhibit 2(a) to the August 14 10-Q. The
last three lines of Section 9.3(a) of the August 14 Exhibit 2(a)
inadvertently contained a proviso which is not a part of the
Merger Agreement executed and agreed to by the parties thereto.
The full text of the correct Merger Agreement is attached as
Exhibit 2(a) hereto and supersedes the August 14 Exhibit 2(a) in
its entirety.
(a) Exhibits.
Exhibit 2(a) -- Agreement and Plan of Merger, dated as of
August 11, 1995, by and among CIPSCO
Incorporated, Union Electric Company, Arch
Holding Corp., and Arch Merger Inc.
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EXHIBIT 2.(a)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNION ELECTRIC COMPANY,
CIPSCO INCORPORATED,
ARCH HOLDING CORP.,
AND
ARCH MERGER INC.
DATED AS OF AUGUST 11, 1995
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TABLE OF CONTENTS
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ARTICLE I
THE MERGERS
SECTION 1.1 The Mergers.................................... 2
SECTION 1.2 Effects of the Mergers......................... 2
SECTION 1.3 Effective Time of the Mergers.................. 3
ARTICLE II
TREATMENT OF SHARES
SECTION 2.1 Effect of the Mergers on Capital Stock......... 3
SECTION 2.2 Dissenting Shares.............................. 5
SECTION 2.3 Exchange of Certificates....................... 6
ARTICLE III
THE CLOSING
SECTION 3.1 Closing........................................ 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CIPSCO
SECTION 4.1 Organization and Qualification................. 8
SECTION 4.2 Subsidiaries................................... 9
SECTION 4.3 Capitalization................................. 10
SECTION 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance........................ 11
SECTION 4.5 Reports and Financial Statements............... 13
SECTION 4.6 Absence of Certain Changes or Events........... 14
SECTION 4.7 Litigation..................................... 14
SECTION 4.8 Registration Statement and Proxy
Statement.................................... 14
SECTION 4.9 Tax Matters.................................... 15
SECTION 4.10 Employee Matters; ERISA........................ 17
SECTION 4.11 Environmental Protection....................... 20
SECTION 4.12 Regulation as a Utility........................ 23
SECTION 4.13 Vote Required.................................. 23
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SECTION 4.14 Accounting Matters............................. 24
SECTION 4.15 Non-applicability of Certain Illinois
Law.......................................... 24
SECTION 4.16 Opinion of Financial Advisor................... 24
SECTION 4.17 Insurance...................................... 24
SECTION 4.18 Ownership of Union Electric Common Stock....... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF UNION ELECTRIC
SECTION 5.1 Organization and Qualification................. 25
SECTION 5.2 Subsidiaries................................... 25
SECTION 5.3 Capitalization................................. 26
SECTION 5.4 Authority; Non-Contravention; Statutory
Approvals; Compliance........................ 27
SECTION 5.5 Reports and Financial Statements............... 29
SECTION 5.6 Absence of Certain Changes or Events........... 30
SECTION 5.7 Litigation..................................... 30
SECTION 5.8 Registration Statement and Proxy
Statement.................................... 30
SECTION 5.9 Tax Matters.................................... 31
SECTION 5.10 Employee Matters; ERISA........................ 33
SECTION 5.11 Environmental Protection....................... 36
SECTION 5.12 Regulation as a Utility........................ 38
SECTION 5.13 Vote Required.................................. 38
SECTION 5.14 Accounting Matters............................. 38
SECTION 5.15 Non-applicability of Certain
Missouri Law................................. 38
SECTION 5.16 Opinion of Financial Advisor................... 38
SECTION 5.17 Insurance...................................... 38
SECTION 5.18 Ownership of CIPSCO Common Stock............... 39
SECTION 5.19 Operations of Nuclear Power Plant.............. 39
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Covenants of the Parties....................... 39
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information.......................... 49
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SECTION 7.2 Joint Proxy Statement and Registration
Statement.................................... 50
SECTION 7.3 Regulatory Matters............................. 51
SECTION 7.4 Shareholder Approval........................... 51
SECTION 7.5 Directors' and Officers'
Indemnification.............................. 52
SECTION 7.6 Disclosure Schedules........................... 54
SECTION 7.7 Public Announcements........................... 55
SECTION 7.8 Rule 145 Affiliates............................ 55
SECTION 7.9 Employee Agreements and Workforce
Matters...................................... 55
SECTION 7.1 Employee Benefit Plans......................... 56
SECTION 7.11 Stock Option and Other Stock Plans............. 58
SECTION 7.12 No Solicitations............................... 60
SECTION 7.13 Company Board of Directors..................... 60
SECTION 7.14 Company Officers............................... 61
SECTION 7.15 Boards of Directors of Subsidiaries............ 61
SECTION 7.16 Post-Merger Operations......................... 62
SECTION 7.17 Expenses....................................... 62
SECTION 7.18 Further Assurances............................. 62
SECTION 7.19 Charter and By-Law Amendments.................. 63
SECTION 7.20 Transfers of Illinois Assets................... 63
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation
to Effect the Mergers........................ 63
SECTION 8.2 Conditions to Obligation of Union Electric
to Effect the Mergers........................ 65
SECTION 8.3 Conditions to Obligation of CIPSCO to
Effect the Mergers........................... 66
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination..................................... 67
SECTION 9.2 Effect of Termination........................... 71
SECTION 9.3 Termination Fee; Expenses....................... 71
SECTION 9.4 Amendment....................................... 73
SECTION 9.5 Waiver.......................................... 74
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival; Effect of Representations
and Warranties.............................. 74
SECTION 10.2 Brokers....................................... 74
SECTION 10.3 Notices....................................... 75
SECTION 10.4 Miscellaneous................................. 76
SECTION 10.5 Interpretation................................ 76
SECTION 10.6 Counterparts; Effect.......................... 76
SECTION 10.7 Parties in Interest........................... 76
SECTION 10.8 Waiver of Jury Trial and Certain
Damages..................................... 77
SECTION 10.9 Enforcement................................... 77
Exhibit A Form of CIPSCO Stock Option Agreement
Exhibit B Form of Union Electric Stock Option Agreement
Exhibit 7.8 Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of August 11, 1995 (this
"Agreement"), by and among Union Electric Company, a Missouri corporation
("Union Electric"), CIPSCO Incorporated, an Illinois corporation ("CIPSCO"),
Arch Holding Corp., a Missouri corporation (the "Company") and Arch Merger Inc.,
a Missouri corporation and a wholly owned subsidiary of the Company ("Merger
Sub").
WHEREAS, Union Electric and CIPSCO have determined to engage in a
business combination transaction on the terms stated herein;
WHEREAS, in furtherance thereof, Union Electric and CIPSCO have formed
the Company, the capital stock of which is owned equally by Union Electric and
CIPSCO, the Company has formed Merger Sub, and the respective Boards of
Directors of Union Electric, CIPSCO, the Company and Merger Sub have approved
this Agreement and the transactions contemplated hereby on the terms and
conditions set forth in this Agreement (such transactions referred to herein
collectively as the "Mergers");
WHEREAS, the Board of Directors of Union Electric and the Board of
Directors of CIPSCO have approved and CIPSCO has executed an agreement with
Union Electric in the form of Exhibit A (the "CIPSCO Stock Option Agreement")
whereby CIPSCO has granted Union Electric an option to purchase shares of its
common stock upon the terms and conditions provided in such agreement;
WHEREAS, the Board of Directors of Union Electric and the Board of
Directors of CIPSCO has approved and Union Electric has executed an agreement
with CIPSCO in the form of Exhibit B (the "Union Electric Stock Option
Agreement") whereby Union Electric has granted CIPSCO an option to purchase
shares of its common stock upon the terms and conditions provided in such
agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
parties hereto and their respective stockholders will recognize no gain or loss
for federal income tax purposes as a result of the consummation of the Mergers;
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
<PAGE>
ARTICLE I
THE MERGERS
Section 1.1 The Mergers. Upon the terms and subject to the conditions of
this Agreement:
(a) At the Union Electric Effective Time (as defined in Section 1.3),
Merger Sub shall be merged with and into Union Electric (the "Union Electric
Merger") in accordance with the laws of the State of Missouri. Union Electric
shall be the surviving corporation in the Union Electric Merger and shall
continue its corporate existence under the laws of the State of Missouri. The
effects and the consequences of the Union Electric Merger shall be as set forth
in Section 1.2(a). Throughout this Agreement, the term "Union Electric" shall
refer to Union Electric prior to the Union Electric Merger or to Union Electric
in its capacity as the surviving corporation in the Union Electric Merger, as
the context requires.
(b) At the Company Effective Time (as defined in Section 1.3), CIPSCO
shall be merged with and into the Company (the "Company Merger") in accordance
with the laws of the State of Missouri and the State of Illinois. The Company
shall be the surviving corporation in the Company Merger and shall continue its
corporate existence under the laws of the State of Missouri. The effects and
the consequences of the Company Merger shall be as set forth in Section 1.2(b).
Section 1.2 Effects of the Mergers.
(a) At the Union Electric Effective Time, (i) the articles of
incorporation of Union Electric, as in effect immediately prior to the Union
Electric Effective Time, shall be the articles of incorporation of the surviving
corporation in the Union Electric Merger until thereafter amended as provided by
law and such articles of incorporation, and (ii) the by-laws of Union Electric,
as in effect immediately prior to the Union Electric Effective Time, shall be
the by-laws of the surviving corporation in the Union Electric Merger until
thereafter amended as provided by law, the articles of incorporation of the
surviving corporation in the Union Electric Merger and such by-laws. Subject to
the foregoing, the additional effects of the Union Electric Merger shall be as
provided in the applicable provisions of the General and Business Corporation
Law of the State of Missouri (the "MGBCL").
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(b) At the Company Effective Time, (i) the articles of incorporation
of the Company, as in effect immediately prior to the Company Effective Time
(which shall be amended and restated in a form agreed to by Union Electric and
CIPSCO pursuant to Section 7.19) shall be the articles of incorporation of the
surviving corporation in the Company Merger (the "Articles of Incorporation")
until thereafter amended as provided by law and the Articles of Incorporation,
and (ii) the by-laws of the Company shall be amended and restated in a form
agreed to by Union Electric and CIPSCO and, as so amended and restated, shall be
the by-laws of the surviving corporation in the Company Merger (the "By-laws")
until thereafter amended as provided by law, the Articles of Incorporation and
the By-laws. Subject to the foregoing, the additional effects of the Company
Merger shall be as provided in the applicable provisions of the MGBCL and the
Business Corporation Act of 1983 of the State of Illinois (the "IBCL").
Section 1.3 Effective Time of the Mergers. On the Closing Date (as
defined in Section 3.1), (a) with respect to the Union Electric Merger, articles
of merger complying with the requirements of the MGBCL shall be filed with the
Secretary of State of the State of Missouri and (b) with respect to the Company
Merger, articles of merger complying with the requirements of the MGBCL and the
IBCL shall be filed with the Secretary of State of the State of Missouri and the
Secretary of State of the State of Illinois. The Union Electric Merger shall
become effective upon the issuance of a certificate of merger by the Secretary
of State of the State of Missouri (the "Union Electric Effective Time"). The
Company Merger shall become effective upon the issuance of a certificate of
merger by the Secretary of State of the State of Missouri or upon the issuance
of a certificate of merger by the Secretary of State of the State of Illinois,
whichever occurs later (the "Company Effective Time" or the "Effective Time").
The Union Electric Effective Time shall be immediately prior to the Company
Effective Time.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Mergers on Capital Stock.
(a) At the Union Electric Effective Time, by virtue of the Union Electric
Merger and without any action on the part of any holder of any capital stock of
Union Electric or Merger Sub:
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(i) Conversion of Merger Sub Stock. Each share of Common Stock, par
value $5.00 per share, of Merger Sub (the "Merger Sub Common Stock") shall be
converted into one share of common stock of the surviving corporation in the
Union Electric Merger.
(ii) Cancellation of Union Electric Treasury Stock. Each share of Union
Electric Common Stock that is owned by Union Electric as treasury stock and all
shares of Union Electric Common Stock that are owned, directly or indirectly, by
Union Electric or CIPSCO or any of their respective wholly owned subsidiaries
shall be cancelled and shall cease to exist and no stock of the Company or other
consideration shall be delivered in exchange therefor.
(iii) Conversion of Union Electric Common Stock. Each issued and
outstanding share of Common Stock, par value $5.00 per share, of Union Electric
(the "Union Electric Common Stock"), other than Union Electric Dissenting Shares
(as defined in Section 2.2) and shares cancelled pursuant to Section 2.1(a)(ii)
of this Agreement, shall be converted into the right to receive one (the "Union
Electric Exchange Ratio") fully paid and non-assessable share of Common Stock,
par value $5.00 per share, of the Company ("Company Common Stock"). Upon such
conversion, each holder of a certificate formerly representing any such shares
of Union Electric Common Stock shall cease to have any rights with respect
thereto, except the right to receive the shares of Company Common Stock to be
issued in consideration therefor upon surrender of such certificate in
accordance with Section 2.3.
(iv) No Change in Union Electric Preferred Stock. Each issued and
outstanding share of Preferred Stock, without par value, of Union Electric (the
"Union Electric Preferred Stock"), other than Union Electric Dissenting Shares,
shall remain outstanding and shall continue to represent one fully paid and non-
assessable share of preferred stock of the surviving corporation with identical
rights (including dividend rates) and designations as were applicable to such
share of Union Electric Preferred Stock immediately prior to the Union Electric
Merger.
(b) At the Company Effective Time, by virtue of the Company Merger
and without any action on the part of any holder of any capital stock of CIPSCO
or the Company:
(i) Cancellation of Certain CIPSCO Stock. Each share of Common Stock,
without par value, of CIPSCO (the "CIPSCO Common Stock") that is owned by CIPSCO
as treasury
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stock, by subsidiaries of CIPSCO or by Union Electric, the Company or any of
their respective subsidiaries shall be cancelled and cease to exist.
(ii) Cancellation of Certain Company Common Stock. Each issued and
outstanding share of Company Common Stock that is owned by CIPSCO, Union
Electric or any of their wholly owned subsidiaries immediately prior to the
Company Effective Time shall be cancelled and cease to exist.
(iii) Treatment of Certain Company Common Stock. Each share of Company
Common Stock issued pursuant to Section 2.1(a)(iii) hereof shall remain
outstanding and shall continue to represent one share of Company Common Stock.
(iv) Conversion of CIPSCO Common Stock. Each issued and outstanding share
of CIPSCO Common Stock (other than shares cancelled pursuant to Section
2.1(b)(i)) shall be converted into the right to receive 1.03 (the "CIPSCO
Exchange Ratio", and together with the Union Electric Exchange Ratio, the
"Exchange Ratios") fully paid and non-assessable shares of Company Common Stock.
Upon such conversion, each holder of a certificate formerly representing any
such shares of CIPSCO Common Stock shall cease to have any rights with respect
thereto, except the right to receive the shares of Company Common Stock to be
issued in consideration therefor upon the surrender of such certificate in
accordance with Section 2.3.
Section 2.2 Dissenting Shares.
(a) Shares of Union Electric Common Stock and Union Electric Preferred
Stock held by any holder entitled to relief as a dissenting shareholder under
Section 351.455 of the MGBCL (the "Union Electric Dissenting Shares") shall not
be converted into the right to receive Company Common Stock or remain
outstanding as preferred stock of the surviving corporation, as the case may be,
in the Union Electric Merger, but shall be converted into such consideration as
may be due with respect to such shares pursuant to the applicable provisions of
the MGBCL, unless and until the right of such holder to receive fair value for
such Union Electric Dissenting Shares terminates in accordance with Section
351.455 of the MGBCL. If such right is terminated otherwise than by the
purchase of such shares by Union Electric, then such shares shall cease to be
Union Electric Dissenting Shares and shall be converted into and represent the
right to receive Company Common Stock or preferred stock of the surviving
corporation in the Union Electric Merger, as provided in Section 2.1(a).
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(b) Shares of CIPSCO Common Stock held by any holder entitled to
relief as a dissenting shareholder under Section 5/11.65 of the IBCL (the
"CIPSCO Dissenting Shares") shall be converted into the right to receive shares
of Company Common Stock in accordance with Section 2.1(b)(iv) of this Agreement
and shall thereafter be subject to sale or purchase as provided in applicable
provisions of the IBCL.
Section 2.3 Exchange of Certificates.
(a) Deposit with Exchange Agent. As soon as practicable after the
Effective Time, the Company shall deposit with a bank or trust company mutually
agreeable to CIPSCO and Union Electric (the "Exchange Agent"), certificates
representing shares of Company Common Stock required to effect the exchanges
referred to in Section 2.1, together with cash payable in respect of fractional
shares pursuant to Section 2.3(d).
(b) Exchange Procedures. As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Union Electric Effective Time
represented outstanding shares of Union Electric Common Stock or CIPSCO Common
Stock (the "Certificates") that were converted (the "Converted Shares") into the
right to receive shares of Company Common Stock (the "Company Shares") pursuant
to Section 2.1 (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
certificates representing Company Shares. Upon surrender of a Certificate to
the Exchange Agent for cancellation (or to such other agent or agents as may be
appointed by agreement of Union Electric and CIPSCO), together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
may require, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole Company Shares
which such holder has the right to receive pursuant to the provisions of this
Article II. In the event of a transfer of ownership of Converted Shares which
is not registered in the transfer records of Union Electric or CIPSCO, as the
case may be, a certificate representing the proper number of Company Shares may
be issued to a transferee if the Certificate representing such Converted Shares
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.3, each Certificate shall be
deemed at any time after
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the Effective Time to represent only the right to receive upon such surrender
the certificate representing Company Shares and cash in lieu of any fractional
shares of Company Common Stock as contemplated by this Section 2.3.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Company Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Company Shares
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.3(d) until the holder of record of
such Certificate shall surrender such Certificate. Subject to the effect of
unclaimed property, escheat and other applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole Company Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Company Common Stock to which such
holder is entitled pursuant to Section 2.3(d) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Company Shares and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole Company Shares.
(d) No Fractional Securities. Notwithstanding any other provision of
this Agreement, no certificates or scrip representing fractional shares of
Company Common Stock shall be issued upon the surrender for exchange of
Certificates and such fractional shares shall not entitle the owner thereof to
vote or to any other rights of a holder of Company Common Stock. A holder of
CIPSCO Common Stock who would otherwise have been entitled to a fractional share
of Company Common Stock shall be entitled to receive a cash payment in lieu of
such fractional share in an amount equal to the product of such fraction
multiplied by the average of the last reported sales price, regular way, per
share of CIPSCO Common Stock on the New York Stock Exchange ("NYSE") Composite
Tape for the ten business days prior to and including the last business day on
which such stock was traded on the NYSE, without any interest thereon.
