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REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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ILLINOIS POWER COMPANY
(Exact name of Registrant as specified in its charter)
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<S> <C>
STATE OF ILLINOIS 37-0344645
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62525
(217) 424-6600
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
LARRY D. HAAB, CHAIRMAN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62525
(217) 424-7152
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
ROBERT J. REGAN, ESQ.
SCHIFF HARDIN & WAITE
7200 SEARS TOWER
CHICAGO, ILLINOIS 60606
(312) 258-5606
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities.................. $200,000,000 100% $200,000,000 $59,000.00
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(1) Estimated solely for the purpose of calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION , 1998
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PROSPECTUS
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ILLINOIS POWER COMPANY
$200,000,000
DEBT SECURITIES
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Illinois Power Company (the "Company") intends from time to time to issue,
in one or more series, up to $200,000,000 aggregate principal amount of its New
Mortgage Bonds or other debt securities (collectively, "Securities") on terms to
be determined when the agreement to sell is made or at the time of sale, as the
case may be. For each issue of Securities for which this Prospectus is being
delivered (the "Offered Securities") there is an accompanying Prospectus
Supplement ("Prospectus Supplement") that sets forth the type of Offered
Securities, the series designation, the aggregate principal amount of the issue,
the maturities, rates and times of payment of interest, and any redemption
terms, credit enhancement terms and other special terms of the Offered
Securities, as well as any planned listing thereof on a stock exchange.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The Securities will be sold in accordance with the plan of distribution
described in "Plan of Distribution" herein.
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THE DATE OF THIS PROSPECTUS IS , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
and information statements and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661 and at Seven World Trade Center, 13th Floor, New York, New York
10048, or obtained from the Commission's Web site on the World Wide Web at
http://www.sec.gov. Copies of such material may be obtained from the public
reference section of the Commission, 450 Fifth Street, N.W, Washington, D.C.
20549, at prescribed rates. Such reports, proxy and information statements and
other information concerning the Company may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which
exchange certain of the Company's securities are listed. In addition, such
reports, proxy and information statements and other information concerning the
Company may be inspected at the principal office of the Company, 500 South 27th
Street, Decatur, Illinois 62525.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement"), which the Company has filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
Statements contained or incorporated by reference herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the Registration
Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission under the
Exchange Act are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(b) The Company's Current Reports on Form 8-K dated January 21, 1998,
February 13, 1998, April 14, 1998 and May 6, 1998.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, in the Prospectus Supplement or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
INFORMATION THAT THE PROSPECTUS INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO THE SHAREHOLDER SERVICES DEPARTMENT, ILLINOIS POWER COMPANY AT 500
SOUTH 27TH STREET, DECATUR, ILLINOIS 62525, TELEPHONE NUMBER: 1(800) 800-8220 OR
AT THE WEB SITE OF ITS PARENT COMPANY, ILLINOVA CORPORATION ("ILLINOVA"), ON THE
WORLD WIDE WEB AT HTTP://WWW.ILLINOVA.COM.
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THE COMPANY
Illinois Power Company (the "Company") was incorporated under the laws of
the State of Illinois on May 25, 1923. It is engaged in the generation,
transmission, distribution and sale of electric energy and the distribution,
transportation and sale of natural gas in the State of Illinois. Its service
area is a widely diversified industrial and agricultural area comprising
approximately 15,000 square miles in northern, central and southern Illinois.
Electric service is provided at retail to 310 incorporated municipalities,
adjacent suburban and rural areas and numerous unincorporated municipalities
having an estimated aggregate population of approximately 1,265,000. Gas service
is provided to 257 incorporated municipalities, adjacent suburban areas and
numerous unincorporated municipalities having an estimated aggregate population
of approximately 920,000. The larger cities served include Decatur, East St.
Louis (gas only), Champaign, Danville, Belleville, Granite City, Bloomington
(electric only), Galesburg, Urbana and Normal (electric only). Illinova owns all
of the outstanding common stock of the Company.
The executive offices of the Company are located at 500 South 27th Street,
Decatur, Illinois 62525, and the Company's telephone number is (217) 424-6600.