(e) Closing of Transfer Books. From and after the Union Electric
Effective Time or the Company Effective Time, as the case may be, the stock
transfer books of Union Electric and CIPSCO shall be closed and no transfer of
any capital stock of Union Electric or CIPSCO shall thereafter be made. If,
after
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the Effective Time, Certificates are presented to the Company, they shall be
cancelled and exchanged for certificates representing the appropriate number of
Company Shares as provided in Section 2.1 and in this Section 2.3.
(f) Termination of Exchange Agent. Any certificates representing
Company Shares deposited with the Exchange Agent pursuant to Section 2.3(a) and
not exchanged within one year after the Effective Time pursuant to this Section
2.3 shall be returned by the Exchange Agent to the Company, which shall
thereafter act as Exchange Agent. All funds held by the Exchange Agent for
payment to the holders of unsurrendered Certificates and unclaimed at the end of
one year from the Effective Time shall be returned to the Company, after which
time any holder of unsurrendered Certificates shall look as a general creditor
only to the Company for payment of such funds to which such holder may be due,
subject to applicable law. The Company shall not be liable to any person for
such shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Union Electric, 1901 Chouteau Avenue, St. Louis,
Missouri, at 10:00 A.M., local time, on the second business day immediately
following the date on which the last of the conditions set forth in Article VIII
hereof is fulfilled or waived, or at such other time and date and place as Union
Electric and CIPSCO shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CIPSCO
CIPSCO represents and warrants to Union Electric as follows:
Section 4.1 Organization and Qualification. Except as set forth in Section
4.1 of the CIPSCO Disclosure Schedule (as defined in Section 7.6(ii)), CIPSCO
and each CIPSCO Subsidiary (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by
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all necessary approvals and orders, to own, lease and operate its assets and
properties to the extent owned, leased and operated and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary. As used in this Agreement, (a) the term "subsidiary" of a person
shall mean any corporation or other entity (including partnerships and other
business associations) of which at least a majority of the outstanding capital
stock or other voting securities having voting power under ordinary
circumstances to elect directors or similar members of the governing body of
such corporation or entity shall at the time be held, directly or indirectly, by
such person, (b) the term "CIPSCO Subsidiary" shall mean those of the
subsidiaries, joint ventures or general partnership interests of CIPSCO
identified as CIPSCO Subsidiaries in Section 4.2 of the CIPSCO Disclosure
Schedule and (c) the term "Direct Subsidiary" shall be deemed to mean CIPSCO
Subsidiaries or Union Electric Subsidiaries (as defined in Section 5.1), as the
case may be.
Section 4.2 Subsidiaries. Section 4.2 of the CIPSCO Disclosure Schedule
sets forth a description as of the date hereof, of all subsidiaries and joint
ventures of CIPSCO, including (a) the name of each such entity and CIPSCO's
interest therein, and (b) as to each CIPSCO Subsidiary and CIPSCO Joint Venture
(as defined below), a brief description of the principal line or lines of
business conducted by each such entity. Except as set forth in Section 4.2 of
the CIPSCO Disclosure Schedule, none of the CIPSCO Subsidiaries is a "public
utility company", a "holding company", a "subsidiary company" or an "affiliate"
of any public utility company within the meaning of Section 2(a)(5), 2(a)(7),
2(a)(8) or 2(a)(11) of the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act"), respectively. Except as set forth in Section 4.2 of
the CIPSCO Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each CIPSCO Subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by CIPSCO free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature whatsoever and
there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating any
such CIPSCO Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of its capital stock or obligating it to
grant, extend or enter into any such agreement or commitment. As used in this
Agreement, (a) the
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term "joint venture" of a person shall mean any corporation or other entity
(including partnerships and other business associations) that is not a
subsidiary of such person, in which such person or one or more of its
subsidiaries owns an equity interest, other than equity interests held for
passive investment purposes which are less than 5% of any class of the
outstanding voting securities or equity of any such entity and (b) the term
"CIPSCO Joint Venture" shall mean those of the joint ventures of CIPSCO or any
CIPSCO Subsidiary identified as a CIPSCO Joint Venture in Section 4.2 of the
CIPSCO Disclosure Schedule. CIPSCO has no subsidiaries, joint ventures, or
general or limited partnership interests other than those listed as CIPSCO
Subsidiaries on Section 4.2 of the CIPSCO Disclosure Schedule.
Section 4.3 Capitalization. (a) The authorized capital stock of CIPSCO
consists of 100,000,000 shares of CIPSCO Common Stock, and 4,600,000 shares of
CIPSCO Preferred Stock. As of the close of business on August 11, 1995, there
were issued and outstanding 34,069,542 shares of CIPSCO Common Stock and no
shares of CIPSCO Preferred Stock. All of the issued and outstanding shares of
the capital stock of CIPSCO are, and any shares of CIPSCO Common Stock issued
pursuant to the CIPSCO Stock Option Agreement will be, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as set forth in
Section 4.3 of the CIPSCO Disclosure Schedule, as of the date hereof, there are
no outstanding subscriptions, options, calls, contracts, voting trusts, proxies
or other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating CIPSCO or any of the CIPSCO
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of CIPSCO, or obligating CIPSCO to
grant, extend or enter into any such agreement or commitment, other than under
the CIPSCO Stock Option Agreement. There are no outstanding stock appreciation
rights of CIPSCO which were not granted in tandem with a related stock option
and no outstanding limited stock appreciation rights or other rights to redeem
for cash options or warrants of CIPSCO.
(b) The authorized capital stock of Central Illinois Public Service Company,
an Illinois corporation and a wholly owned subsidiary of CIPSCO ("CIPS")
consists of 45,000,000 shares of common stock without par value ("CIPS Common
Stock"), 2,000,000 shares of Cumulative Preferred Stock, par value $100 per
share ("CIPS Preferred Stock"), and 2,600,000 shares of Preferred Stock without
par value ("CIPS No-Par Preferred Stock"). As of the close of business on
August 11, 1995, there were issued and outstanding 25,452,373 shares of CIPS
Common
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Stock (all of which were owned by CIPSCO), 800,000 shares of CIPS Preferred
Stock (consisting of 150,000 shares of the 4% series, 50,000 shares of the 4.25%
series, 75,000 shares of the 4.90% series, 50,000 shares of the 4.92% series,
50,000 shares of the 5.16% series, 125,000 shares of the 6.625% series, and
300,000 shares of the 1993 Auction A series), and no shares of CIPS No-Par
Preferred Stock.
Section 4.4 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. CIPSCO has all requisite corporate power and authority to
enter into this Agreement and the CIPSCO Stock Option Agreement, and, subject to
the applicable Shareholders' Approval (as defined in Section 4.13) and the
applicable CIPSCO Required Statutory Approvals (as defined in Section 4.4(c)),
to consummate the transactions contemplated hereby or thereby. The execution
and delivery of this Agreement and the CIPSCO Stock Option Agreement and the
consummation by CIPSCO of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of CIPSCO,
subject, in the case of this Agreement, to obtaining the applicable CIPSCO
Shareholders' Approval. Each of this Agreement and the CIPSCO Stock Option
Agreement has been duly and validly executed and delivered by CIPSCO and,
assuming the due authorization, execution and delivery hereof and thereof by the
other signatories hereto and thereto, constitutes the valid and binding
obligation of CIPSCO enforceable against it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section 4.4(b) of the CIPSCO
Disclosure Schedule, the execution and delivery of this Agreement and the CIPSCO
Stock Option Agreement by CIPSCO do not, and the consummation of the
transactions contemplated hereby or thereby will not, in any material respect,
violate, conflict with, or result in a material breach of any provision of, or
constitute a material default (with or without notice or lapse of time or both)
under, or result in the termination or modification of, or accelerate the
performance required by, or result in a right of termination, cancellation, or
acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any material lien, security interest, charge or
encumbrance ("Liens") upon any of the properties or assets of CIPSCO or any of
the CIPSCO Subsidiaries or CIPSCO Joint Ventures (any such violation, conflict,
breach, default, right of termination, modification, cancellation or
acceleration, loss or creation, a "Violation" with respect to CIPSCO, such term
when used in Article V having a correlative meaning with respect to Union
Electric)
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pursuant to any provisions of (i) the articles of incorporation, by-laws or
similar governing documents of CIPSCO or any of the CIPSCO Subsidiaries or the
CIPSCO Joint Ventures, (ii) subject to obtaining the CIPSCO Required Statutory
Approvals and the receipt of the CIPSCO Shareholders' Approval, any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any Governmental Authority (as defined in Section 4.4(c))
applicable to CIPSCO or any of the CIPSCO Subsidiaries or the CIPSCO Joint
Ventures or any of their respective properties or assets or (iii) subject to
obtaining the third-party consents set forth in Section 4.4(b) of the CIPSCO
Disclosure Schedule (the "CIPSCO Required Consents") any material note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which CIPSCO or any of the CIPSCO Subsidiaries or CIPSCO Joint Ventures is a
party or by which it or any of its properties or assets may be bound or
affected.
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent or approval of, any court, federal, state,
local or foreign governmental or regulatory body (including a stock exchange or
other self-regulatory body) or authority (each, a "Governmental Authority") is
necessary for the execution and delivery of this Agreement or the CIPSCO Stock
Option Agreement by CIPSCO or the consummation by CIPSCO of the transactions
contemplated hereby or thereby, except as described in Section 4.4(c) of the
CIPSCO Disclosure Schedule (the "CIPSCO Required Statutory Approvals", it being
understood that references in this Agreement to "obtaining" such CIPSCO Required
Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law).
(d) Compliance. Except as set forth in Section 4.4(d), Section 4.10 or
Section 4.11 of the CIPSCO Disclosure Schedule, or as disclosed in the CIPSCO
SEC Reports (as defined in Section 4.5) filed prior to the date hereof, neither
CIPSCO nor any of the CIPSCO Subsidiaries nor, to the knowledge of CIPSCO, any
CIPSCO Joint Venture is in material violation of, is under investigation with
respect to any material violation of, or has been given notice or been charged
with any material violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any Governmental Authority.
Except as set forth in Section 4.4(d) of the CIPSCO Disclosure Schedule or in
Section 4.11 of the CIPSCO Disclosure Schedule, CIPSCO and the CIPSCO
Subsidiaries and
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CIPSCO Joint Ventures have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct their
businesses as presently conducted in all material respects. Except as set forth
in Section 4.4(d) of the CIPSCO Disclosure Schedule, CIPSCO and each of the
CIPSCO Subsidiaries is not in material breach or violation of or in material
default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party, could
result in a material default under, (i) its articles of incorporation or by-laws
or (ii) any material contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which it
is a party or by which it is bound or to which any of its property is subject.
Section 4.5 Reports and Financial Statements. The filings required to be
made by CIPSCO and the CIPSCO Subsidiaries since January 1, 1990 under the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the 1935 Act, the Federal
Power Act, as amended (the "Power Act"), the Atomic Energy Act of 1954, as
amended (the "Atomic Energy Act") and applicable state public utility laws and
regulations have been filed with the Securities and Exchange Commission (the
"SEC"), the Federal Energy Regulatory Commission (the "FERC"), the Nuclear
Regulatory Commission ("NRC") or the appropriate state public utilities
commission, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective dates, in
all material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder. CIPSCO has made available to
Union Electric a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by CIPSCO with the SEC since
January 1, 1992 (as such documents have since the time of their filing been
amended, the "CIPSCO SEC Reports"). As of their respective dates, the CIPSCO
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements of CIPSCO included in the CIPSCO SEC Reports
(collectively, the "CIPSCO Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP") (except as may be indicated therein or in the notes thereto and
except with respect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly
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present the consolidated financial position of CIPSCO as of the dates thereof
and the consolidated results of its operations and cash flows for the periods
then ended. True, accurate and complete copies of the articles of incorporation
and by-laws of CIPSCO and of CIPS, as in effect on the date hereof, have been
made available to Union Electric.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
the CIPSCO SEC Reports filed prior to the date hereof or as set forth in Section
4.6 of the CIPSCO Disclosure Schedule, from December 31, 1994, CIPSCO and each
of the CIPSCO Subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice and there has not been, and no
fact or condition exists which would have or, insofar as reasonably can be
foreseen, could have, a material adverse effect on the business, assets,
financial condition, results of operations or prospects of CIPSCO and its
subsidiaries taken as a whole (a "CIPSCO Material Adverse Effect").
Section 4.7 Litigation. Except as disclosed in the CIPSCO SEC Reports filed
prior to the date hereof or as set forth in Section 4.7, Section 4.9 or Section
4.11 of the CIPSCO Disclosure Schedule, (i) there are no material claims, suits,
actions or proceedings, pending or, to the knowledge of CIPSCO, threatened, nor
are there, to the knowledge of CIPSCO, any material investigations or reviews
pending or threatened against, relating to or affecting CIPSCO or any of the
CIPSCO Subsidiaries, (ii) there have not been any significant developments since
December 31, 1994 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (iii) there are no material
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to CIPSCO or any of the CIPSCO Subsidiaries.
Section 4.8 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of CIPSCO for inclusion
or incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC in connection with the issuance of shares of Company
Common Stock in the Mergers (the "Registration Statement") will, at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the joint proxy
statement, in definitive form, relating to the meetings of Union Electric and
CIPSCO shareholders to be held in connection with the Merger (the "Proxy
Statement") will not,
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at the dates mailed to shareholders and at the times of the meetings of
shareholders to be held in connection with the Mergers, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Registration
Statement and the Proxy Statement, insofar as they relate to CIPSCO or any
CIPSCO Subsidiary, will comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder.
Section 4.9 Tax Matters. "Taxes", as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or other
assessments, including all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, excise, franchise, real and personal property, gross
receipt, capital stock, production, business and occupation, disability,
employment, payroll, license, estimated, stamp, custom duties, severance or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties (civil or criminal) on or additions to any such
taxes. "Tax Return", as used in this Agreement, means a report, return or other
information required to be supplied to a governmental entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes CIPSCO or any of its subsidiaries, or
Union Electric or any of its subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the CIPSCO Disclosure Schedule:
(a) Filing of Timely Tax Returns. CIPSCO and each of the CIPSCO
Subsidiaries have filed (or there has been filed on its behalf) all material Tax
Returns required to be filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, complete and correct and
filed on a timely basis.
(b) Payment of Taxes. CIPSCO and each of the CIPSCO Subsidiaries have,
within the time and in the manner prescribed by law, paid all Taxes that are
currently due and payable except for those contested in good faith and for which
adequate reserves have been taken.
(c) Deferred Taxes. CIPSCO and the CIPSCO Subsidiaries have accounted for
deferred income taxes in accordance with GAAP.
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(d) Tax Liens. There are no Tax liens upon the assets of CIPSCO or any of
the CIPSCO Subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. CIPSCO and each of the CIPSCO Subsidiaries have
complied in all material respects with the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), relating to the withholding of Taxes, as
well as similar provisions under any other laws, and have, within the time and
in the manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither CIPSCO nor any of
the CIPSCO Subsidiaries has requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither CIPSCO nor any of the CIPSCO
Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute of limitations for
the assessment of all Taxes has expired for all applicable Tax Returns of CIPSCO
and each of the CIPSCO Subsidiaries or those Tax Returns have been examined by
the appropriate taxing authorities for all periods through the date hereof, and
no deficiency for any Taxes has been proposed, asserted or assessed against
CIPSCO or any of the CIPSCO Subsidiaries that has not been resolved and paid in
full.
(i) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of CIPSCO or any of the CIPSCO Subsidiaries.
(j) Powers of Attorney. No power of attorney currently in force has been
granted by CIPSCO or any of the CIPSCO Subsidiaries concerning any Tax matter.
(k) Tax Rulings. Neither CIPSCO nor any of the CIPSCO Subsidiaries has
received a Tax Ruling (as defined below) or entered into a Closing Agreement (as
defined below) with any taxing authority that would have a continuing adverse
effect after the Closing Date. "Tax Ruling", as used in this Agreement, shall
mean a written ruling of a taxing authority relating to Taxes. "Closing
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Agreement", as used in this Agreement, shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
(l) Availability of Tax Returns. CIPSCO has made available to Union
Electric complete and accurate copies of (i) all Tax Returns, and any amendments
thereto, filed by CIPSCO or any of the CIPSCO Subsidiaries since January 1,
1992, (ii) all audit reports received from any taxing authority relating to any
Tax Return filed by CIPSCO or any of the CIPSCO Subsidiaries and (iii) any
Closing Agreements entered into by CIPSCO or any of the CIPSCO Subsidiaries with
any taxing authority.
(m) Tax Sharing Agreements. Neither CIPSCO nor any CIPSCO Subsidiary is a
party to any agreement relating to allocating or sharing of Taxes.
(n) Code Section 280G. Neither CIPSCO nor any of the CIPSCO Subsidiaries is
a party to any agreement, contract or arrangement that could result, on account
of the transactions contemplated hereunder, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(o) Liability for Others. Neither CIPSCO nor any of the CIPSCO Subsidiaries
has any liability for Taxes of any person other than CIPSCO and the CIPSCO
Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor, (ii) by
contract or (iii) otherwise.
Section 4.10 Employee Matters; ERISA. Except as set forth in Section 4.10
of the CIPSCO Disclosure Schedule:
(a) Benefit Plans. Section 4.10(a) of the CIPSCO Disclosure Schedule
contains a true and complete list of each employee benefit plan covering
employees, former employees, directors or former directors of CIPSCO and each of
the CIPSCO Subsidiaries or their beneficiaries, or providing benefits to such
persons in respect of services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any
severance or change in control agreement (collectively, the "CIPSCO Benefit
Plans"). No CIPSCO Benefit Plan is a "multiemployer plan" as defined in Section
3(37) of ERISA.
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(b) Contributions. All material contributions and other payments required
to be made for any period through the date to which this representation speaks,
by CIPSCO or any of the CIPSCO Subsidiaries to any CIPSCO Benefit Plan (or to
any person pursuant to the terms thereof) have been timely made or paid in full,
or, to the extent not required to be made or paid on or before the date to which
this representation speaks, have been reflected in the CIPSCO Financial
Statements.
(c) Qualification; Compliance. Each of the CIPSCO Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service (the "IRS") to be so qualified or an
application for such a determination, which was filed before the expiration of
the applicable remedial amendment period, is pending, and, to the best knowledge
of CIPSCO, no circumstances exist that are reasonably expected by CIPSCO to
result in the revocation of any such determination. CIPSCO and each of its
subsidiaries is in compliance in all material respects with, and each of the
CIPSCO Benefit Plans is and has been operated in all material respects in
compliance with, all applicable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code. Each CIPSCO Benefit Plan
intended to provide for the deferral of income, the reduction of salary or other
compensation, or to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits. There are no pending
or, to the knowledge of CIPSCO, threatened or anticipated claims under or in
respect of any CIPSCO Benefit Plan by or on behalf of any employee, former
employee, director, former director, or beneficiary thereof, or otherwise
involving any CIPSCO Benefit Plan (other than routine claims for benefits).