USE OF PROCEEDS
Unless otherwise provided in the Prospectus Supplement accompanying this
Prospectus, the net proceeds from the sale of the Securities will be added to
the Company's general funds and used for general corporate purposes. Until so
used, it is expected that the net proceeds will be placed in interest bearing
time deposits or invested in short-term marketable securities. Any other use of
the net proceeds of any offering of Securities may be determined at the time of
such offering and will be described in the accompanying Prospectus Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Company for the periods indicated. This information is qualified in its
entirety by the information appearing elsewhere in this Prospectus and by the
information and financial statements incorporated in this Prospectus by
reference.
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YEAR ENDED DECEMBER 31,
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1993 1994 1995 1996 1997
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<S> <C> <C> <C> <C>
0.80(1) 2.73 2.77 3.40 0.42(1)
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(1) The ratios of earnings to fixed charges of 0.80 and 0.42 for the years ended
December 31, 1993 and 1997, respectively, indicate that earnings were
inadequate to cover fixed charges. Additional earnings of approximately $63
million in 1993 and approximately $84 million in 1997 were required to
attain a one-to-one ratio of earnings to fixed charges. Excluding
disallowed Clinton Power Station plant costs, the ratio of earnings to
fixed charges would have been 2.25 for the year ended December 31, 1993.
Excluding the write-off related to the discontinued application of SFAS 71,
"Accounting for the Effects of Certain Types of Regulation," for the
generation segment of the Company's business, the ratio of earnings to
fixed charges would have been 2.58 for the year ended December 31, 1997.
Earnings used in the calculation of the ratio of earnings to fixed charges
include the allowance for funds used during construction and the deferred
financing costs associated with the Company's Clinton Power Station and are
before deduction of income taxes and fixed charges. Fixed charges include
interest on long-term debt, related amortization of debt discount, premium, and
expense, other interest and that portion of rent expense which is estimated to
be representative of the interest component.
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DESCRIPTION OF THE NEW MORTGAGE BONDS
If the Offered Securities are the Company's New Mortgage Bonds (the "New
Mortgage Bonds"), then the following description is applicable to the Offered
Securities.
GENERAL
The New Mortgage Bonds will be bonds, notes or other evidences of
indebtedness authenticated and delivered under a General Mortgage Indenture and
Deed of Trust between the Company and Harris Trust and Savings Bank (the "New
Mortgage Trustee"), dated as of November 1, 1992. The New Mortgage Bonds will be
issued in one or more series in registered form, without coupons. The General
Mortgage and Deed of Trust, as supplemented by various supplemental indentures,
including one or more supplemental indentures relating to the New Mortgage
Bonds, is hereinafter referred to as the "New Mortgage." The summaries under
this heading do not purport to be complete and are subject to the detailed
provisions of the New Mortgage. Capitalized terms used under this heading which
are not otherwise defined in this Prospectus shall have the meanings ascribed
thereto in the New Mortgage. Wherever particular provisions of the New Mortgage
or terms defined therein are referred to, such provisions or definitions are
incorporated by reference as a part of the statements made herein and such
statements are qualified in their entirety by such reference. References to
article and section numbers in this description of the New Mortgage Bonds,
unless otherwise indicated, are references to article and section numbers of the
New Mortgage.
Reference is made to the Prospectus Supplement for a description of the
following terms of each series of New Mortgage Bonds in respect of which this
Prospectus is being delivered: (i) the title of such New Mortgage Bonds; (ii)
the limit, if any, upon the aggregate principal amount of such New Mortgage
Bonds; (iii) the date or dates on which the principal of such New Mortgage Bonds
is payable; (iv) the rate or rates at which such New Mortgage Bonds will bear
interest, if any; the date or dates from which such interest will accrue; the
dates on which such interest will be payable ("Interest Payment Dates"); and the
regular record dates for the interest payable on such Interest Payment Dates;
(v) the option, if any, of the Company to redeem such New Mortgage Bonds and the
periods within which or the dates on which, the prices at which and the terms
and conditions upon which, such New Mortgage Bonds may be redeemed, in whole or
in part, upon the exercise of such option; (vi) the obligation, if any, of the
Company to redeem or purchase such New Mortgage Bonds pursuant to any sinking
fund or analogous provisions or at the option of the Holder and the periods
within which or the dates on which, the prices at which and the terms and
conditions upon which such New Mortgage Bonds will be redeemed or purchased, in
whole or in part, pursuant to such obligation; (vii) the denominations in which
such New Mortgage Bonds will be issuable; (viii) whether such New Mortgage Bonds
are to be issued in whole or in part in the form of one or more global New
Mortgage Bonds and, if so, the identity of the depositary for such global New
Mortgage Bonds; and (ix) any other terms of such New Mortgage Bonds not
inconsistent with the provisions of the New Mortgage.