(d) Liabilities. With respect to the CIPSCO Benefit Plans, individually and
in the aggregate, no event has occurred, and, to the best knowledge of CIPSCO,
there does not now exist any condition or set of circumstances, that could
subject CIPSCO or any of the CIPSCO Subsidiaries to any material liability
arising under the Code, ERISA or any other applicable law (including, without
limitation, any liability to any such plan or the Pension Benefit Guaranty
Corporation (the "PBGC")), or under any indemnity agreement to which CIPSCO or
any subsidiary thereof is a party, excluding liability for benefit claims,
administrative expenses and funding obligations payable in the ordinary course.
No event has occurred, and, to the best
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knowledge of CIPSCO, there does not now exist any condition or set of
circumstances, that could give rise to any material liability of CIPSCO or any
ERISA Affiliate (as hereinafter defined) of CIPSCO under (i) Title IV of ERISA
(other than for PBGC premium payments), (ii) Section 302 of ERISA, (iii)
Sections 412 and 4971 of the Code, or (iv) the continuation coverage
requirements of section 601 et seq. of ERISA and Section 4980B of the Code
(other than the payment of benefits required thereby), that would be a liability
of the Company or any of its ERISA Affiliates following the Closing. The term
"ERISA Affiliate" means, with respect to any entity, trade or business, any
other entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the first entity, trade or business, or that is a member of the same "controlled
group" as the first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA or other applicable laws.
(e) Welfare Plans. Except as set forth in the CIPSCO Financial Statements,
none of the CIPSCO Benefit Plans that are "welfare plans", within the meaning of
Section 3(1) of ERISA, provides for any retiree benefits, other than
continuation coverage required to be provided under Section 4980B of the Code or
Part 6 of Title I of ERISA or other applicable laws.
(f) Documents Made Available. CIPSCO has made available to Union Electric a
true and correct copy of each collective bargaining agreement to which CIPSCO or
any of the CIPSCO Subsidiaries is a party or under which CIPSCO or any of the
CIPSCO Subsidiaries has obligations and, with respect to each CIPSCO Benefit
Plan, where applicable, (i) such plan and the most recent summary plan
description, (ii) the most recent annual report filed with the IRS, (iii) each
related trust agreement, insurance contract, service provider or investment
management agreement (including all amendments to each such document), (iv) the
most recent determination of the IRS with respect to the qualified status of
such CIPSCO Benefit Plan, and (v) the most recent actuarial report or valuation.
(g) Payments Resulting from the Merger. (i) The consummation or
announcement of any transaction contemplated by this Agreement will not (either
alone or upon the occurrence of any additional or further acts or events) result
in any (A) payment (whether of severance pay or otherwise) becoming due from
CIPSCO or any of the
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CIPSCO Subsidiaries to any officer, employee, former employee, director or
former director thereof or to the trustee under any "rabbi trust" or similar
arrangement, or (B) benefit under any CIPSCO Benefit Plan being established or
becoming accelerated, vested or payable and (ii) neither CIPSCO nor any of the
CIPSCO Subsidiaries is a party to (A) any management, employment, deferred
compensation, severance (including any payment, right or benefit resulting from
a change in control), bonus or other contract for personal services with any
officer, director or employee, (B) any consulting contract with any person who
prior to entering into such contract was a director or officer of CIPSCO, or (C)
any plan, agreement, arrangement or understanding similar to any of the
foregoing.
(h) Labor Agreements. As of the date hereof, neither CIPSCO nor any of the
CIPSCO Subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization. To the best knowledge of
CIPSCO, as of the date hereof, there is no current union representation question
involving employees of CIPSCO or any of the CIPSCO Subsidiaries, nor does CIPSCO
know of any activity or proceeding of any labor organization (or representative
thereof) or employee group to organize any such employees. Except as disclosed
in the CIPSCO SEC Reports filed prior to the date hereof or in Section 4.10(h)
of the CIPSCO Disclosure Schedule, (i) there is no unfair labor practice,
employment discrimination or other material complaint against CIPSCO or any of
the CIPSCO Subsidiaries pending or, to the best knowledge of CIPSCO, threatened,
(ii) there is no strike or lockout or material dispute, slowdown or work
stoppage pending, or to the best knowledge of CIPSCO, threatened, against or
involving CIPSCO, and (iii) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the best knowledge of CIPSCO,
threatened, in respect of which any director, officer, employee or agent of
CIPSCO or any of the CIPSCO Subsidiaries is or may be entitled to claim
indemnification from CIPSCO or such CIPSCO Subsidiary pursuant to their
respective articles of incorporation or by-laws or as provided in the
indemnification agreements listed in Section 4.10(h) of the CIPSCO Disclosure
Schedule.
Section 4.11 Environmental Protection. Except as set forth in Section 4.11
of the CIPSCO Disclosure Schedule or in the CIPSCO SEC Reports filed prior to
the date hereof:
(a) Compliance. CIPSCO and each of the CIPSCO Subsidiaries is in material
compliance with all applicable
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Environmental Laws (as defined in Section 4.11(g)(ii)); and neither CIPSCO nor
any of the CIPSCO Subsidiaries has received any communication (written or oral)
from any person or Governmental Authority that alleges that CIPSCO or any of the
CIPSCO Subsidiaries is not in material compliance with applicable Environmental
Laws.
(b) Environmental Permits. CIPSCO and each of the CIPSCO Subsidiaries has
obtained or has applied for all material environmental, health and safety
permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the construction of their facilities or the conduct of
their operations, and all such Environmental Permits are in good standing or,
where applicable, a renewal application has been timely filed and is pending
agency approval, and CIPSCO and the CIPSCO Subsidiaries are in material
compliance with all terms and conditions of the Environmental Permits, and
CIPSCO reasonably believes that any transfer, renewal or reapplication for any
Environmental Permit required as a result of the Company Merger can be
accomplished in the ordinary course of business.
(c) Environmental Claims. To the best knowledge of CIPSCO, there is no
material Environmental Claim (as defined in Section 4.11(g)(i)) pending (i)
against CIPSCO or any of the CIPSCO Subsidiaries or CIPSCO Joint Ventures, or
(ii) against any real or personal property or operations which CIPSCO or any of
the CIPSCO Subsidiaries owns, leases or manages, in whole or in part.
(d) Releases. CIPSCO has no knowledge of any material Releases (as defined
in Section 4.11(g)(iv)) of any Hazardous Material (as defined in Section
4.11(g)(iii)) that would be reasonably likely to form the basis of any material
Environmental Claim against CIPSCO or any of the CIPSCO Subsidiaries.
(e) Predecessors. CIPSCO has no knowledge of any material Environmental
Claim pending or threatened, or of any Release of Hazardous Materials that would
be reasonably likely to form the basis of any material Environmental Claim, in
each case against any person or entity (including, without limitation, any
predecessor of CIPSCO or any of the CIPSCO Subsidiaries) whose liability CIPSCO
or any of the CIPSCO Subsidiaries has or may have retained or assumed either
contractually or by operation of law or against any real or personal property
which CIPSCO or any of the CIPSCO Subsidiaries formerly owned, leased or
managed, in whole or in part.
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(f) Disclosure. To CIPSCO's best knowledge, CIPSCO has disclosed to Union
Electric all material facts which CIPSCO reasonably believes form the basis of a
material Environmental Claim arising from (i) the cost of CIPSCO pollution
control equipment currently required or known to be required in the future; (ii)
the cost that CIPSCO reasonably expects to incur to comply with the requirements
of the Clean Air Act Amendments of 1990; (iii) current CIPSCO remediation costs
or CIPSCO remediation costs known to be required in the future (including,
without limitation, any payments to resolve any threatened or asserted
Environmental Claim for remediation costs); or (iv) any other environmental
matter affecting CIPSCO.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or violation (written or
oral) by any person or entity (including any Governmental Authority) alleging
potential liability (including, without limitation, potential responsibility for
or liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural-resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location, whether or not owned,
operated, leased or managed by CIPSCO or any of the CIPSCO Subsidiaries or
CIPSCO Joint Ventures (for purposes of this Section 4.11), or by Union Electric
or any of the Union Electric Subsidiaries or Union Electric Joint Ventures (for
purposes of Section 5.11); or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law; or (C) any and all
claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state, local laws, rules
and regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to
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the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, and transformers or other equipment
that contain dielectric fluid containing polychlorinated biphenyls ("PCBs") in
regulated concentrations; and (b) any chemicals, materials or substances which
are now defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or words
of similar import, under any Environmental Law; and (c) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited or
regulated under any Environmental Law in a jurisdiction in which CIPSCO or any
of the CIPSCO Subsidiaries or CIPSCO Joint Ventures operates (for purposes of
this Section 4.11) or in which Union Electric or any of the Union Electric
Subsidiaries or Union Electric Joint Ventures operates (for purposes of Section
5.11).
(iv) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
Section 4.12 Regulation as a Utility. CIPSCO is an exempt public
utility holding company under Section 3(a)(1) of the 1935 Act. CIPS is
regulated as a public utility in the State of Illinois and in no other state and
is an exempt public utility holding company under Sections 3(a)(1) and 3(a)(2)
of the 1935 Act. Except as set forth in the preceding sentence and in Section
4.12 of the CIPSCO Disclosure Schedule, neither CIPSCO nor any "subsidiary
company" or "affiliate" (as those terms are defined in the 1935 Act) of CIPSCO
is subject to regulation as a public utility or public service company (or
similar designation) by any other state in the United States or any foreign
country.
Section 4.13 Vote Required. The approval of the Merger by two-thirds
of the votes entitled to be cast by all holders of CIPSCO Common Stock (the
"CIPSCO Shareholders' Approval") is the only vote of the holders of any class or
series of the capital stock of CIPSCO or any of its subsidiaries required to
approve this Agreement, the Mergers and the other transactions contemplated
hereby.
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Section 4.14 Accounting Matters. Neither CIPSCO, any CIPSCO
Subsidiary nor, to CIPSCO's best knowledge, any of its affiliates has taken or
agreed to take any action that would prevent the transactions to be effected
pursuant to this Agreement from being accounted for as a pooling of interests in
accordance with GAAP and applicable SEC regulations. As used in this Agreement
(except as specifically otherwise defined), the term "affiliate", except where
otherwise defined herein, shall mean, as to any person, any other person which
directly or indirectly controls, or is under common control with, or is
controlled by, such person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
Section 4.15 Non-applicability of Certain Illinois Law. Assuming the
representation and warranty of Union Electric made in Section 5.18 is correct,
and except as set forth in Section 4.15 of the CIPSCO Disclosure Schedule, none
of the business combination or fair price provisions of Sections 5/11.75 or
5/11.85 of the IBCL or any similar provisions of the IBCL (or, to the best
knowledge of CIPSCO, any other similar state statute) are applicable to the
transactions contemplated by this Agreement, including the granting of the
CIPSCO Stock Option pursuant to the CIPSCO Stock Option Agreement or the
exercise thereof.
Section 4.16 Opinion of Financial Advisor. CIPSCO has received the
oral opinion of Morgan Stanley & Co. Incorporated, to the effect that, as of
August 11, 1995, in light of the Union Electric Exchange Ratio, the CIPSCO
Exchange Ratio is fair from a financial point of view to the holders of CIPSCO
Common Stock.
Section 4.17 Insurance. Except as set forth in Section 4.17 of the
CIPSCO Disclosure Schedule, CIPSCO and each of the CIPSCO Subsidiaries is, and
has been continuously since January 1, 1990, insured with financially
responsible insurers in such amounts and against such risks and losses as are
customary in all material respects for companies conducting the business as
conducted by CIPSCO and the CIPSCO Subsidiaries during such time period. Except
as set forth in Section 4.17 of the CIPSCO Disclosure Schedule, neither CIPSCO
nor any of the CIPSCO Subsidiaries has received any notice of cancellation or
termination with respect to any material insurance policy of
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CIPSCO or any of the CIPSCO Subsidiaries. The insurance policies of CIPSCO and
each of the CIPSCO Subsidiaries are valid and enforceable policies in all
material respects.
Section 4.18 Ownership of Union Electric Common Stock. Except
pursuant to the terms of the Union Electric Stock Option Agreement and as set
forth in Section 4.18 of the CIPSCO Disclosure Schedule, CIPSCO does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of Union Electric Common Stock or Union Electric
Preferred Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF UNION ELECTRIC
Union Electric represents and warrants to CIPSCO as follows:
Section 5.1 Organization and Qualification. Except as set forth in Section
5.1 of the Union Electric Disclosure Schedule (as defined in Section 7.6(i)),
each of Union Electric and each Union Electric Subsidiary (as defined below) is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders to own, lease and operate its assets and properties to the
extent owned, leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary. As
used in this Agreement, the term: (a) "Union Electric Subsidiary" shall mean
those of the subsidiaries and general partnership interests of Union Electric
identified as Union Electric Subsidiaries in Section 5.2 of the Union Electric
Disclosure Schedule; and (b) "Union Electric Joint Venture" shall mean those of
the joint ventures of Union Electric or any Union Electric Subsidiary identified
as a Union Electric Joint Venture in Section 5.2 of the Union Electric
Disclosure Schedule.
Section 5.2 Subsidiaries. Section 5.2 of the Union Electric Disclosure
Schedule sets forth a description as of the date hereof of all subsidiaries and
joint ventures of Union Electric, including (a) the name of each such entity and
Union Electric's interest therein, and (b) as to each Union Electric Subsidiary
and Union Electric Joint Venture, a brief description of the principal line or
lines of business conducted by
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each such entity. Except as set forth in Section 5.2 of the Union Electric
Disclosure Schedule, none of the Union Electric Subsidiaries is a "public
utility company", a "holding company", a "subsidiary company" or an "affiliate"
of any public utility company within the meaning of Section 2(a)(5), 2(a)(7),
2(a)(8) or 2(a)(11) of the 1935 Act, respectively. Except as set forth in
Section 5.2 of the Union Electric Disclosure Schedule, all of the issued and
outstanding shares of capital stock of each Union Electric Subsidiary are
validly issued, fully paid, nonassessable and free of preemptive rights, and are
owned directly or indirectly by Union Electric free and clear of any liens,
claims, encumbrances, security interests, equities, charges and options of any
nature whatsoever and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any such Union Electric Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of its capital
stock or obligating it to grant, extend or enter into any such agreement or
commitment. With respect to the subsidiaries and joint ventures of Union
Electric that are not Union Electric Subsidiaries (the "Union Electric
Unrestricted Subsidiaries"): (i) except as set forth in Section 5.2 of the
Union Electric Disclosure Schedule, neither Union Electric nor any Union
Electric Subsidiary is liable for any obligations or liabilities of any Union
Electric Unrestricted Subsidiary; (ii) neither Union Electric nor any Union
Electric Subsidiary is obligated to make any loans or capital contributions to,
or to undertake any guarantees or other obligations with respect to, Union
Electric Unrestricted Subsidiaries, except for loans, capital contributions,
guarantees and other obligations not in excess of $20 million in the aggregate
to all such Union Electric Unrestricted Subsidiaries; and (iii) the aggregate
book value as of December 31, 1994, of Union Electric's investment in the Union
Electric Unrestricted Subsidiaries (other than Electric Energy, Inc., an
Illinois corporation) was not in excess of $10 million.
Section 5.3 Capitalization. The authorized capital stock of Union Electric
consists of 150,000,000 shares of Union Electric Common Stock, 25,000,000 shares
of Union Electric Preferred Stock and 7,500,000 shares of preference stock, par
value $1.00 per share ("Union Electric Preference Stock"). As of the close of
business on August 11, 1995, there were issued and outstanding 102,123,834
shares of Union Electric Common Stock, 3,434,596 shares of Union Electric
Preferred Stock and
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no shares of Union Electric Preference Stock. All of the issued and outstanding
shares of the capital stock of Union Electric are, and any shares of Union
Electric Common Stock issued pursuant to the Union Electric Stock Option
Agreement will be, validly issued, fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 5.3 of the Union Electric
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating Union Electric or any of the Union
Electric Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Union Electric, or
obligating Union Electric to grant, extend or enter into any such agreement or
commitment, other than under the Union Electric Stock Option Agreement. Other
than in connection with the Union Electric Stock Option, there are no
outstanding stock appreciation rights of Union Electric which were not granted
in tandem with a related stock option and no outstanding limited stock
appreciation rights or other rights to redeem for cash options or warrants of
Union Electric.
Section 5.4 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. Union Electric has all requisite corporate power and
authority to enter into this Agreement and the Union Electric Stock Option
Agreement, and, subject to the applicable Union Electric Shareholders' Approval
(as defined in Section 5.13) and the applicable Union Electric Required
Statutory Approvals (as defined in Section 5.4(c)), to consummate the
transactions contemplated hereby or thereby. The execution and delivery of this
Agreement and the Union Electric Stock Option Agreement and the consummation by
Union Electric of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Union Electric,
subject, in the case of this Agreement, to obtaining the applicable Union
Electric Shareholders' Approval. Each of this Agreement and the Union Electric
Stock Option Agreement has been duly and validly executed and delivered by Union
Electric and, assuming the due authorization, execution and delivery hereof and
thereof by the other signatories hereto and thereto, constitutes the valid and
binding obligation of Union Electric enforceable against it in accordance with
its terms.
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(b) Non-Contravention. Except as set forth in Section 5.4(b) of the Union
Electric Disclosure Schedule, the execution and delivery of this Agreement and
the Union Electric Stock Option Agreement by Union Electric does not, and the
consummation of the transactions contemplated hereby or thereby will not, result
in a material Violation pursuant to any provisions of (i) the articles of
incorporation, by-laws or similar governing documents of Union Electric or any
of the Union Electric Subsidiaries or the Union Electric Joint Ventures, (ii)
subject to obtaining the Union Electric Required Statutory Approvals and the
receipt of the Union Electric Shareholders' Approval, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to Union Electric or any of
the Union Electric Subsidiaries or the Union Electric Joint Ventures or any of
their respective properties or assets or (iii) subject to obtaining the third-
party consents set forth in Section 5.4(b) of the Union Electric Disclosure
Schedule (the "Union Electric Required Consents"), any material note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Union Electric or any of the Union Electric Subsidiaries or Union Electric
Joint Ventures is a party or by which it or any of its properties or assets may
be bound or affected.
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental Authority
is necessary for the execution and delivery of this Agreement or the Union
Electric Stock Option Agreement by Union Electric or the consummation by Union
Electric of the transactions contemplated hereby, except as described in Section
5.4(c) of the Union Electric Disclosure Schedule (the "Union Electric Required
Statutory Approvals", it being understood that references in this Agreement to
"obtaining" such Union Electric Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods expire as
are necessary to avoid a violation of law).
(d) Compliance. Except as set forth in Section 5.4(d), Section 5.10 or
Section 5.11 of the Union Electric Disclosure Schedule, or as disclosed in the
Union Electric SEC Reports (as defined in Section 5.5) filed prior to the date
hereof, neither Union Electric nor any of the Union Electric Subsidiaries nor,
to the knowledge of Union Electric, any Union Electric Joint Venture, is in
material violation of, is under investigation with respect to any material
violation of, or has been given notice or been charged with any material
violation
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of, any law, statute, order, rule, regulation, ordinance or judgment (including,
without limitation, any applicable environmental law, ordinance or regulation)
of any Governmental Authority. Except as set forth in Section 5.4(d) of the
Union Electric Disclosure Schedule or in Section 5.11 of the Union Electric
Disclosure Schedule, Union Electric and the Union Electric Subsidiaries and
Union Electric Joint Ventures have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct their
businesses as presently conducted in all material respects. Except as set forth
in Section 5.4(d) of the Union Electric Disclosure Schedule, Union Electric and
each of the Union Electric Subsidiaries is not in material breach or violation
of or in material default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a material default under, (i) its articles of
incorporation or by-laws or (ii) any material contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound or to which any
of its property is subject.
Section 5.5 Reports and Financial Statements. The filings required to be
made by Union Electric and the Union Electric Subsidiaries since January 1, 1990
under the Securities Act, the Exchange Act, the 1935 Act, the Power Act, the
Atomic Energy Act and applicable state public utility laws and regulations have
been filed with the SEC, the FERC, the NRC or the appropriate state public
utilities commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits, amendments
and supplements appertaining thereto, and complied, as of their respective
dates, in all material respects with all applicable requirements of the
appropriate statute and the rules and regulations thereunder. Union Electric
has made available to CIPSCO a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by Union Electric
with the SEC since January 1, 1992 (as such documents have since the time of
their filing been amended, the "Union Electric SEC Reports"). As of their
respective dates, the Union Electric SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of Union Electric included
in the Union Electric SEC Reports (collectively, the "Union Electric Financial
Statements") have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes
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thereto and except with respect to unaudited statements as permitted by Form 10-
Q of the SEC) and fairly present the financial position of Union Electric as of
the dates thereof and the results of its operations and cash flows for the
periods then ended. True, accurate and complete copies of Union Electric's
Restated Articles of Incorporation and by-laws of Union Electric as in effect on
the date hereof have been made available to CIPSCO.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed in
the Union Electric SEC Reports filed prior to the date hereof or as set forth in
Section 5.6 of the Union Electric Disclosure Schedule, from December 31, 1994,
Union Electric and each of the Union Electric Subsidiaries have conducted their
business only in the ordinary course of business consistent with past practice
and there has not been, and no fact or condition exists which would have or,
insofar as reasonably can be foreseen, could have, a material adverse effect on
the business, assets, financial condition, results of operations or prospects of
Union Electric and its subsidiaries taken as a whole (an "Union Electric
Material Adverse Effect").
Section 5.7 Litigation. Except as disclosed in the Union Electric SEC
Reports filed prior to the date hereof or as set forth in Section 5.7, Section
5.9 or Section 5.11 of the Union Electric Disclosure Schedule, (i) there are no
material claims, suits, actions or proceedings, pending or, to the knowledge of
Union Electric, threatened, nor are there, to the knowledge of Union Electric,
any material investigations or reviews pending or threatened against, relating
to or affecting Union Electric or any of the Union Electric Subsidiaries, (ii)
there have not been any significant developments since December 31, 1994 with
respect to such disclosed claims, suits, actions, proceedings, investigations or
reviews and (iii) there are no material judgments, decrees, injunctions, rules
or orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to Union Electric or
any of the Union Electric Subsidiaries.
Section 5.8 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of Union Electric for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (ii) the Proxy
Statement will not, at the dates mailed to shareholders and at the times of the
meetings of shareholders to be held in connection
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with the Mergers, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement and the Proxy Statement,
insofar as they relate to Union Electric or any Union Electric Subsidiary, will
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
Section 5.9 Tax Matters. Except as set forth in Section 5.9 of the Union
Electric Disclosure Schedule:
(a) Filing of Timely Tax Returns. Union Electric and each of the Union
Electric Subsidiaries have filed (or there has been filed on its behalf) all
material Tax Returns required to be filed by each of them under applicable law.
All such Tax Returns were and are in all material respects true, complete and
correct and filed on a timely basis.
(b) Payment of Taxes. Union Electric and each of the Union Electric
Subsidiaries have, within the time and in the manner prescribed by law, paid all
Taxes that are currently due and payable except for those contested in good
faith and for which adequate reserves have been taken.
(c) Deferred Income Taxes. Union Electric and the Union Electric
Subsidiaries have accounted for deferred income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of Union Electric or
any of the Union Electric Subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. Union Electric and each of the Union Electric
Subsidiaries have complied in all material respects with the provisions of the
Code relating to the withholding of Taxes, as well as similar provisions under
any other laws, and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither Union Electric nor
any of the Union Electric Subsidiaries has requested any extension of time
within which to file any Tax Return, which Tax Return has not since been filed.
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(g) Waivers of Statute of Limitations. Neither Union Electric nor any of
the Union Electric Subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute of limitations for
the assessment of all Taxes has expired for all applicable Tax Returns of Union
Electric and each of the Union Electric Subsidiaries or those Tax Returns have
been examined by the appropriate taxing authorities for all periods through the
date hereof, and no deficiency for any Taxes has been proposed, asserted or
assessed against Union Electric or any of the Union Electric Subsidiaries that
has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of Union Electric or any of the Union
Electric Subsidiaries.
(j) Powers of Attorney. No power of attorney currently in force has been
granted by Union Electric or any of the Union Electric Subsidiaries concerning
any Tax matter.
(k) Tax Rulings. Neither Union Electric nor any of the Union Electric
Subsidiaries has received a Tax Ruling or entered into a Closing Agreement with
any taxing authority that would have a continuing adverse effect after the
Closing Date.
(l) Availability of Tax Returns. Union Electric has made available to
CIPSCO complete and accurate copies of (i) all Tax Returns, and any amendments
thereto, filed by Union Electric or any of the Union Electric Subsidiaries since
January 1, 1992, (ii) all audit reports received from any taxing authority
relating to any Tax Return filed by Union Electric or any of the Union Electric
Subsidiaries and (iii) any Closing Agreements entered into by Union Electric or
any of the Union Electric Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither Union Electric nor any Union Electric
Subsidiary is a party to any agreement relating to allocating or sharing of
Taxes.
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(n) Code Section 280G. Neither Union Electric nor any of the Union Electric
Subsidiaries is a party to any agreement, contract, or arrangement that could
result, on account of the transactions contemplated hereunder, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(o) Liability for Others. Neither Union Electric nor any of the Union
Electric Subsidiaries has any liability for Taxes of any person other than Union
Electric and the Union Electric Subsidiaries (i) under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor, (ii) by contract, or (iii) otherwise.
Section 5.10 Employee Matters; ERISA. Except as set forth in Section 5.10
of the Union Electric Disclosure Schedule:
(a) Benefit Plans. Section 5.10(a) of the Union Electric Disclosure
Schedule contains a true and complete list of each employee benefit plan
covering employees, former employees, directors or former directors of Union
Electric and each of the Union Electric Subsidiaries or their beneficiaries, or
providing benefits to such persons in respect of services provided to any such
entity, including, but not limited to, any employee benefit plans within the
meaning of Section 3(3) of ERISA and any severance or change in control
agreement (collectively, the "Union Electric Benefit Plans"). No Union Electric
Benefit Plan is a "multiemployer plan" as defined in Section 3(37) of ERISA.
(b) Contributions. All material contributions and other payments required
to be made for any period through the date to which this representation speaks,
by Union Electric or any of the Union Electric Subsidiaries to any Union
Electric Benefit Plan (or to any person pursuant to the terms thereof) have been
timely made or paid in full, or, to the extent not required to be made or paid
on or before the date to which this representation speaks, have been reflected
in the Union Electric Financial Statements.
(c) Qualification; Compliance. Each of the Union Electric Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified or an application for
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such a determination, which was filed before the expiration of the applicable
remedial amendment period, is pending, and, to the best knowledge of Union
Electric, no circumstances exist that are reasonably expected by Union Electric
to result in the revocation of any such determination. Union Electric and each
of its subsidiaries is in compliance in all material respects with, and each of
the Union Electric Benefit Plans is and has been operated in all material
respects in compliance with, all applicable laws, rules and regulations
governing such plan, including, without limitation, ERISA and the Code. Each
Union Electric Benefit Plan intended to provide for the deferral of income, the
reduction of salary or other compensation, or to afford other income tax
benefits, complies with the requirements of the applicable provisions of the
Code or other laws, rules and regulations required to provide such income tax
benefits. There are no pending or, to the knowledge of Union Electric,
threatened or anticipated claims under or in respect of any Union Electric
Benefit Plan by or on behalf of any employee, former employee, director, former
director, or beneficiary thereof, or otherwise involving any Union Electric
Benefit Plan (other than routine claims for benefits).
(d) Liabilities. With respect to the Union Electric Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the best
knowledge of Union Electric, there does not now exist any condition or set of
circumstances, that could subject Union Electric or any of the Union Electric
Subsidiaries to any material liability arising under the Code, ERISA or any
other applicable law (including, without limitation, any liability to any such
plan or the PBGC), or under any indemnity agreement to which Union Electric or
any subsidiary thereof is a party, excluding liability for benefit claims,
administrative expenses and funding obligations payable in the ordinary course.
No event has occurred, and, to the best knowledge of Union Electric, there does
not now exist any condition or set of circumstances, that could give rise to any
material liability of Union Electric or any ERISA Affiliate of Union Electric
under (i) Title IV of ERISA (other than for PBGC premium payments), (ii) Section
302 of ERISA, (iii) Sections 412 and 4971 of the Code, or (iv) the continuation
coverage requirements of Section 601 et seq. of ERISA and section 4980B of the
Code (other than for the payment of benefits required thereby), that would be a
liability of the Company or any of its ERISA Affiliates following the Closing.
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(e) Welfare Plans. Except as set forth in the Union Electric Financial
Statements, none of the Union Electric Benefit Plans that are "welfare plans",
within the meaning of Section 3(1) of ERISA, provides for any retiree benefits,
other than continuation coverage required to be provided under Section 4980B of
the Code or Part 6 of Title I of ERISA or other applicable laws.
(f) Documents Made Available. Union Electric has made available to CIPSCO a
true and correct copy of each collective bargaining agreement to which Union
Electric or any of the Union Electric Subsidiaries is a party or under which
Union Electric or any of the Union Electric Subsidiaries has obligations and,
with respect to each Union Electric Benefit Plan, where applicable, (i) such
plan and the most recent summary plan description, (ii) the most recent annual
report filed with the IRS, (iii) each related trust agreement, insurance
contract, service provider or investment management agreement (including all
amendments to each such document), (iv) the most recent determination of the IRS
with respect to the qualified status of such Union Electric Benefit Plan, and
(v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. (i) The consummation or announcement
of any transaction contemplated by this Agreement will not (either alone or upon
the occurrence of any additional or further acts or events) result in any (A)
payment (whether of severance pay or otherwise) becoming due from Union Electric
or any of the Union Electric Subsidiaries to any officer, employee, former
employee, director or former director thereof or to the trustee under any "rabbi
trust" or similar arrangement, or (B) benefit under any Union Electric Benefit
Plan being established or becoming accelerated, vested or payable and (ii)
neither Union Electric nor any of the Union Electric Subsidiaries is a party to
(A) any management, employment, deferred compensation, severance (including any
payment, right or benefit resulting from a change in control), bonus or other
contract for personal services with any officer, director or employee, (B) any
consulting contract with any person who prior to entering into such contract was
a director or officer of Union Electric, or (C) any plan, agreement, arrangement
or understanding similar to any of the foregoing.
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(h) Labor Agreements. As of the date hereof, neither Union Electric nor any
of the Union Electric Subsidiaries is a party to any collective bargaining
agreement or other labor agreement with any union or labor organization. To the
best knowledge of Union Electric, as of the date hereof, there is no current
union representation question involving employees of Union Electric or any of
the Union Electric Subsidiaries, nor does Union Electric know of any activity or
proceeding of any labor organization (or representative thereof) or employee
group to organize any such employees. Except as disclosed in the Union Electric
SEC Reports filed prior to the date hereof or in Section 5.10(h) of the Union
Electric Disclosure Schedule, (i) there is no unfair labor practice, employment
discrimination or other material complaint against Union Electric or any of the
Union Electric Subsidiaries pending or, to the best knowledge of Union Electric,
threatened, (ii) there is no strike, or lockout or material dispute, slowdown or
work stoppage pending, or to the best knowledge of Union Electric, threatened,
against or involving Union Electric, and (iii) there is no proceeding, claim,
suit, action or governmental investigation pending or, to the best knowledge of
Union Electric, threatened, in respect of which any director, officer, employee
or agent of Union Electric or any of the Union Electric Subsidiaries is or may
be entitled to claim indemnification from Union Electric or such Union Electric
Subsidiary pursuant to their respective articles of incorporation or by-laws or
as provided in the indemnification agreements listed in Section 5.10(h) of the
Union Electric Disclosure Schedule.
Section 5.11 Environmental Protection. Except as set forth in Section 5.11
of the Union Electric Disclosure Schedule or in the Union Electric SEC Reports
filed prior to the date hereof:
(a) Compliance. Union Electric and each of the Union Electric Subsidiaries
is in material compliance with all applicable Environmental Laws; and neither
Union Electric nor any of the Union Electric Subsidiaries has received any
communication (written or oral) from any person or Governmental Authority that
alleges that Union Electric or any of the Union Electric Subsidiaries is not in
material compliance with applicable Environmental Laws.
(b) Environmental Permits. Union Electric and each of the Union Electric
Subsidiaries has obtained or has applied for all the Environmental Permits
necessary for the construction of their facilities or the conduct of
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their operations, and all such Environmental Permits are in good standing or,
where applicable, a renewal application has been timely filed and is pending
agency approval, and Union Electric and the Union Electric Subsidiaries are in
material compliance with all terms and conditions of the Environmental Permits,
and Union Electric reasonably believes that any transfer, renewal or
reapplication for any Environmental Permit required as a result of the Union
Electric Merger can be accomplished in the ordinary course of business.
(c) Environmental Claims. To the best knowledge of Union Electric, there is
no material Environmental Claim pending (i) against Union Electric or any of the
Union Electric Subsidiaries or Union Electric Joint Ventures, or (ii) against
any real or personal property or operations which Union Electric or any of the
Union Electric Subsidiaries owns, leases or manages, in whole or in part.
(d) Releases. Union Electric has no knowledge of any material Releases of
any Hazardous Material that would be reasonably likely to form the basis of any
material Environmental Claim against Union Electric or any of the Union Electric
Subsidiaries.
(e) Predecessors. Union Electric has no knowledge of any material
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any material
Environmental Claim, in each case against any person or entity (including,
without limitation, any predecessor of Union Electric or any of the Union
Electric Subsidiaries) whose liability Union Electric or any of the Union
Electric Subsidiaries has or may have retained or assumed either contractually
or by operation of law or against any real or personal property which Union
Electric or any of the Union Electric Subsidiaries formerly owned, leased or
managed, in whole or in part.
(f) Disclosure. To Union Electric's best knowledge, Union Electric has
disclosed to CIPSCO all material facts which Union Electric reasonably believes
form the basis of a material Environmental Claim arising from (i) the cost of
Union Electric pollution control equipment currently required or known to be
required in the future; (ii) the cost that Union Electric reasonably expects to
incur to comply with the requirements of the Clean Air Act Amendments of 1990;
(iii) current Union Electric remediation costs or Union Electric remediation
costs known to be required in the future (including, without limitation, any
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payments to resolve any threatened or asserted Environmental Claim for
remediation costs); or (iv) any other environmental matter affecting Union
Electric.
Section 5.12 Regulation as a Utility. Union Electric is regulated as a
public utility in the States of Missouri and Illinois and in no other state.
Neither Union Electric nor any "subsidiary company" or "affiliate" of Union
Electric is subject to regulation as a public utility or public service company
(or similar designation) by any other state in the United States or any foreign
country.
Section 5.13 Vote Required. The approval of the Mergers by two-thirds of
the votes entitled to be cast by the holders of the shares of Union Electric
Common Stock and Union Electric Preferred Stock, voting together as a single
class (the "Union Electric Shareholders' Approval"), is the only vote of the
holders of any class or series of the capital stock of Union Electric or any of
its subsidiaries required to approve this Agreement, the Mergers and the other
transactions contemplated hereby.
Section 5.14 Accounting Matters. Neither Union Electric nor, to Union
Electric's best knowledge, any of its affiliates has taken or agreed to take any
action that would prevent the Company from accounting for the transactions to be
effected pursuant to this Agreement as a pooling of interests in accordance with
GAAP and applicable SEC regulations.
Section 5.15 Non-applicability of Certain Missouri Law. Assuming that the
representation and warranty of CIPSCO made in Section 4.18 is correct, and
except as set forth in Section 5.15 of the Union Electric Disclosure Schedule,
none of the control share acquisition provisions of Sections 351.407 and 351.015
of the MGBCL or the business combination provisions of Section 351.459 of the
MGBCL or any similar provisions of the MGBCL (or, to the best knowledge of Union
Electric, any other similar state statute) are applicable to the transactions
contemplated by this Agreement including the granting of the Union Electric
Stock Option pursuant to the Union Electric Stock Option Agreement or the
exercise thereof.
Section 5.16 Opinion of Financial Advisor. Union Electric has received the
oral opinion of Goldman, Sachs & Co. to, the effect that, as of August 11, 1995,
the Exchange Ratios are fair from a financial point of view to the holders of
Union Electric Common Stock.
Section 5.17 Insurance. Except as set forth in Section 5.17 of the Union
Electric Disclosure Schedule, Union
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Electric and each of the Union Electric Subsidiaries is, and has been
continuously since January 1, 1990, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary in
all material respects for companies conducting the business as conducted by
Union Electric and the Union Electric Subsidiaries during such time period.
Except as set forth in Section 5.17 of the Union Electric Disclosure Schedule,
neither Union Electric nor any of the Union Electric Subsidiaries has received
any notice of cancellation or termination with respect to any material insurance
policy of Union Electric or any of the Union Electric Subsidiaries. The
insurance policies of Union Electric and each of the Union Electric Subsidiaries
are valid and enforceable policies in all material respects.
Section 5.18 Ownership of CIPSCO Common Stock. Except pursuant to the terms
of the CIPSCO Stock Option Agreement, Union Electric does not "beneficially own"
(as such term is defined for purposes of Section 13(d) of the Exchange Act) any
shares of CIPSCO Common Stock.