REDEMPTION OF THE NEW MORTGAGE BONDS
Any terms for the optional or mandatory redemption of New Mortgage Bonds
will be set forth in the Prospectus Supplement. Except as shall otherwise be
provided in the applicable Prospectus Supplement with respect to New Mortgage
Bonds redeemable at the option of the Holder, New Mortgage Bonds will be
redeemable only upon notice by mail not less than 30 days prior to the date
fixed for redemption, and, if less than all the New Mortgage Bonds of a series,
or any Tranche thereof, are to be redeemed, the particular New Mortgage Bonds to
be redeemed will be selected by such method as shall be provided for any
particular series or Tranche, or in the absence of any such provision, by such
method as the Bond Registrar deems fair and appropriate. (See Sections 5.03 and
5.04.)
Any notice of redemption at the option of the Company may state that such
redemption shall be conditioned upon receipt by the New Mortgage Trustee, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such New Mortgage
Bonds and that if such money has not been so received, such notice will be of no
force and effect and the Company will not be required to redeem such New
Mortgage Bonds. (See Section 5.04.)
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While the New Mortgage contains provisions for the maintenance of the
Mortgaged Property, it does not contain any provisions for a maintenance or
sinking fund and, except as may be provided in a Supplemental Indenture (and
described in the applicable Prospectus Supplement) there will be no provisions
for any such funds for the New Mortgage Bonds.
SECURITY
General. Except as discussed below, New Mortgage Bonds now or hereafter
issued under the New Mortgage will be secured primarily by:
(a) bonds ("First Mortgage Bonds") issued under the Company's Mortgage
and Deed of Trust, dated November 1, 1943 (the "First Mortgage"), to Harris
Trust and Savings Bank, as trustee (the "First Mortgage Trustee"), and
delivered to the New Mortgage Trustee under the New Mortgage; as discussed
under "Description of First Mortgage Bonds," the First Mortgage
constitutes, subject to certain exceptions, a first mortgage lien on
substantially all properties of the Company; and
(b) the lien of the New Mortgage on the Company's properties used in
the generation, purchase, transmission, distribution and sale of
electricity or gas, which lien is junior to the lien of the First Mortgage.
As discussed below under "Pledged Bonds," following a merger or
consolidation of another corporation into the Company, the Company could deliver
to the New Mortgage Trustee bonds issued under an existing mortgage on the
properties of such other corporation in lieu of or in addition to bonds issued
under the First Mortgage. In such event, the New Mortgage Bonds would be
secured, additionally, by such bonds and by the lien of the New Mortgage on the
properties of such other corporation, which would be junior to the liens of such
existing mortgage and the First Mortgage. The First Mortgage and all such other
mortgages are hereinafter, collectively, called the "Prior Mortgages," and all
bonds issued under the Prior Mortgages and delivered to the New Mortgage Trustee
are hereinafter collectively called the "Pledged Bonds." If and when no Prior
Mortgages are in effect, the New Mortgage will constitute a first mortgage lien
on all property of the Company subject thereto.
Pledged Bonds. The Pledged Bonds will be issued and delivered to, and
registered in the name of, the New Mortgage Trustee or its nominee and will be
owned and held by the New Mortgage Trustee, subject to the provisions of the New
Mortgage, for the benefit of the Holders of all New Mortgage Bonds Outstanding
from time to time, and the Company will have no interest in such Pledged Bonds.