Section 5.19. Operations of Nuclear Power Plant. Except as set forth in
Section 5.18 of the Union Electric Disclosure Schedule, the operations of the
nuclear power facility owned by Union Electric ("Callaway") have at all times
been conducted in material compliance with applicable health, safety, regulatory
and other legal requirements. Union Electric maintains emergency plans designed
to respond to an unplanned release from Callaway of radioactive materials into
the environment. Union Electric currently maintains (i) customary liability
insurance consistent with industry practice and consistent with Union Electric's
view of the risks inherent to the operation of a nuclear power facility and (ii)
plans for the decommissioning of Callaway and for the short-term storage of
spent nuclear fuel, which plans have at all times been funded consistent with
budget projections for such plans.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties. After the date hereof and prior to
the Effective Time or earlier termination of this Agreement, Union Electric and
CIPSCO each agree as follows, each as to itself and to each of the Union
Electric Subsidiaries and the CIPSCO Subsidiaries, as the case may be, except as
expressly contemplated or permitted in this Agreement, the Union Electric Stock
Option Agreement or the CIPSCO
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Stock Option Agreement, or to the extent the other parties hereto shall
otherwise consent in writing:
(a) Ordinary Course of Business. Each party hereto shall, and shall cause
its Direct Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use all commercially reasonable efforts to preserve intact their
present business organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings with
them and, subject to prudent management of workforce needs and ongoing programs
currently in force, keep available the services of their present officers and
employees. Except as set forth in Section 6.1(a) of the Union Electric
Disclosure Schedule or the CIPSCO Disclosure Schedule, respectively, no party
shall, nor shall any party permit any of its Direct Subsidiaries to, enter into
a new line of business, or make any change in the line of business it engages in
as of the date hereof involving any material investment of assets or resources
or any material exposure to liability or loss, in the case of CIPSCO, to CIPSCO
and its subsidiaries taken as a whole, and in the case of Union Electric, to
Union Electric and its subsidiaries taken as a whole.
(b) Dividends. No party shall, nor shall any party permit any of its Direct
Subsidiaries to, (i) declare or pay any dividends on or make other distributions
in respect of any of their capital stock other than to such party or its wholly
owned subsidiaries, regular quarterly dividends on Union Electric Common Stock
with usual record and payment dates not, during any fiscal year, in excess of
104% of the dividends for the prior fiscal year, regular quarterly dividends on
Union Electric Preferred Stock with usual record and payment dates, regular
quarterly dividends on CIPSCO Common Stock with usual record and payment dates
not, during any fiscal year, in excess of 104% of the dividends for the prior
fiscal year and regular quarterly dividends on CIPS Preferred Stock with usual
record and payment dates; (ii) split, combine or reclassify any of their capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of their capital stock;
or (iii) redeem, repurchase or otherwise acquire any shares of their capital
stock, other than (A) in connection with refunding of CIPS Preferred Stock or
Union Electric Preferred Stock with preferred stock or debt at a lower cost of
funds (calculating such
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cost on an after-tax basis), (B) in connection with intercompany purchases of
capital stock or (C) for the purpose of funding the Union Electric Dividend
Reinvestment and Stock Purchase Plan, the CIPSCO Automatic Dividend Reinvestment
and Stock Purchase Plan, the CIPS Employee Long-Term Savings Plan, Employee
Long-Term Savings Plan IBEW-702, and Employee Long-Term Savings Plan IUOE-148
(the "CIPS 401(k) Plans"), the Union Electric Savings Investment Plan, and/or
the Union Electric Long-Term Incentive Plan of 1995 ("Union Electric LTIP").
The last record date of each of Union Electric and CIPSCO on or prior to the
Effective Time which relates to a regular quarterly dividend on Union Electric
Common Stock or CIPSCO Common Stock, as the case may be, shall be agreed to by
the parties in advance and shall be the same date and shall be prior to the
Effective Time.
(c) Issuance of Securities. No party shall, nor shall any party permit any
of its Direct Subsidiaries to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of, any shares of
their capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such shares
or convertible or exchangeable securities, other than pursuant to the CIPSCO
Stock Option Agreement or the Union Electric Stock Option Agreement, other than
intercompany issuances of capital stock, and other than issuances (i) in the
case of CIPSCO and the CIPSCO Subsidiaries, in connection with refunding CIPS
Preferred Stock with preferred stock or debt at a lower cost of funds
(calculating such cost on an after-tax basis); and (ii), in the case of Union
Electric and the Union Electric Subsidiaries (x) in connection with refunding of
Union Electric Preferred Stock with preferred stock or debt at a lower cost of
funds (calculating such cost on an after-tax basis); and (y) up to 500,000
shares of Union Electric Common Stock to be issued pursuant to the Union
Electric Long-Term Incentive Plan of 1995. The parties shall promptly furnish
to each other such information as may be reasonably requested including
financial information and take such action as may be reasonably necessary and
otherwise fully cooperate with each other in the preparation of any registration
statement under the Securities Act and other documents necessary in connection
with issuance of securities as contemplated by this Section 6.1(c), subject to
obtaining customary indemnities.
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(d) Charter Documents. No party shall, and no party shall permit any of its
subsidiaries to, amend or propose to amend its respective articles of
incorporation, by-laws or regulations, or similar organic documents, except as
contemplated herein.
(e) No Acquisitions. Except as set forth in Section 6.1(bb) or 6.1(e) of
the CIPSCO Disclosure Schedule or the Union Electric Disclosure Schedule, other
than (i) acquisitions by CIPSCO and its Direct Subsidiaries not in excess of $15
million, singularly or in the aggregate and (ii) acquisitions by Union Electric
and its Direct Subsidiaries not in excess of $50 million, singularly or in the
aggregate, no party shall, nor shall any party permit any of its Direct
Subsidiaries to, acquire, or publicly propose to acquire, or agree to acquire,
by merger or consolidation with, or by purchase or otherwise, a substantial
equity interest in or a substantial portion of the assets of, any business or
any corporation, partnership, association or other business organization or
division thereof, nor shall any party acquire or agree to acquire a material
amount of assets other than in the ordinary course of business consistent with
past practice.
(f) Capital Expenditures and Emission Allowances. Except as set forth in
Section 6.1(f) of the CIPSCO Disclosure Schedule or the Union Electric
Disclosure Schedule or as required by law, no party shall, nor shall any party
permit any of its Direct Subsidiaries to, (i) (x) in the case of CIPSCO, make
capital expenditures in excess of $75 million over the amount budgeted by CIPSCO
or its Direct Subsidiaries for capital expenditures as set forth in such Section
6.1(f) of the CIPSCO Disclosure Schedule and (y) in the case of Union Electric,
make capital expenditures in excess of $200 million over the amount budgeted by
Union Electric or its Direct Subsidiaries for capital expenditures as set forth
in such Section 6.1(f) of the Union Electric Disclosure Schedule or (ii) enter
into written commitments for the purchase of sulfur dioxide emission allowances
as provided for by the Clean Air Act Amendments of 1990, (x) in the case of
CIPSCO, in excess of $15 million and (y) in the case of Union Electric, in
excess of $20 million, in each case singularly or in the aggregate.
(g) No Dispositions. Except as set forth in Section 6.1(g) of the CIPSCO
Disclosure Schedule or the Union Electric Disclosure Schedule, other than (i)
dispositions by CIPSCO and its Direct Subsidiaries of less than $15
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million, singularly or in the aggregate and (ii) dispositions by Union Electric
and its Direct Subsidiaries of less than $50 million, singularly or in the
aggregate, no party shall, nor shall any party permit any of its Direct
Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, any of
its assets, other than encumbrances or dispositions in the ordinary course of
its business consistent with past practice.
(h) Indebtedness. Except as contemplated by this Agreement, no party shall,
nor shall any party permit any of its Direct Subsidiaries to, incur or guarantee
any indebtedness (including any debt borrowed or guaranteed or otherwise assumed
including, without limitation, the issuance of debt securities or warrants or
rights to acquire debt) or enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing other than (i)
short-term indebtedness in the ordinary course of business consistent with past
practice (such as the issuance of commercial paper or the use of existing credit
facilities); (ii) arrangements between such party and its Direct Subsidiaries or
among its Direct Subsidiaries; (iii) indebtedness in an amount not to exceed in
the aggregate $75 million, in the case of CIPSCO, and indebtedness in an amount
not to exceed in the aggregate $200 million, in the case of Union Electric; or
(iv) in connection with the refunding of existing indebtedness at a lower cost
of funds or the refunding of Preferred Stock as permitted by Section 6.1(b).
(i) Compensation, Benefits. Except as set forth in Section 6.1(i) of the
CIPSCO Disclosure Schedule or the Union Electric Disclosure Schedule, as may be
required by applicable law, as may be required to facilitate or obtain a
determination from the IRS that a plan is "qualified" within the meaning of
Section 401(a) of the Code or as contemplated by this Agreement, no party shall,
nor shall any party permit any of its Direct Subsidiaries to, (i) enter into,
adopt or amend or increase the amount or accelerate the payment or vesting of
any benefit or amount payable under, any employee benefit plan or other
contract, agreement, commitment, arrangement, plan or policy covering employees,
former employees, directors or former directors or their beneficiaries or
providing benefits to such persons that is maintained by, contributed to or
entered into by such party or any of its Direct Subsidiaries, or increase, or
enter into any contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to extend,
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expand or enhance the engagement, employment or any related rights of, or take
any other action or grant any benefit (including, without limitation, any stock
options or stock option plan) not required under the terms of any existing
employee benefit plan, or other contract, agreement, commitment, arrangement,
plan or policy to or with any director, officer or other employee of such party
or any of its Direct Subsidiaries, except for normal increases or grants or
actions in the ordinary course of business consistent with past practice that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to such party or any of its Direct Subsidiaries or (ii)
enter into or amend any employment, severance or special pay arrangement with
respect to the termination of employment or other similar contract, agreement or
arrangement with any director or officer or other employee other than in the
ordinary course of business consistent with current industry practice.
(j) 1935 Act. Except as set forth in Section 6.1(j) of the CIPSCO
Disclosure Schedule or Union Electric Disclosure Schedule, and except as
required or contemplated by this Agreement, no party shall, nor shall any party
permit any of its Direct Subsidiaries to, engage in any activities which would
cause a change in its status, or that of its subsidiaries, under the 1935 Act.
(k) Transmission, Generation. Except as permitted pursuant to Section
6.1(f) and except as required pursuant to tariffs on file with the FERC as of
the date hereof, in the ordinary course of business consistent with past
practice, or as set forth in Section 6.1(k) of the CIPSCO Disclosure Schedule or
the Union Electric Disclosure Schedule, no party shall, nor shall any party
permit any of its Direct Subsidiaries to, (i) commence construction of any
additional generating, transmission or delivery capacity, or (ii) obligate
itself to purchase or otherwise acquire, or to sell or otherwise dispose of, or
to share, any additional generating, transmission or delivery capacity owned by
Union Electric or CIPS except as set forth in the budgets of CIPSCO and Union
Electric.
(l) Accounting. Except as set forth in Section 6.1(l) of the CIPSCO
Disclosure Schedule or Union Electric Disclosure Schedule, no party shall, nor
shall any party permit any of its Direct Subsidiaries to, make any changes in
their accounting methods, except as required by law, rule, regulation or GAAP.
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(m) Pooling. No party shall, nor shall any party permit any of its
subsidiaries to, take any action which would, or would be reasonably likely to,
prevent the Company from accounting for the transactions to be effected pursuant
to this Agreement as a pooling of interests in accordance with GAAP and
applicable SEC regulations, and each party hereto shall use all reasonable
efforts to achieve such result (including taking such actions as may be
necessary to cure any facts or circumstances that could prevent such
transactions from qualifying for pooling-of-interests accounting treatment).
(n) Tax-Free Status. No party shall, nor shall any party permit any of its
subsidiaries to, take any actions which would, or would be reasonably likely to,
adversely affect the status of the Mergers as a tax-free transaction (except as
to dissenters' rights and fractional shares) under Section 368(a) of the Code,
and each party hereto shall use all reasonable efforts to achieve such result.
(o) Affiliate Transactions. Except as set forth in Section 6.1(o) of each
of the CIPSCO Disclosure Schedule or the Union Electric Disclosure Schedule, no
party shall, nor shall any party permit any of its Direct Subsidiaries to, enter
into any material agreement or arrangement with any of their respective
affiliates (other than wholly owned subsidiaries) on terms materially less
favorable to such party than could be reasonably expected to have been obtained
with an unaffiliated third party on an arm's-length basis.
(p) Cooperation, Notification. Each party shall, and shall cause its Direct
Subsidiaries to, (i) confer on a regular and frequent basis with one or more
representatives of the other party to discuss, subject to applicable law,
material operational matters and the general status of its ongoing operations;
(ii) promptly notify the other party of any significant changes in its business,
properties, assets, condition (financial or other), results of operations or
prospects; (iii) advise the other party of any change or event which has had or,
insofar as reasonably can be foreseen, is reasonably likely to result in, in the
case of CIPSCO, a CIPSCO Material Adverse Effect or, in the case of Union
Electric, a Union Electric Material Adverse Effect; and (iv) promptly provide
the other party with copies of all filings made by such party or any of its
Direct Subsidiaries with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this Agreement and
the transactions contemplated hereby.
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(q) Rate Matters. Each of CIPSCO and Union Electric shall, and shall cause
its Direct Subsidiaries to, discuss with the other any changes in its or its
Direct Subsidiaries' rates or charges (other than automatic cost pass-through
rate adjustment clauses), standards of service or accounting from those in
effect on the date hereof and consult with the other prior to making any filing
(or any amendment thereto), or effecting any agreement, commitment, arrangement
or consent with governmental regulators, whether written or oral, formal or
informal, with respect thereto, and no party will make any filing to change its
rates on file with the FERC that would have a material adverse effect on the
benefits associated with the business combination provided for herein.
(r) Third-Party Consents. CIPSCO shall, and shall cause its Direct
Subsidiaries to, use all commercially reasonable efforts to obtain all CIPSCO
Required Consents. CIPSCO shall promptly notify Union Electric of any failure
or prospective failure to obtain any such consents and, if requested by Union
Electric, shall provide copies of all CIPSCO Required Consents obtained by
CIPSCO to Union Electric. Union Electric shall, and shall cause its Direct
Subsidiaries to, use all commercially reasonable efforts to obtain all Union
Electric Required Consents. Union Electric shall promptly notify CIPSCO of any
failure or prospective failure to obtain any such consents and, if requested by
CIPSCO, shall provide copies of all Union Electric Required Consents obtained by
Union Electric to CIPSCO.
(s) No Breach, Etc. No party shall, nor shall any party permit any of its
Direct Subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement, the
Union Electric Stock Option Agreement or the CIPSCO Stock Option Agreement, as
the case may be, or in any of its representations and warranties set forth in
this Agreement, the Union Electric Stock Option Agreement or the CIPSCO Stock
Option Agreement, as the case may be, being untrue on and as of the Closing
Date.
(t) Tax-Exempt Status. No party shall, nor shall any party permit any
Direct Subsidiary to, take any action that would likely jeopardize the
qualification of any outstanding revenue bonds of Union Electric, CIPSCO or of
their Direct Subsidiaries which qualify on the date hereof under Section 142(a)
of the Code as "exempt facility bonds" or as tax-exempt industrial development
bonds under
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Section 103(b)(4) of the Internal Revenue Code of 1954, as amended, prior to the
Tax Reform Act of 1986.
(u) Transition Management. As soon as practicable after the date hereof, the
parties shall create a special transition management task force (the "Task
Force"), the co-chairmen of which shall be Mr. Charles W. Mueller and Mr.
Clifford L. Greenwalt. The Task Force shall examine various alternatives
regarding the manner in which to best organize and manage the business of the
Company after the Effective Time, subject to applicable law. Mr. Charles W.
Mueller will manage and be responsible for the day-to-day activities and
operations of the Task Force. Each party will cause the Company to take only
those actions, from the date hereof until the Effective Time, that are required
or contemplated by this Agreement to be so taken by the Company, or as may
otherwise be mutually agreed upon.
(v) Tax Matters. Except as set forth in Section 6.1(v) of the CIPSCO
Disclosure Schedule or the Union Electric Disclosure Schedule, no party shall
make or rescind any material express or deemed election relating to taxes,
settle or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal income tax return
for the taxable year ending December 31, 1993, except as may be required by
applicable law.
(w) Discharge of Liabilities. No party shall pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
(which includes the payment of final and unappealable judgments) or in
accordance with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of such party included in such party's reports filed with the SEC, or
incurred in the ordinary course of business consistent with past practice.
(x) Contracts. No party shall, except in the ordinary course of business
consistent with past practice, modify, amend, terminate, renew or fail to use
reasonable business efforts to renew any material contract or agreement to which
such party or any Direct Subsidiary of such
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party is a party or waive, release or assign any material rights or claims.
(y) Insurance. Each party shall, and shall cause its Direct Subsidiaries to,
maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies engaged
in the electric and gas utility industry and employing methods of generating
electric power and fuel sources similar to those methods employed and fuels used
by such party or its Direct Subsidiaries.
(a) Permits. Each party shall, and shall cause its Direct Subsidiaries to,
use reasonable efforts to maintain in effect all existing governmental permits
pursuant to which such party or its Direct Subsidiaries operate.
(aa) Limitation on Investments in Unrestricted Subsidiaries. From and after
the date hereof, (i) except pursuant to Section 6.1(bb), CIPSCO will not make,
and will not permit any CIPSCO Subsidiary to make, any additional investments
in, or loans or capital contributions to, or to undertake any guarantees or
other obligations with respect to, any CIPSCO Unrestricted Subsidiary; and (ii)
Union Electric will not make, and will not permit any Union Electric Subsidiary
to make, any additional investments in, or loans or capital contributions to, or
to undertake any guarantees or other obligations with respect to, any Union
Electric Unrestricted Subsidiary in excess of $50 million (which number shall be
in addition to the amounts budgeted for capital expenditures and acquisitions as
set forth in Section 6.1(e) and (f) of the Union Electric Disclosure Schedule).