Pledged Bonds issued as the basis for the authentication and delivery of New
Mortgage Bonds (a) will mature on the same dates, and in the same principal
amounts, as such New Mortgage Bonds and (b) will contain, in addition to any
mandatory redemption provisions applicable to all Pledged Bonds Outstanding
under the related Prior Mortgage, mandatory redemption provisions correlative to
provisions for mandatory redemption, or for redemption at the option of the
Holder, of such New Mortgage Bonds. Pledged Bonds issued as the basis for
authentication and delivery of a series or Tranche of New Mortgage Bonds (x)
may, but need not, bear interest, any such interest to be payable at the same
times as interest on the New Mortgage Bonds of such series or Tranche and (y)
may, but need not, contain provisions for the redemption thereof at the option
of the Company, any such redemption to be made at a redemption price or prices
not less than the principal amount of such Pledged Bonds. (See Sections 4.02 and
7.01.)
Any payment by the Company of principal of or premium or interest on the
Pledged Bonds held by the New Mortgage Trustee will be applied by the New
Mortgage Trustee to the payment of any principal, premium or interest, as the
case may be, in respect of the New Mortgage Bonds which is then due, and, to the
extent of such application, the obligation of the Company under the New Mortgage
to make such payment in respect of the New Mortgage Bonds will be deemed
satisfied and discharged. If, at the time of any such payment of principal of
Pledged Bonds, there shall be no principal then due in respect of the New
Mortgage Bonds, the proceeds of such payment will be deemed to constitute Funded
Cash and will be held by the New Mortgage Trustee as part of the Mortgaged
Property, to be withdrawn, used or applied as provided in the New Mortgage. If,
at the time of any such payment of premium or interest on Pledged Bonds, there
shall be no premium or interest, as the case may be, then due in respect of the
New Mortgage Bonds, the proceeds of such
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payments will be remitted to the Company at its request. (See Section 7.02 and
"-- Withdrawal of Cash" below). Any payment by the Company of principal of or
premium or interest on New Mortgage Bonds authenticated and delivered on the
basis of the deposit with the New Mortgage Trustee of Pledged Bonds (other than
by application of the proceeds of payments in respect of such Pledged Bonds)
will, to the extent thereof, be deemed to satisfy and discharge the obligation
of the Company, if any, to make a payment of principal, premium or interest, as
the case may be, in respect of such Pledged Bonds which is then due.
The New Mortgage Trustee may not sell, assign or otherwise transfer any
Pledged Bonds except to a successor trustee under the New Mortgage. (See Section
7.04.) At the time any New Mortgage Bonds of any series or Tranche which have
been authenticated and delivered upon the basis of Pledged Bonds cease to be
Outstanding (other than as a result of the application of the proceeds of the
payment or redemption of such Pledged Bonds), the New Mortgage Trustee shall
surrender to or upon the order of the Company an equal principal amount of such
Pledged Bonds having the same Stated Maturity and mandatory redemption
provisions as such New Mortgage Bonds. (See Section 7.03.)
At the date of this Prospectus, the only Prior Mortgage is the First
Mortgage and the only Pledged Bonds issuable at this time are First Mortgage
Bonds issuable thereunder. The New Mortgage provides that in the event of the
merger or consolidation of another company with or into the Company, an existing
mortgage constituting a lien on properties of such other company prior to the
lien of the New Mortgage may be designated by the Company as an additional Prior
Mortgage. Bonds thereafter issued under such additional mortgage would be
Pledged Bonds and could provide the basis for the authentication and delivery of
New Mortgage Bonds under the New Mortgage. (See Section 7.06.) When no Pledged
Bonds are Outstanding under a Prior Mortgage except for Pledged Bonds held by
the New Mortgage Trustee, then, at the request of the Company and subject to
satisfaction of certain conditions, the New Mortgage Trustee will surrender such
Pledged Bonds for cancellation, and the related Prior Mortgage will be satisfied
and discharged, the lien of such Prior Mortgage on the Company's property will
cease to exist and the priority of the lien of the New Mortgage will be
increased. (See Section 7.07.)