(bb) Limitation on Investments by CIPSCO Investment Company. From and after
the date hereof, CIPSCO shall take all action necessary to ensure that (i)
CIPSCO Investment Company, an Illinois corporation and a wholly owned CIPSCO
Subsidiary ("CIC"), makes investments in a manner consistent with its practice
during the 24 month period preceding the date hereof and (ii) other than
investments in marketable securities which are managed by third party investment
managers, the aggregate amount invested per annum by CIC (such investments,
including funds borrowed for the purpose of funding such investments and
including investments in the energy and leveraged leasing areas (but excluding
funds borrowed without recourse to CIPSCO or any CIPSCO Subsidiary), the
"Restricted Investments"), shall not exceed $15 million. In addition, CIPSCO
agrees that neither it nor any of its
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Direct Subsidiaries (other than CIC) shall enter into any guarantee, keep-well
or similar arrangements with respect to CIC, including guarantees of payment and
performance. For the purposes of this Section 6.1(bb), references to CIC shall
include references to direct and indirect subsidiaries, partnerships and joint
ventures of CIC.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice, each party
shall, and shall cause its Direct Subsidiaries to, afford to the officers,
directors, employees, accountants, counsel, investment bankers, financial
advisors and other representatives of the other (collectively,
"Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns
and environmental or worker health and safety audits, reports, studies and
investigations, whether draft or final, relating to the party, its Direct
Subsidiaries or any property currently or formerly owned, leased or operated by
the party or its Direct Subsidiaries) and, during such period, each party shall,
and shall cause its Direct Subsidiaries to, furnish promptly to the other (i)
access to each report, schedule and other document filed or received by it or
any of its Direct Subsidiaries pursuant to the requirements of federal or state
securities laws or filed with or sent to the SEC, the FERC, the NRC, the
Department of Justice, the Federal Trade Commission, the Missouri Public Service
Commission, the Illinois Commerce Commission or any other federal or state
regulatory agency or commission, and (ii) access to all information concerning
themselves, their subsidiaries, directors, officers and shareholders and such
other matters as may be reasonably requested by the other party in connection
with any filings, applications or approvals required or contemplated by this
Agreement or for any other reason related to the transactions contemplated by
this Agreement. Each party shall provide access to those premises, documents,
reports and information described above of subsidiaries of such party that are
not Direct Subsidiaries to the extent such party has or is able to obtain such
access. Each party shall, and shall cause its subsidiaries and Representatives
to, hold in strict confidence all Information (as defined in the Confidentiality
Agreement) concerning the other parties furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, dated as of June
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21, 1995, between CIPSCO and Union Electric, as it may be amended from time to
time (the "Confidentiality Agreement").
Section 7.2 Joint Proxy Statement and Registration Statement.
(a) Preparation and Filing. The parties will prepare and file with the SEC
as soon as reasonably practicable after the date hereof the Registration
Statement and the Proxy Statement (together, the "Joint Proxy/Registration
Statement"). The parties hereto shall each use reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after such filing. Each party hereto shall also take
such action as may be reasonably required to cause the shares of Company Common
Stock issuable in connection with the Mergers to be registered or to obtain an
exemption from registration under applicable state "blue sky" or securities
laws; provided, however, that no party shall be required to register or qualify
as a foreign corporation or to take other action which would subject it to
service of process in any jurisdiction where it will not be, following the
Mergers, so subject. Each of the parties hereto shall furnish all information
concerning itself which is required or customary for inclusion in the Joint
Proxy/Registration Statement. The parties shall use reasonable efforts to cause
the shares of Company Common Stock issuable in the Mergers to be approved for
listing on the NYSE upon official notice of issuance. The information provided
by any party hereto for use in the Joint Proxy/Registration Statement shall be
true and correct in all material respects without omission of any material fact
which is required to make such information not false or misleading. No
representation, covenant or agreement is made by or on behalf of any party
hereto with respect to information supplied by any other party for inclusion in
the Joint Proxy Statement/Registration Statement.
(b) Letter of CIPSCO's Accountants. CIPSCO shall use best efforts to cause
to be delivered to Union Electric a letter of Arthur Andersen LLP dated a date
within two business days before the date of the Joint Proxy/Registration
Statement, and addressed to Union Electric, in form and substance reasonably
satisfactory to Union Electric and customary in scope and substance for "cold
comfort" letters delivered by independent public accountants in connection with
registration statements on Form S-4.
(c) Letter of Union Electric's Accountants. Union Electric shall use best
efforts to cause to be delivered to CIPSCO a letter of Price Waterhouse LLP,
dated a date within two business days before the date of the Joint Proxy/
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Registration Statement, and addressed to CIPSCO, in form and substance
reasonably satisfactory to CIPSCO and customary in scope and substance for "cold
comfort" letters delivered by independent public accountants in connection with
registration statements on Form S-4.
(d) Fairness Opinions. It shall be a condition to the mailing of the Joint
Proxy/Registration Statement to the shareholders of CIPSCO and Union Electric
that (i) CIPSCO shall have received an opinion from Morgan Stanley & Co.
Incorporated, dated the date of the Joint Proxy/Registration Statement, to the
effect that, as of the date thereof, the Exchange Ratios are fair, from a
financial point of view, to the holders of CIPSCO Common Stock and (ii) Union
Electric shall have received an opinion from Goldman, Sachs & Co., dated the
date of the Joint Proxy/Registration Statement, to the effect that, as of the
date thereof, the Exchange Ratios are fair from a financial point of view to the
holders of Union Electric Common Stock.
Section 7.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications
required to be filed under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations promulgated
thereunder with respect to the transactions contemplated hereby. Such parties
will use all commercially reasonable efforts to make such filings promptly and
to respond promptly to any requests for additional information made by either of
such agencies.
(b) Other Regulatory Approvals. Each party hereto shall cooperate and use
its best efforts to promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of all Governmental
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement, including, without limitation, the CIPSCO Required Statutory
Approvals and the Union Electric Required Statutory Approvals.
Section 7.4 Shareholder Approval.
(a) Approval of Union Electric Shareholders. Subject to the provisions of
Section 7.4(c) and Section 7.4(d), Union Electric shall, as soon as reasonably
practicable after the date hereof (i) take all steps necessary to duly call,
give
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notice of, convene and hold a special meeting of its shareholders (the "Union
Electric Special Meeting") for the purpose of securing the Union Electric
Shareholders' Approval, (ii) distribute to its shareholders the Proxy Statement
in accordance with applicable federal and state law and with its Restated
Articles of Incorporation and by-laws, (iii) subject to the fiduciary duties of
its Board of Directors, recommend to its shareholders the approval of this
Agreement and the transactions contemplated hereby and (iv) cooperate and
consult with CIPSCO with respect to each of the foregoing matters.
(b) Approval of CIPSCO Shareholders. Subject to the provisions of Section
7.4(c) and Section 7.4(d), CIPSCO shall, as soon as reasonably practicable after
the date hereof (i) take all steps necessary to duly call, give notice of,
convene and hold a meeting of its shareholders (the "CIPSCO Special Meeting")
for the purpose of securing the CIPSCO Shareholders' Approval, (ii) distribute
to its shareholders the Proxy Statement in accordance with applicable federal
and state law and with its Amended and Restated Articles of Incorporation and
by-laws, (iii) subject to the fiduciary duties of its Board of Directors,
recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby and (iv) cooperate and consult with Union
Electric with respect to each of the foregoing matters.
(c) Meeting Date. The Union Electric Special Meeting for the purpose of
securing the Union Electric Shareholders' Approval and the CIPSCO Special
Meeting for the purpose of securing the CIPSCO Shareholders' Approval shall be
held on such dates as CIPSCO and Union Electric shall mutually determine.
(d) Fairness Opinions Not Withdrawn. It shall be a condition to the
obligation of CIPSCO to hold the CIPSCO Special Meeting that the opinion of
Morgan Stanley & Co. Incorporated, referred to in Section 7.2(d), shall not have
been withdrawn, and it shall be a condition to the obligation of Union Electric
to hold the Union Electric Special Meeting that the opinion of Goldman, Sachs &
Co., referred to in Section 7.2(d), shall not have been withdrawn.
Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an existing
right of indemnification or other agreement or policy, from and after the
Effective Time, the Company shall, to the fullest extent permitted by applicable
law, indemnify, defend and hold harmless each person who is
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now, or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer, director or employee of any of the parties
hereto or any subsidiary (each an "Indemnified Party" and collectively, the
"Indemnified Parties") against (i) all losses, expenses (including reasonable
attorney's fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement, arising out
of actions or omissions occurring at or prior to the Effective Time (and whether
asserted or claimed prior to, at or after the Effective Time) that are, in whole
or in part, based on or arising out of the fact that such person is or was a
director, officer or employee of such party or a subsidiary of such party (the
"Indemnified Liabilities"), and (ii) all Indemnified Liabilities to the extent
they are based on or arise out of or pertain to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), (i) the Company
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company, promptly after statements therefor are received and otherwise advance
to such Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, (ii) the Company will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to whether
an Indemnified Party's conduct complies with the standards set forth under
Missouri law and the Articles of Incorporation or By-laws shall be made by
independent counsel mutually acceptable to the Company and the Indemnified
Party; provided, however, that the Company shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only one
law firm with respect to each related matter except to the extent there is, in
the opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions of
such Indemnified Party and any other Indemnified Party or Indemnified Parties.
(b) Insurance. For a period of six years after the Effective Time, the
Company shall cause to be maintained in effect policies of directors' and
officers' liability insurance maintained by CIPSCO and Union Electric for the
benefit of those persons who are currently covered by such policies on terms no
less favorable than the terms of such current insurance coverage; provided,
however, that the Company shall not be required to expend in any year an amount
in excess of 200% of the annual aggregate premiums currently paid by CIPSCO or
Union Electric, as the case may be, for such insurance; and provided, further,
that if the annual premiums of such insurance coverage
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exceed such amount, the Company shall be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of the Board of Directors of
the Company, for a cost not exceeding such amount.
(c) Successors. In the event the Company or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provisions shall be made so
that the successors and assigns of the Company shall assume the obligations set
forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of the date
hereof in favor of the employees, agents, directors and officers of CIPSCO,
Union Electric and their respective subsidiaries with respect to their
activities as such prior to the Effective Time, as provided in their respective
articles of incorporation and by-laws in effect on the date hereof, or otherwise
in effect on the date hereof, shall survive the Merger and shall continue in
full force and effect for a period of not less than six years from the Effective
Time.
(e) Benefit. The provisions of this Section 7.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (i) Union Electric
has delivered to CIPSCO a schedule (the "Union Electric Disclosure Schedule"),
accompanied by a certificate signed by the chief financial officer of Union
Electric stating the Union Electric Disclosure Schedule is being delivered
pursuant to this Section 7.6(i) and (ii) CIPSCO has delivered to Union Electric
a schedule (the "CIPSCO Disclosure Schedule"), accompanied by a certificate
signed by the chief financial officer of CIPSCO stating the CIPSCO Disclosure
Schedule is being delivered pursuant to this Section 7.6(ii). The CIPSCO
Disclosure Schedule and the Union Electric Disclosure Schedule are collectively
referred to herein as the "Disclosure Schedules". The Disclosure Schedules
constitute an integral part of this Agreement and modify the respective
representations, warranties, covenants or agreements of the parties hereto
contained herein to the extent that such representations, warranties, covenants
or agreements expressly refer to the Disclosure Schedules. Anything to the
contrary contained herein or in the Disclosure Schedules notwithstanding, any
and
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all statements, representations, warranties or disclosures set forth in the
Disclosure Schedules shall be deemed to have been made on and as of the date
hereof.
Section 7.7 Public Announcements. Subject to each party's disclosure
obligations imposed by law, CIPSCO and Union Electric will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement or
statement with respect hereto or thereto without the consent of the other party
(which consent shall not be unreasonably withheld).
Section 7.8 Rule 145 Affiliates. Within 30 days after the date of this
Agreement, CIPSCO shall identify in a letter to Union Electric, and Union
Electric shall identify in a letter to CIPSCO, all persons who are, and to such
person's best knowledge who will be at the Closing Date, "affiliates" of CIPSCO
and Union Electric, respectively, as such term is used in Rule 145 under the
Securities Act (or otherwise under applicable SEC accounting releases with
respect to pooling-of-interests accounting treatment). Each of CIPSCO and Union
Electric shall use all reasonable efforts to cause their respective affiliates
(including any person who may be deemed to have become an affiliate after the
date of the letter referred to in the prior sentence) to deliver to the Company
on or prior to the Closing Date a written agreement substantially in the form
attached as Exhibit 7.8 (each, an "Affiliate Agreement").
Section 7.9 Employee Agreements and Workforce Matters.
(a) Certain Employee Agreements. Subject to Section 7.10, Section 7.14 and
Section 7.15, the Company and its subsidiaries shall honor, without
modification, all contracts, agreements, collective bargaining agreements and
commitments of the parties prior to the date hereof which apply to any current
or former employee or current or former director of the parties hereto;
provided, however, that this undertaking is not intended to prevent the Company
from enforcing such contracts, agreements, collective bargaining agreements and
commitments in accordance with their terms, including, without limitation, any
reserved right to amend, modify, suspend, revoke or terminate any such contract,
agreement, collective bargaining agreement or commitment.
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(b) Workforce Matters. Subject to applicable collective bargaining
agreements, for a period of three years following the Effective Time, any
reductions in workforce in respect of employees of the Company shall be made on
a fair and equitable basis, in light of the circumstances and the objectives to
be achieved, giving consideration to previous work history, job experience, and
qualifications, without regard to whether employment prior to the Effective Time
was with CIPSCO or its subsidiaries or Union Electric or its subsidiaries, and
any employees whose employment is terminated or jobs are eliminated by the
Company or any of its subsidiaries during such period shall be entitled to
participate on a fair and equitable basis in the job opportunity and employment
placement programs offered by the Company or any of its subsidiaries. Any
workforce reductions carried out following the Effective Time by the Company and
its subsidiaries shall be done in accordance with all applicable collective
bargaining agreements, and all laws and regulations governing the employment
relationship and termination thereof including, without limitation, the Worker
Adjustment and Retraining Notification Act and regulations promulgated
thereunder, and any comparable state or local law.
Section 7.10 Employee Benefit Plans.
(a) Maintenance of CIPSCO and Union Electric Benefit Plans. Subject to
Section 7.10(b), Section 7.10(c) and Section 6.1(i), each of the CIPSCO Benefit
Plans and Union Electric Benefit Plans in effect at the date hereof shall be
maintained in effect with respect to the employees or former employees of CIPSCO
and any of its Direct Subsidiaries, on the one hand, and of Union Electric and
any of its Direct Subsidiaries, on the other hand, respectively, who are covered
by any such benefit plan immediately prior to the Closing Date (the "Affiliated
Employees") until the Company otherwise determines after the Effective Time;
provided, however, that nothing herein contained shall limit any reserved right
contained in any such CIPSCO Benefit Plan or Union Electric Benefit Plan to
amend, modify, suspend, revoke or terminate any such plan; provided, further,
however, that the Company or its subsidiaries shall provide benefits to the
Affiliated Employees for a period of not less than one year following the
Effective Time, other than with respect to plans referred to in Section 7.10(b)
and Section 7.11, which are no less favorable in the aggregate than those
provided under the CIPSCO Benefit Plans (with respect to employees and former
employees of CIPSCO and its Direct Subsidiaries), or the Union Electric Benefit
Plans (with respect to employees or former employees of Union Electric and its
Direct Subsidiaries), as the case may be. Without limitation of the foregoing,
each participant in any such CIPSCO Benefit Plan or Union Electric Benefit Plan
shall receive credit for purposes
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of eligibility to participate, vesting, benefit accrual and eligibility to
receive benefits under any benefit plan of the Company or any of its
subsidiaries or affiliates for service credited for the corresponding purpose
under such benefit plan; provided, however, that such crediting of service shall
not operate to duplicate any benefit to any such participant or the funding for
any such benefit or cause any such CIPSCO Benefit Plan or Union Electric Benefit
Plan to fail to comply with the applicable provisions of the Code or ERISA. Any
person hired by the Company or any of its subsidiaries after the Closing Date
who was not employed by any party hereto or its subsidiaries immediately prior
to the Closing Date shall be eligible to participate in such benefit plans
maintained, or contributed to, by the subsidiary, division or operation by which
such person is employed, provided that such person meets the eligibility
requirements of the applicable plan.
(b) Adoption of Company Replacement Plans. With respect to the Union
Electric Executive Incentive Plan (the "Union Electric EIP"), the Union Electric
LTIP and the CIPSCO Management Incentive Plan (the "CIPSCO MIP"), the Company
and its subsidiaries shall adopt replacement plans as set forth in this Section
7.11(b) (collectively, the "Company Replacement Plans"), subject in each case to
shareholder approval prior to the Effective Time and subject to the shareholder
approvals described below, which approvals shall be sought by the Company as
soon as reasonably practicable following the Effective Time. Each Company
Replacement Plan shall amend and supersede the corresponding Union Electric or
CIPSCO plan and such corresponding plan shall, as of the Effective Time, be
merged with and into the appropriate Company Replacement Plan. The Union
Electric EIP and the CIPSCO MIP shall be replaced by a new annual bonus plan
under which cash bonuses, based on percentages of base salaries, are awarded
based upon the achievement of performance goals determined in advance by the
Human Resources Committee of the Board of Directors of the Company (the
"Committee"). With respect to those participants in the new plan who are, or
who the Committee determines are likely to be, "covered individuals" within the
meaning of Section 162(m) of the Code, the performance goals shall be objective
standards that are approved by shareholders in accordance with the requirements
for exclusion from the limits of Section 162(m) of the Code as performance-based
compensation. The Union Electric LTIP shall be replaced by a stock compensation
plan (the "Company Stock Plan") providing for the grant of stock options, stock
appreciation rights, restricted stock, performance units and such other awards
based upon the Company Common Stock as the Board of Directors may determine,
subject to shareholder approval of the Company Stock Plan. The Company shall
reserve 4.0 million shares for issuance under the Company Stock Plan.
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(c) CIPSCO Action. Before the Effective Time, CIPSCO shall take all steps
necessary to amend (i) the CIPSCO Special Executive Retirement Plan, (ii) the
CIPSCO Excess Benefit Plan and (iii) all trusts associated with such plans, so
that none of the transactions contemplated by this Agreement shall constitute a
"change in control" for purposes of said arrangements, subject to any required
consents of participants therein, which CIPSCO shall use its best efforts to
obtain. Prior to or as soon as practicable after the date hereof, Union
Electric shall adopt a severance plan substantially in the form previously
provided to CIPSCO.
Section 7.11 Stock Option and Other Stock Plans.
(a) Amendment of Union Electric LTIP. Effective as of the Effective Time,
Union Electric shall amend the Union Electric LTIP and use its best efforts to
amend each underlying stock award agreement, in each case to the extent
necessary to provide that (i) none of the transactions contemplated by this
Agreement shall constitute a Change in Control for purposes of the Union
Electric LTIP, (ii) each outstanding option to purchase shares of Old Union
Electric Common Stock (each, an "Union Electric Stock Option") shall constitute
an option to acquire shares of Company Common Stock, on the same terms and
conditions as were applicable under such Union Electric Stock Option, based on
the same number of shares of the Company Common Stock as the holder of such
Union Electric Stock Option would have been entitled to receive pursuant to the
Mergers in accordance with Article II had such holder exercised such option in
full immediately prior to the Effective Time; provided that the number of
shares, the option price, and the terms and conditions of exercise of such
option, shall be determined in a manner that preserves both (A) the aggregate
gain (or loss) on the Union Electric Stock Option immediately prior to the
Effective Time and (B) the ratio of the exercise price per share subject to the
Union Electric Stock Option to the fair market value (determined immediately
prior to the Effective Time) per share subject to such option; and provided,
further, that in the case of any option to which Section 421 of the Code applies
by reason of its qualification under any of Sections 422-424 of the Code, the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with Section 424(a) of the Code; and (iii) each outstanding performance
dividend unit under the Union Electric Stock Plan ("Union Electric Dividend
Units") shall constitute a performance dividend based upon the same number of
shares of Company Common Stock as the holder of such Union Electric Dividend
Unit would have been entitled to receive pursuant to the Union Electric Merger
in accordance with Article II had such holder been the
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absolute owner, immediately before the Effective Time, of the shares of Union
Electric Common Stock on which such Union Electric Dividend Unit is based, with
such adjustments to the performance goals for such Union Electric Dividend Units
as the Union Electric Human Resources Committee shall determine to be fair and
equitable in light of the Merger, and otherwise on the same terms and conditions
as governed such Union Electric Dividend Unit immediately before the Effective
Time. At the Effective Time, the Company shall assume each agreement relating
to Union Electric Stock Options and Union Electric Dividend Units under the
Union Electric Stock Plan, each as amended as previously provided. As soon as
practicable after the Effective Time, the Company shall deliver to the holders
of Union Electric Stock Options and Union Electric Stock Awards appropriate
notices setting forth such holders' rights pursuant to the Company Stock Plan
and each underlying stock award agreement, each as assumed by the Company.