The New Mortgage contains no restrictions on the issuance of bonds issued
under Prior Mortgages in addition to Pledged Bonds issued to the New Mortgage
Trustee as the basis for the authentication and delivery of New Mortgage Bonds.
First Mortgage Bonds may currently be issued under the First Mortgage on the
basis of property additions, retirements of bonds previously issued under the
First Mortgage and cash deposited with the First Mortgage Trustee. (See
"Description of First Mortgage Bonds.")
Lien of the New Mortgage. The properties of the Company used in the
generation, purchase, transmission, distribution and sale of electricity and gas
will be subject to the lien of the New Mortgage. Substantially all of such
property, while subject to the lien of the New Mortgage, will be also subject to
the prior lien of the First Mortgage. The New Mortgage Bonds will have the
benefit of the first mortgage lien of the First Mortgage on such property, and
the benefit of the prior lien of any additional Prior Mortgage on any property
subject thereto, to the extent of the aggregate principal amount of Pledged
Bonds, issued under the respective Prior Mortgages, held by the New Mortgage
Trustee.
The lien of the New Mortgage is subject to Permitted Liens which include
tax liens and other governmental charges which are not delinquent and which are
being contested, construction and material-men's liens, certain judgment liens,
easement, reservations and rights of others (including governmental entities)
in, and defects of title in, certain property of the Company, certain leasehold
interests, liens on the Company's pollution control and sewage and solid waste
facilities and certain other liens and encumbrances. (See Section 1.01.)
There are excepted from the lien of the New Mortgage, among other things,
cash and securities not paid to, deposited with or held by the New Mortgage
Trustee under the New Mortgage; contracts, leases and other agreements of all
kinds, contract rights, bills, notes and other instruments, accounts receivable,
claims, certain intellectual property rights and other general intangibles;
automobiles, other vehicles, movable equipment, aircraft and vessels; all goods,
wares and merchandise held for sale in the ordinary course of business or for
the use by or the benefit of the Company; nuclear fuel; fuel, materials,
supplies and other personal property consumable in the operations of the
Company's business; computers, machinery and equipment; coal, ore, gas,
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oil, minerals and timber mined or extracted from the land; electric energy, gas,
steam water and other products generated, produced or purchased; leasehold
interests; and all books and records. (See Section 1.01.)
Without the consent of the Holders, the Company and the New Mortgage
Trustee may enter into supplemental indentures to subject to the lien of the New
Mortgage additional property, whether or not used in the electric or gas utility
businesses (including property which would otherwise be excepted from such
lien). (See Section 14.01.) Such property, so long as the same would otherwise
constitute Property Additions (as described below), would thereupon constitute
Property Additions and be available as a basis for the issuance of New Mortgage
Bonds. (See "Issuance of Additional New Mortgage Bonds.")
The New Mortgage contains provisions subjecting after-acquired property to
the lien thereof, subject to the prior lien of the First Mortgage. These
provisions are limited in the case of consolidation or merger (whether or not
the Company is the surviving corporation) or sale of substantially all of the
Company's assets. In the event of consolidation or merger or the transfer of all
the mortgaged property as or substantially as an entirety, the New Mortgage will
not be required to be a lien upon any of the properties then owned or thereafter
acquired by the successor corporation except properties acquired from the
Company in or as a result of such transaction and improvements, extensions and
additions to such properties and renewals, replacements and substitutions of or
for any part or parts of such properties. (See Article Thirteen and
"-- Consolidation, Merger, Conveyance, Transfer or Lease.") In addition,
after-acquired property may be subject to vendors' liens, purchase money
mortgages and other liens thereon at the time of acquisition thereof, including
the lien of any Prior Mortgage.
The New Mortgage provides that the New Mortgage Trustee will have a lien,
prior to the lien on behalf of the holders of New Mortgage Bonds, upon Mortgaged
Property, for the payment of its reasonable compensation and expenses and for
indemnity against certain liabilities. (See Section 11.07.)
CREDIT ENHANCEMENT
See the Prospectus Supplement for credit enhancement terms, if any, of the
New Mortgage Bonds.
ISSUANCE OF ADDITIONAL NEW MORTGAGE BONDS
The maximum principal amount of New Mortgage Bonds which may be issued
under the New Mortgage is unlimited. (See Section 3.01.) New Mortgage Bonds of
any series may be issued from time to time under Article Four of the New
Mortgage on the basis of, and in an aggregate principal amount not exceeding:
(1) the aggregate principal amount of Pledged Bonds issued and
delivered to the New Mortgage Trustee;
(2) 75% of the Cost or Fair Value (whichever is less) of Property
Additions (as described below) which do not constitute Funded Property
(generally, Property Additions which have been made the basis of the
authentication and delivery of New Mortgage Bonds, the release of mortgaged
property or cash withdrawals, or which have been substituted for retired
property) after certain deductions and additions, primarily including
adjustments to offset property retirements;
(3) the aggregate principal amount of Retired Bonds (which consist of
New Mortgage Bonds no longer outstanding under the New Mortgage which have
not been used for certain other purposes under the New Mortgage and which
are not to be paid, redeemed or otherwise retired by the application of
Funded Cash), but if Pledged Bonds had been made the basis for the
authentication and delivery of such Retired Bonds, only if the related
Prior Mortgage has been discharged; and
(4) an amount of cash deposited with the New Mortgage Trustee.
In general, the issuance of New Mortgage Bonds is subject to Adjusted Net
Earnings of the Company for 12 consecutive months within the preceding 18 months
being at least twice the Annual Interest Requirements on all New Mortgage Bonds
at the time outstanding, New Mortgage Bonds then applied for, all outstanding
Prior Bonds other than Pledged Bonds held by the New Mortgage Trustee under the
New Mortgage, and all other indebtedness (with certain exceptions) secured by a
lien prior to the lien of the New Mortgage, except
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that no such net earnings requirement need be met if the additional New Mortgage
Bonds to be issued are to have no Stated Interest Rate prior to Maturity. The
Company is not required to satisfy the net earnings requirement prior to
issuance of New Mortgage Bonds as provided in (1) above, if the Pledged Bonds
issued and delivered to the New Mortgage Trustee as the basis for such issuance
have been authenticated and delivered under the related Prior Mortgage on the
basis of retired Prior Bonds unless (a) the Stated Maturity of such retired
Prior Bonds is a date more than two years after the date of the Company Order
requesting the authentication and delivery of such New Mortgage Bonds and (b)
the Stated Interest Rate, if any, on such retired Prior Bonds immediately prior
to Maturity is less than the Stated Interest Rate, if any, on such New Mortgage
Bonds to be in effect upon the initial authentication and delivery thereof. In
addition, the Company is not required to satisfy the net earnings requirement
prior to issuance of New Mortgage Bonds as provided in (3) above. In general,
the interest requirement with respect to variable interest rate indebtedness, if
any, is determined with reference to the rate or rates in effect on the date
immediately preceding such determination or the rate to be in effect upon
initial authentication. (See Section 1.03 and Article Four.)
Adjusted Net Earnings are calculated before, among other things, provisions
for income taxes; depreciation or amortization of property; interest on any
indebtedness and amortization of debt discount and expense; any non-recurring
charge to income of whatever kind or nature (including without limitation the
recognition of expense due to the non-recoverability of assets or expense),
whether or not recorded as a non-recurring item in the Company's books of
account; and any refund of revenues previously collected or accrued by the
Company subject to possible refund. Adjusted Net Earnings also do not take into
account profits or losses from the sale or other disposition of property, or
non-recurring charges of any kind or nature, whether items of revenue or
expense. With respect to New Mortgage Bonds of a series subject to a Periodic
Offering (such as a medium-term note program), the New Mortgage Trustee will be
entitled to receive a certificate evidencing compliance with the net earnings
requirements only once, at or prior to the time of the first authentication and
delivery of the New Mortgage Bonds of such series. (See Sections 1.03 and 4.01.)
Property Additions generally include any property which is owned by the
Company and is subject to the lien of the New Mortgage except (with certain
exceptions) goodwill or going concern value rights, or any property the cost of
acquisition or construction of which is properly chargeable to an operating
expense account of the Company. (See Section 1.04.)