(b) Company Action. With respect to each of the Union Electric LTIP, the
Savings Investment Plan, the CIPS Employee Stock Ownership Plan, the CIPS 401(k)
Plans, and any other plans under which the delivery of Union Electric or CIPSCO
Common Stock is required upon payment of benefits, grant of awards or exercise
of options (the "Stock Plans"), the Company shall take all corporate action
necessary or appropriate to (i) provide for the issuance or purchase in the open
market of Company Common Stock rather than Union Electric Common Stock or CIPSCO
Common Stock, as applicable, pursuant thereto, and otherwise to amend such stock
plans to reflect this Agreement and the Mergers, (ii) obtain shareholder
approval with respect to such Stock Plan to the extent such approval is required
for purposes of the Code or other applicable law, or to enable such Stock Plan
to comply with Rule 16b-3 promulgated under the Exchange Act, (iii) reserve for
issuance under such plan or otherwise provide a sufficient number of shares of
Company Common Stock for delivery upon payment of benefits, grant of awards or
exercise of options under such Stock Plan and (iv) as soon as practicable after
the Effective Time, file registration statements on Form S-3 or Form S-8 or
amendments on such forms to the Form S-4 Registration Statement, as the case may
be (or any successor or other appropriate forms), with respect to the shares of
Company Common Stock subject to such Stock Plan to the extent such registration
statement is required under applicable law, and the Company shall use its best
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectuses contained therein) for so long
as such benefits and grants remain payable and such options remain outstanding.
With respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act,
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the Company shall administer the Stock Plans, where applicable, in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act.
Section 7.12 No Solicitations. Each party hereto shall not, and shall cause
its Direct Subsidiaries not to, and shall not permit any of its Representatives
or subsidiaries that are not Direct Subsidiaries to, and shall use its best
efforts to cause such persons not to, directly or indirectly: initiate, solicit
or encourage, or take any action to facilitate the making of any offer or
proposal which constitutes or is reasonably likely to lead to, any Business
Combination Proposal (as defined below), or, in the event of an unsolicited
Business Combination Proposal, except to the extent required by their fiduciary
duties under applicable law if so advised in a written opinion of outside
counsel, engage in negotiations or provide any information or data to any person
relating to any Business Combination Proposal. Each party hereto shall notify
the other party orally and in writing of any such inquiries, offers or proposals
(including, without limitation, the terms and conditions of any such proposal
and the identity of the person making it), within 24 hours of the receipt
thereof, shall keep the other party informed of the status and details of any
such inquiry, offer or proposal, and shall give the other party five days'
advance notice of any agreement to be entered into with or any information to be
supplied to any person making such inquiry, offer or proposal. Each party
hereto shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any Business Combination Proposal. As used in this Section 7.12,
"Business Combination Proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving any
party to this Agreement or any of its material subsidiaries, or any proposal or
offer (in each case, whether or not in writing and whether or not delivered to
the stockholders of a party generally) to acquire in any manner, directly or
indirectly, a substantial equity interest in or a substantial portion of the
assets of any party to this Agreement or any of its material subsidiaries, other
than pursuant to the transactions contemplated by this Agreement. Nothing
contained herein shall prohibit a party from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act
with respect to a Business Combination Proposal by means of a tender offer.
Section 7.13 Company Board of Directors. CIPSCO's and Union Electric's
respective Boards of Directors will take such action as may be necessary to
cause the number of directors comprising the full Board of Directors of the
Company at
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the Effective Time to be 15 persons, including Mr. Clifford L. Greenwalt and
four non-management directors of CIPSCO to be designated by CIPSCO prior to the
Effective Time, and Mr. Charles W. Mueller and nine other directors of Union
Electric designated by Union Electric prior to the Effective Time. If, prior to
the Effective Time, any of such designees shall decline or be unable to serve,
the party which designated such person shall designate another person to serve
in such person's stead, except that a replacement for the position of Chairman
of the Board of Directors of the Company shall be chosen by the Board of
Directors of Union Electric. CIPSCO's and Union Electric's respective Boards of
Directors will also take such action as may be necessary to cause the committees
of the Board of Directors of the Company at the Effective Time to consist of (i)
two representatives designated by CIPSCO and six representatives designated by
Union Electric, in the case of the Executive Committee, (ii) one representative
designated by CIPSCO and three representatives designated by Union Electric, in
the case of the Human Resources Committee, (iii) one representative designated
by CIPSCO and three representatives designated by Union Electric, in the case of
the Nominating Committee, (iv) two representatives designated by CIPSCO and four
representatives designated by Union Electric, in the case of the Audit Committee
and (v) two representatives designated by CIPSCO and four representatives
designated by Union Electric, in the case of the Contributions Committee, with
such persons in each case to be designated prior to the Effective Time.
Section 7.14 Company Officers. Mr. Charles W. Mueller shall be the Chairman
of the Board of Directors, President and Chief Executive Officer of the Company
at the Effective Time and Mr. Clifford L. Greenwalt shall be Vice Chairman of
the Company's Board of Directors. The other officers of the Company at the
Effective Time shall be such officers as may be designated by the Board of
Directors of the Company.
Section 7.15 Boards of Directors of Subsidiaries. At the Effective Time,
the Board of Directors of CIPS shall be expanded to include three additional
directorships, and shall initially consist of (i) the directors serving
immediately prior to the Effective Time and (ii) Mr. Charles W. Mueller and two
additional persons designated by Union Electric, which two persons, together
with Mr. Charles W. Mueller, shall fill the vacancies created by the expansion
of the Board of Directors of CIPS. At the Effective Time, the Board of
Directors of Union Electric, as the surviving corporation in the Union Electric
Merger, shall initially consist of Mr. Charles W. Mueller, Mr. Clifford L.
Greenwalt and such other nominees as shall be determined by the Company.
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Section 7.16 Post-Merger Operations. Following the Effective Time, the
Company shall conduct its operations in accordance with the following:
(a) Principal Corporate Offices. The principal corporate office of the
Company shall be located in St. Louis, Missouri. From the Effective Time CIPS
shall maintain its principal corporate office in Springfield, Illinois.
(b) Maintenance of Separate Existence. CIPS shall continue its separate
corporate existence, operating under the name "Central Illinois Public Service
Company".
(c) Charities. After the Effective Time, the Company shall provide
charitable contributions and community support within the service areas of the
parties and each of their respective subsidiaries at levels substantially
comparable to the levels of charitable contributions and community support
provided by the parties and their respective subsidiaries within their service
areas within the two-year period immediately prior to the Effective Time.
Section 7.17 Expenses. Subject to Section 9.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except that those
expenses incurred in connection with printing the Joint Proxy/Registration
Statement, as well as the filing fee relating thereto, shall be shared equally
by CIPSCO and Union Electric.
Section 7.18 Further Assurances. Each party will, and will cause its Direct
Subsidiaries to, execute such further documents and instruments and take such
further actions as may reasonably be requested by any other party in order to
consummate the Mergers in accordance with the terms hereof. The parties
expressly acknowledge and agree that, although it is their current intention to
effect a business combination among themselves in the form contemplated by this
Agreement, it may be preferable to effectuate such a business combination by
means of an alternative structure in light of the conditions set forth in
Section 8.1(e), Section 8.2(e), and Section 8.3(e). Accordingly, if the only
conditions to the parties' obligations to consummate the Mergers which are not
satisfied or waived are receipt of any one or more of the CIPSCO Required
Consents, CIPSCO Required Statutory Approvals, Union Electric Required Consents
or Union Electric Required Statutory Approvals, and the adoption of an
alternative structure (that otherwise substantially preserves for CIPSCO and
Union Electric the economic
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benefits of the Mergers) would result in such conditions being satisfied or
waived, then the parties shall use their respective best efforts to effect a
business combination among themselves by means of a mutually agreed upon
structure other than the Mergers that so preserves such benefits; provided that,
prior to closing any such restructured transaction, all material third-party and
Governmental Authority declarations, filings, registrations, notices,
authorizations, consents or approvals necessary for the effectuation of such
alternative business combination shall have been obtained and all other
conditions to the parties' obligations to consummate the Mergers, as applied to
such alternative business combination, shall have been satisfied or waived.
Section 7.19 Charter and By-Law Amendments. Prior to the mailing of the
Joint Proxy Statement/Prospectus, Union Electric and CIPSCO shall agree upon
amendments to be effected to the articles of incorporation of the Company, and
the by-laws of the Company, and the Company shall take all actions necessary so
that such amendments become effective no later than the Effective Time.
Section 7.20 Transfers of Illinois Assets. Prior to the Closing and subject
to the next sentence of this Section 7.20, Union Electric shall use reasonable
efforts and shall have taken such action as is necessary to effect the transfer
of the assets set forth on Schedule 7.20 of this Agreement to CIPS, which
transfers shall be effected immediately subsequent to the Company Merger. To
the extent any of such assets set forth in Schedule 7.20 cannot be conveyed to
CIPS, the parties hereto shall use reasonable efforts to implement alternative
arrangements (such as licensing arrangements) with respect to such non-conveyed
assets as shall be mutually agreed upon by Union Electric and CIPSCO.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Mergers.
The respective obligations of each party to effect the Mergers shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of the parties
hereto:
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(a) Shareholder Approvals. The Union Electric Shareholders' Approval and
the CIPSCO Shareholders' Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of the Mergers shall have been issued and be continuing in effect,
and the Mergers and the other transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation.
(c) Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, and no stop
order suspending such effectiveness shall have been issued and remain in effect.
(d) Listing of Shares. The shares of Company Common Stock issuable in the
Mergers pursuant to Article II shall have been approved for listing on the NYSE
upon official notice of issuance.
(e) Statutory Approvals. The CIPSCO Required Statutory Approvals and the
Union Electric Required Statutory Approvals shall have been obtained at or prior
to the Effective Time, such approvals shall have become Final Orders (as defined
below) and such Final Orders shall not impose terms or conditions which, in the
aggregate, would have, or insofar as reasonably can be foreseen, could have, a
material adverse effect on the business, assets, financial condition or results
of operations of the Company and its prospective subsidiaries taken as a whole
or on the Company prospective utility subsidiaries located in the State of
Missouri taken as a whole, or on its prospective utility subsidiaries located in
the State of Illinois taken as a whole or which would be materially inconsistent
with the agreements of the parties contained herein. A "Final Order" means
action by the relevant regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which any waiting
period prescribed by law before the transactions contemplated hereby may be
consummated has expired, and as to which all conditions to the consummation of
such transactions prescribed by law, regulation or order have been satisfied.
(f) Pooling. Each of CIPSCO and Union Electric shall have received a letter
of its independent public accountants, dated the Closing Date, in form and
substance
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reasonably satisfactory, in each case, to CIPSCO and Union Electric, stating
that the transactions effected pursuant to this Agreement will qualify as a
pooling of interests transaction under GAAP and applicable SEC regulations.
(g) Dissenters' Rights. The number of Union Electric Dissenting Shares
shall not constitute more than 5% of the number of issued and outstanding shares
of Union Electric Common Stock and Union Electric Preferred Stock, taken
together as a single class for this purpose.
Section 8.2 Conditions to Obligation of Union Electric to Effect the
Mergers. The obligation of Union Electric to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by Union Electric in writing pursuant to
Section 9.5:
(a) Performance of Obligations of CIPSCO. CIPSCO (and/or its appropriate
subsidiaries) shall have performed its agreements and covenants contained in
Sections 6.1(b) and 6.1(c) and shall have performed in all material respects its
other agreements and covenants contained in or contemplated by this Agreement
and the CIPSCO Stock Option Agreement required to be performed by it at or prior
to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
CIPSCO set forth in this Agreement and the CIPSCO Stock Option Agreement shall
be true and correct (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date or time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without regard to any
materiality qualifications contained therein) which, individually or in the
aggregate, would not be reasonably likely to result in a CIPSCO Material Adverse
Effect.
(c) Closing Certificates. Union Electric shall have received a certificate
signed by the chief financial officer of CIPSCO, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.2(a) and Section 8.2(b) have been satisfied.
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(d) CIPSCO Material Adverse Effect. No CIPSCO Material Adverse Effect shall
have occurred and there shall exist no fact or circumstance which is reasonably
likely to have a CIPSCO Material Adverse Effect.
(e) CIPSCO Required Consents. The CIPSCO Required Consents the failure of
which to obtain would have a CIPSCO Material Adverse Effect shall have been
obtained.
(f) Affiliate Agreements. The Company shall have received Affiliate
Agreements, duly executed by each "affiliate" of CIPSCO, substantially in the
form of Exhibit 7.8, as provided in Section 7.8.
(g) Tax Opinion. Union Electric shall have received an opinion of Wachtell,
Lipton, Rosen & Katz satisfactory in form and substance to Union Electric, dated
as of the Closing Date, to the effect that (i) the Union Electric Merger will be
treated as a tax-free reorganization under Section 368(a) of the Code, and/or
(ii) the Mergers, taken together, will be treated as an exchange under Section
351 of the Code.
Section 8.3 Conditions to Obligation of CIPSCO to Effect the Mergers. The
obligation of CIPSCO to effect the CIPSCO Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by CIPSCO in writing pursuant to Section 9.5:
(a) Performance of Obligations of Union Electric. Union Electric (and/or
its appropriate subsidiaries) will have performed its agreements and covenants
contained in Sections 6.1(b) and 6.1(c) and will have performed in all material
respects its other agreements and covenants contained in or contemplated by this
Agreement and the Union Electric Stock Option Agreement required to be performed
at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
Union Electric set forth in this Agreement and the Union Electric Stock Option
Agreement shall be true and correct (i) on and as of the date hereof and (ii) on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific date
or time other than the date hereof or the Closing Date which need only be true
and correct as of such date or time) except in each of cases (i) and (ii)
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for such failures of representations or warranties to be true and correct
(without regard to any materiality qualifications contained therein) which,
individually or in the aggregate, would not be reasonably likely to result in a
Union Electric Material Adverse Effect.
(c) Closing Certificates. CIPSCO shall have received a certificate signed
by the chief financial officer of Union Electric, dated the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) Union Electric Material Adverse Effect. No Union Electric Material
Adverse Effect shall have occurred and there shall exist no fact or circumstance
which is reasonably likely to have a Union Electric Material Adverse Effect.
(e) Union Electric Required Consents. The Union Electric Required Consents
the failure of which to obtain would have a Union Electric Material Adverse
Effect shall have been obtained.
(f) Affiliate Agreements. The Company shall have received Affiliate
Agreements, duly executed by each "affiliate" of Union Electric substantially in
the form of Exhibit 7.8, as provided in Section 7.8.
(g) Tax Opinion. CIPSCO shall have received an opinion of Jones, Day,
Reavis & Pogue satisfactory in form and substance to CIPSCO, dated as of the
Closing Date, to the effect that the Company Merger will be treated as a tax-
free reorganization under Section 368(a) of the Code.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the shareholders of the
respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of CIPSCO and Union
Electric;
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(b) by any party hereto, by written notice to the other parties, if the
Effective Time shall not have occurred on or before the second anniversary of
the date hereof (the "Initial Termination Date"); provided, however, that the
right to terminate the Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date; and provided, further, that if on the
Initial Termination Date the conditions to the Closing set forth in Sections
8.1(e), 8.2(e) and/or 8.3(e) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Initial Termination Date shall be extended to the thirty
month anniversary of the date hereof;
(c) by any party hereto, by written notice to the other parties, if the
Union Electric Shareholders' Approval shall not have been obtained at a duly
held Union Electric Special Meeting, including any adjournments thereof, or the
CIPSCO Shareholders' Approval shall not have been obtained at a duly held CIPSCO
Special Meeting, including any adjournments thereof;
(d) by any party hereto, if any state or federal law, order, rule or
regulation is adopted or issued, which has the effect, as supported by the
written opinion of outside counsel for such party, of prohibiting the Merger, or
by any party hereto if any court of competent jurisdiction in the United States
or any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Merger, and such order,
judgment or decree shall have become final and nonappealable;
(e) by Union Electric, upon two days' prior notice to CIPSCO, if, as a
result of a tender offer by a party other than CIPSCO or any of its affiliates
or any written offer or proposal with respect to a merger, sale of a material
portion of its assets or other business combination (each, a "Business
Combination") by a party other than CIPSCO or any of its affiliates, the Board
of Directors of Union Electric determines in good faith that their fiduciary
obligations under applicable law require that such tender offer or other written
offer or proposal be accepted; provided, however, that (i) the Board of
Directors of Union Electric shall have been advised in a written opinion of
outside counsel that notwithstanding a binding commitment to consummate an
agreement of the nature of
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this Agreement entered into in the proper exercise of their applicable fiduciary
duties, and notwithstanding all concessions which may be offered by CIPSCO in
negotiations entered into pursuant to clause (ii) below, such fiduciary duties
would also require the directors to reconsider such commitment as a result of
such tender offer or other written offer or proposal; and (ii) prior to any such
termination, Union Electric shall, and shall cause its respective financial and
legal advisors to, negotiate with CIPSCO to make such adjustments in the terms
and conditions of this Agreement as would enable Union Electric to proceed with
the transactions contemplated herein on such adjusted terms;
(f) by CIPSCO, upon two days' prior notice to Union Electric, if, as a
result of a tender offer by a party other than Union Electric or any of its
affiliates or any written offer or proposal with respect to a Business
Combination by a party other than Union Electric or any of its affiliates, the
Board of Directors of CIPSCO determines in good faith that their fiduciary
obligations under applicable law require that such tender offer or other written
offer or proposal be accepted; provided, however, that (i) the Board of
Directors of CIPSCO shall have been advised in a written opinion of outside
counsel that notwithstanding a binding commitment to consummate an agreement of
the nature of this Agreement entered into in the proper exercise of their
applicable fiduciary duties, and notwithstanding all concessions which may be
offered by Union Electric in negotiations entered into pursuant to clause (ii)
below, such fiduciary duties would also require the directors to reconsider such
commitment as a result of such tender offer or other written offer or proposal;
and (ii) prior to any such termination, CIPSCO shall, and shall cause its
respective financial and legal advisors to, negotiate with Union Electric to
make such adjustments in the terms and conditions of this Agreement as would
enable CIPSCO to proceed with the transactions contemplated herein on such
adjusted terms;
(g) by CIPSCO, by written notice to Union Electric, if (i) there exist
breaches of the representations and warranties of Union Electric made herein as
of the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a Union Electric Material Adverse
Effect, and such breaches shall not have been remedied within 20 days after
receipt by Union Electric of notice in writing from CIPSCO, specifying the
nature of such breaches and requesting that they be remedied, (ii) Union
Electric (and/or its appropriate
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subsidiaries) shall not have performed and complied with its agreements and
covenants contained in Sections 6.1(b) and 6.1(c) or shall have failed to
perform and comply with, in all material respects, its other agreements and
covenants hereunder or under the Union Electric Stock Option Agreement and such
failure to perform or comply shall not have been remedied within 20 days after
receipt by Union Electric of notice in writing from CIPSCO, specifying the
nature of such failure and requesting that it be remedied; or (iii) the Board of
Directors of Union Electric or any committee thereof (A) shall withdraw or
modify in any manner adverse to CIPSCO its approval or recommendation of this
Agreement or the Union Electric Merger, (B) shall fail to reaffirm such approval
or recommendation upon CIPSCO's request, (C) shall approve or recommend any
acquisition of Union Electric or a material portion of its assets or any tender
offer for shares of capital stock of Union Electric, in each case, by a party
other than CIPSCO or any of its affiliates or (D) shall resolve to take any of
the actions specified in clause (A), (B) or (C);
(h) by Union Electric, by written notice to CIPSCO, if (i) there exist
material breaches of the representations and warranties of CIPSCO made herein as
of the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a CIPSCO Material Adverse Effect, and
such breaches shall not have been remedied within 20 days after receipt by
CIPSCO of notice in writing from Union Electric, specifying the nature of such
breaches and requesting that they be remedied, (ii) CIPSCO (and/or its
appropriate subsidiaries) shall not have performed and complied with its
agreements and covenants contained in Sections 6.1(b) and 6.1(c) or shall have
failed to perform and comply with, in all material respects, its other
agreements and covenants hereunder or under the CIPSCO Stock Option Agreement,
and such failure to perform or comply shall not have been remedied within 20
days after receipt by CIPSCO of notice in writing from Union Electric,
specifying the nature of such failure and requesting that it be remedied; or
(iii) the Board of Directors of CIPSCO or any committee thereof (A) shall
withdraw or modify in any manner adverse to Union Electric its approval or
recommendation of this Agreement or the CIPSCO Merger, (B) shall fail to
reaffirm such approval or recommendation upon Union Electric's request, (C)
shall approve or recommend any acquisition of CIPSCO or a material portion of
its assets or any tender offer for the shares of capital stock of CIPSCO, in
each case by a party other than Union Electric or any of its affiliates
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or (D) shall resolve to take any of the actions specified in clause (A), (B) or
(C); or
(i) by either Union Electric or CIPSCO, by written notice to the other party,
if (A) a third party acquires securities representing greater than 50% of the
voting power of the outstanding voting securities of such other party or (B)
individuals who as of the date hereof constitute the board of directors of such
other party (together with any new directors whose election by such board of
directors or whose nomination for election by the stockholders of such party was
approved by a vote of a majority of the directors of such party then still in
office who are either directors as of the date hereof or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the board of directors of such party then in office.
Section 9.2 Effect of Termination. Subject to Section 10.1(b), in the event
of termination of this Agreement by either CIPSCO or Union Electric pursuant to
Section 9.1 there shall be no liability on the part of either CIPSCO or Union
Electric or their respective officers or directors hereunder, except that
Section 7.17 and Section 9.3, the agreement contained in the last sentence of
Section 7.1, Section 10.2 and Section 10.8 shall survive the termination.
Section 9.3 Termination Fee; Expenses.
(a) Termination Fee upon Breach or Withdrawal of Approval. If this
Agreement is terminated at such time that this Agreement is terminable pursuant
to one (but not both) of (x) Section 9.1(g)(i) or (ii) or (y) Section 9.1(h)(i)
or (ii), then: (i) the breaching party shall promptly (but not later than five
business days after receipt of notice from the non-breaching party) pay to the
non-breaching party in cash an amount equal to all documented out-of-pocket
expenses and fees incurred by the non-breaching party (including, without
limitation, fees and expenses payable to all legal, accounting, financial,
public relations and other professional advisors arising out of, in connection
with or related to the Merger or the transactions contemplated by this
Agreement) not in excess of $10 million; provided, however, that, if this
Agreement is terminated by a party as a result of a willful breach by the other
party, the non-breaching party may pursue any remedies available to it at law or
in equity and shall, in addition to its out-of-pocket expenses (which shall be
paid as specified above and shall not be limited to $10 million), be entitled to
retain such additional amounts as such non-breaching party may be entitled to
receive at law or in equity; and (ii) if (x) at the time of the
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breaching party's willful breach of this Agreement, there shall have been a
third-party tender offer for shares of, or a third party offer or proposal with
respect to a Business Combination involving, such party or any of its affiliates
which at the time of such termination shall not have been rejected by such party
and its board of directors and withdrawn by the third party, and (y) within two
and one-half years of any termination by the non-breaching party, the breaching
party or an affiliate thereof becomes a subsidiary of such offeror or a
subsidiary of an affiliate of such offeror or accepts a written offer to
consummate or consummates a Business Combination with such offeror or an
affiliate thereof, then such breaching party (jointly and severally with its
affiliates), upon the signing of a definitive agreement relating to such a
Business Combination, or, if no such agreement is signed then at the closing
(and as a condition to the closing) of such breaching party becoming such a
subsidiary or of such Business Combination, will pay to the non-breaching party
an additional fee equal to $30 million in cash; provided that in no event shall
the additional termination fee provided for in Section 9.3(b) be payable if the
additional fee referred to in this Section 9.3(a)(ii) has been paid.
(b) Additional Termination Fee. If (i) this Agreement (x) is terminated by
any party pursuant to Section 9.1(e) or Section 9.1(f), (y) is terminated
following a failure of the shareholders of any one of the parties to grant the
necessary approvals described in Section 4.13 and Section 5.13 or (z) is
terminated as a result of such party's material breach of Section 7.4, and (ii)
at the time of such termination or prior to the meeting of such party's
shareholders there shall have been a third-party tender offer for shares of, or
a third-party offer or proposal with respect to a Business Combination
involving, such party or any of its affiliates which at the time of such
termination or of the meeting of such party's shareholders shall not have been
(A) rejected by such party and its board of directors and (B) withdrawn by the
third-party, and (iii) within two and one-half years of any such termination
described in clause (i) above, the party or its affiliate which is the subject
of the tender offer or offer or proposal with respect to a Business Combination
(the "Target Party") becomes a subsidiary of such offeror or a subsidiary of an
affiliate of such offeror or accepts a written offer to consummate or
consummates a Business Combination with such offeror or affiliate thereof, then
such Target Party (jointly and severally with its affiliates), upon the signing
of a definitive agreement relating to such a Business Combination, or, if no
such agreement is signed, then at the closing (and as a condition to the
closing) of such Target Party becoming such a subsidiary or of such Business
Combination, will pay to the other party a termination fee equal
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to $30 million in cash plus the out-of-pocket fees and expenses incurred by the
non-breaching party (including, without limitation, fees and expenses payable to
all legal, accounting, financial, public relations and other professional
advisors arising out of, in connection with or related to the Merger or the
transactions contemplated by this Agreement).
(c) Expenses. The parties agree that the agreements contained in this
Section 9.3 are an integral part of the transactions contemplated by the
Agreement and constitute liquidated damages and not a penalty. If one party
fails to promptly pay to the other any fee due hereunder, the defaulting party
shall pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of any
unpaid fee at the publicly announced prime rate of Citibank, N.A. from the date
such fee was required to be paid.
(d) Limitation of Termination Fees. Notwithstanding anything herein to the
contrary, the aggregate amount payable to Union Electric and its affiliates
pursuant to Section 9.3(a), Section 9.3(b) and the terms of the CIPSCO Stock
Option Agreement shall not exceed $50 million and the aggregate amount payable
to CIPSCO and its affiliates pursuant to Section 9.3(a), Section 9.3(b) and the
terms of the Union Electric Stock Option Agreement shall not exceed $50 million
(including, in each case, reimbursement for fees and expenses payable pursuant
to this Section 9.3). For purposes of this Section 9.3(d), the amount payable
pursuant to the terms of the CIPSCO Stock Option Agreement, as the case may be,
shall be the amount paid pursuant to Section 7(a)(i) and 7(a)(ii) thereof.
Section 9.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the shareholders of CIPSCO and Union Electric and prior to the Effective Time,
but after such approvals, no such amendment shall (i) alter or change the amount
or kind of shares, rights or any of the proceedings of the treatment of shares
under Article II, or (ii) alter or change any of the terms and conditions of
this Agreement if any of the alterations or changes, alone or in the aggregate,
would materially adversely affect the rights of holders of CIPSCO capital stock
or Union Electric capital stock, except for alterations or changes that could
otherwise be adopted by the Board of Directors of the Company, without the
further approval of such shareholders, as applicable. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
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Section 9.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties. (a)
All representations, warranties and agreements in this Agreement shall not
survive the Merger, except as otherwise provided in this Agreement and except
for the agreements contained in this Section 10.1 and in Article II, Section
7.5, Section 7.9, Section 7.10, Section 7.11, Section 7.14, Section 7.15,
Section 7.16, Section 7.17 and Section 10.7.
(b) No party may assert a claim for breach of any representation or warranty
contained in this Agreement (whether by direct claim or counterclaim) except in
connection with the cancellation of this Agreement pursuant to Section 9.1(g)(i)
or Section 9.1(h)(i) (or pursuant to any other subsection of Section 9.1, if the
terminating party would have been entitled to terminate this Agreement pursuant
to Section 9.1(g)(i) or Section 9.1(h)(i)).
Section 10.2 Brokers. CIPSCO represents and warrants that, except for
Morgan Stanley & Co., Inc. whose fees have been disclosed to Union Electric
prior to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of CIPSCO. Union Electric represents and warrants that, except
for Goldman, Sachs & Co., whose fees have been disclosed to CIPSCO prior to the
date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Union Electric.
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Section 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (i) delivered personally, (ii) sent
by reputable overnight courier service, (iii) telecopied (which is confirmed),
or (iv) five days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to CIPSCO, to:
CIPSCO Incorporated
607 East Adams Street
Springfield, IL 62739
Attention: Craig D. Nelson, Treasurer
Telephone: (217) 525-5315
Telecopy: (217) 535-5067
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601
Attention: Robert A. Yolles, Esq.
Telephone: (312) 782-3939
Telecopy: (312) 782-8585
(b) If to Union Electric, to:
Union Electric Company
1901 Chouteau Avenue
P.O. Box 149
St. Louis, MO 63166
Attention: Donald E. Brandt,
Chief Financial Officer
Telephone: (314) 554-2473
Telecopy: (314) 554-3066
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Seth A. Kaplan, Esq.
Telephone: (212) 403-1000
Telecopy: (212) 403-2000
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Section 10.4 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
other than the Confidentiality Agreement; (ii) shall not be assigned by
operation of law or otherwise; and (iii) shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed in and to be fully performed in such State, without giving effect to
its conflicts of law, rules or principles and except to the extent the
provisions of this Agreement (including the documents or instruments referred to
herein) are expressly governed by or derive their authority from the MGBCL or
the IBCA.
Section 10.5 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Section 10.6 Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except for rights of
Indemnified Parties as set forth in Section 7.5, nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Notwithstanding the foregoing and any other provision of this Agreement, and in
addition to any other required action of the Board of Directors of the Company
(a) a majority of the directors (or their successors) serving on the Board of
Directors of the Company who are designated by Union Electric pursuant to
Section 7.13 shall be entitled during the three year period commencing at the
Effective Time (the "Three Year Period") to enforce the provisions of Section
7.9, Section 7.10, Section 7.11 and Section 7.14 on behalf of the Union Electric
officers, directors and employees, as the case may be, and (b) a majority of the
directors (or their successors) serving on the Board of Directors of the Company
who are designated by CIPSCO pursuant to Section 7.13 shall be entitled during
the Three Year Period to enforce the provisions of, Sections 7.9,
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<PAGE>
Section 7.10, Section 7.11, and Section 7.14 on behalf of the CIPSCO officers,
directors and employees, as the case may be. Such directors' rights and
remedies under the preceding sentence are cumulative and are in addition to any
other rights and remedies they may have at law or in equity, but in no event
shall this Section 10.7 be deemed to impose any additional duties on any such
directors. The Company shall pay, at the time they are incurred, all costs,
fees and expenses of such directors incurred in connection with the assertion of
any rights on behalf of the persons set forth above pursuant to this Section
10.7.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each party to this
Agreement waives, to the fullest extent permitted by applicable law, (i) any
right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (ii) without
limitation to Section 9.3, any right it may have to receive damages from any
other party based on any theory of liability for any special, indirect,
consequential (including lost profits) or punitive damages.
Section 10.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court sitting in the State
of New York.
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IN WITNESS WHEREOF, Union Electric and CIPSCO have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
UNION ELECTRIC COMPANY
By: /s/ Charles W. Mueller
-------------------------
Name: Charles W. Mueller
Attest: /s/ James C. Thompson Title: President
---------------------
Secretary
CIPSCO INCORPORATED
By: /s/ Clifford L. Greenwalt
-------------------------
Name: Clifford L. Greenwalt
Attest: /s/ William A. Koertner Title: President
-----------------------
Secretary
ARCH HOLDING CORP.
By: /s/Donald E. Brandt
-------------------
Name: Donald E. Brandt
Attest:/s/ William E. Jaudes Title: President
---------------------
Secretary
ARCH MERGER INC.
By: /s/Donald E. Brandt
-------------------
Name: Donald E. Brandt
Attest:/s/ William E. Jaudes Title: President
---------------------
Secretary
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INDEX OF DEFINED TERMS
1935 Act................................................... 9
Affiliate Agreement........................................ 55
Affiliated Employees....................................... 56
Agreement.................................................. 1
Articles of Incorporation.................................. 3
Atomic Energy Act.......................................... 13
Business Combination....................................... 68
Business Combination Proposal.............................. 60
By-Laws.................................................... 3
Callaway................................................... 39
Certificates............................................... 6
CIPS....................................................... 10
CIPS 401(k) Plans.......................................... 41
CIPS Common Stock.......................................... 10
CIPS No-Par Preferred Stock................................ 10
CIPS Preferred Stock....................................... 10
CIPSCO..................................................... 1
CIPSCO Benefit Plans....................................... 17
CIPSCO Common Stock........................................ 4
CIPSCO Disclosure Schedule................................. 54
CIPSCO Dissenting Shares................................... 6
CIPSCO Exchange Ratio...................................... 5
CIPSCO Financial Statements................................ 13
CIPSCO Joint Venture....................................... 10
CIPSCO Material Adverse Effect............................. 14
CIPSCO MIP................................................. 57
CIPSCO Required Consents................................... 12
CIPSCO Required Statutory Approval......................... 12
CIPSCO Shareholders' Approval.............................. 23
CIPSCO SEC Reports......................................... 13
CIPSCO Special Meeting..................................... 52
CIPSCO Stock Option Agreement.............................. 1
CIPSCO Subsidiary.......................................... 9
Closing.................................................... 8
Closing Agreement.......................................... 16
Closing Date............................................... 8
Code....................................................... 16
Company.................................................... 1
Company Common Stock....................................... 4
Company Effective Time..................................... 3
Company Merger............................................. 2
Company Replacement Plans.................................. 57
Company Shares............................................. 6
Company Stock Plan......................................... 57
Committee.................................................. 57
Confidentiality Agreement.................................. 49
Converted Shares........................................... 6
Direct Subsidiary.......................................... 9
Disclosure Schedules....................................... 54
Effective Time............................................. 3
Environmental Claim........................................ 22
Environmental Laws......................................... 22
Environmental Permits...................................... 21
ERISA...................................................... 17
ERISA Affiliate............................................ 19
Exchange Act............................................... 13
Exchange Agent............................................. 6
Exchange Ratios............................................ 5
FERC....................................................... 13
Final Order................................................ 64
GAAP....................................................... 13
Governmental Authority..................................... 12
Hazardous Material......................................... 23
HSR Act.................................................... 51
IBCL....................................................... 3
Indemnified Liabilities.................................... 53
Indemnified Parties........................................ 53
Indemnified Party.......................................... 53
Initial Termination Date................................... 68
IRS........................................................ 18
Joint Proxy/Registration Statement......................... 50
Joint Venture.............................................. 9
Liens...................................................... 11
Merger Sub................................................. 1
Merger Sub Common Stock.................................... 4
Mergers.................................................... 1
MGBCL...................................................... 2
NRC........................................................ 13
NYSE....................................................... 7
PBCG....................................................... 18
PCBs....................................................... 23
Power Act.................................................. 13
Proxy Statement............................................ 14
Registration Statement..................................... 14
Release.................................................... 23
Representatives............................................ 49
Restricted Investments..................................... 48
SEC........................................................ 13
Securities Act............................................. 13
Stock Plans................................................ 59
Subsidiary................................................. 9
Target Party............................................... 72
Task Force................................................. 47
<PAGE>
Tax Return................................................. 15
Tax Ruling................................................. 16
Taxes...................................................... 15
Three Year Period.......................................... 76
Union Electric............................................. 1
Union Electric Benefit Plans............................... 33
Union Electric Common Stock................................ 4
Union Electric Disclosure Schedule......................... 54
Union Electric Dissenting Shares........................... 5
Union Electric Dividend Units.............................. 58
Union Electric Effective Time.............................. 3
Union Electric EIP......................................... 57
Union Electric Exchange Ratio.............................. 4
Union Electric Financial Statements........................ 29
Union Electric Joint Venture............................... 25
Union Electric LTIP........................................ 41
Union Electric Material Adverse Effect..................... 30
Union Electric Merger...................................... 2
Union Electric Preference Stock............................ 26
Union Electric Preferred Stock............................. 4
Union Electric Required Consents........................... 28
Union Electric Required Statutory Approvals................ 28
Union Electric SEC Reports................................. 29
Union Electric Shareholders' Approval...................... 38
Union Electric Special Meeting............................. 52
Union Electric Stock Option Agreement...................... 1
Union Electric Stock Option................................ 58
Union Electric Subsidiary.................................. 25
Union Electric Unrestricted Subsidiaries................... 26
Violation.................................................. 11
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