Unless otherwise provided in the applicable Prospectus Supplement or
supplement thereto, the Company will issue the New Mortgage Bonds on the basis
of Pledged Bonds (i.e., First Mortgage Bonds) issued under its First Mortgage.
RELEASE OF PROPERTY
The Company may obtain the release from the lien of the New Mortgage of any
Funded Property, except for cash held by the New Mortgage Trustee, upon delivery
to the New Mortgage Trustee of cash equal in amount to the amount, if any, by
which the Cost of the property to be released (or, if less, the Fair Value of
such property at the time it became Funded Property) exceeds the aggregate of:
(1) the principal amount, subject to certain limitations, of
obligations secured by purchase money mortgage upon the property to be
released delivered to the New Mortgage Trustee;
(2) the Cost or Fair Value (whichever is less) of certified Property
Additions not constituting Funded Property after certain deductions and
additions, primarily including adjustments to offset property retirements
(except that such adjustments need not be made if such Property Additions
were acquired or made within the 90-day period preceding the release);
(3) an amount equal to 133 1/3% of the aggregate principal amount of
New Mortgage Bonds the Company would be entitled to issue on the basis of
Retired Bonds (with such entitlement being waived by operation of such
release);
(4) an amount equal to 133 1/3% of the aggregate principal amount of
New Mortgage Bonds delivered to the New Mortgage Trustee (with such New
Mortgage Bonds to be canceled by the New Mortgage Trustee);
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(5) the deposit of cash or, to a limited extent, the principal amount
of obligations secured by purchase money mortgages upon the property
released delivered to the trustee or other holder of a lien prior to the
lien of the New Mortgage; and
(6) any taxes and expenses incidental to any sale, exchange,
dedication or other disposition of the property to be released.
Property which is not Funded Property may generally be released from the
lien of the New Mortgage without depositing any cash or property with the New
Mortgage Trustee as long as (a) the aggregate amount of Cost or Fair Value
(whichever is less) of all Property Additions which do not constitute Funded
Property (excluding the property to be released) after certain deductions and
additions, primarily including adjustments to offset property retirements, is
not less than zero or (b) the Cost or Fair Value (whichever is less) of property
to be released does not exceed the aggregate amount of the Cost or Fair Value
(whichever is less) of Property Additions acquired or made within the 90-day
period preceding the release.
The New Mortgage provides simplified procedures for the release of property
which has been released from the lien of a Prior Mortgage, minor properties and
property taken by eminent domain, and provides for dispositions of certain
obsolete property and grants or surrender of certain rights without any release
or consent by the New Mortgage Trustee.
If any property released from the lien of the New Mortgage continues to be
owned by the Company after such release, the New Mortgage will not become a lien
on any improvement, extension or addition to such property or renewals,
replacements or substitutions of or for any part or parts of such property. (See
Article Eight.)
WITHDRAWAL OF CASH
Subject to certain limitations, cash held by the New Mortgage Trustee may
(1) be withdrawn by the Company (a) to the extent of the Cost or Fair Value
(whichever is less) of Property Additions not constituting Funded Property,
after certain deductions and additions, primarily including adjustments to
offset retirements or (b) in an amount equal to 133 1/3% of the aggregate
principal amount of New Mortgage Bonds that the Company would be entitled to
issue on the basis of Retired Bonds (with such entitlement being waived by
operation of such withdrawal) or (c) in an amount equal to 133 1/3% of the
aggregate principal amount of any Outstanding New Mortgage Bonds delivered to
the New Mortgage Trustee, or (2) upon the request of the Company, be applied to
(a) the purchase of New Mortgage Bonds (at prices not exceeding 133 1/3% of the
principal amount thereof) or (b) the redemption or payment at Stated Maturity of
New Mortgage Bonds (with any New Mortgage Bonds received by the New Mortgage
Trustee pursuant to these provisions being cancelled by the New Mortgage
Trustee) (see Section 8.06); provided, however, that cash deposited with the New
Mortgage Trustee as the basis for the authentication and delivery of New
Mortgage Bonds, as well as cash representing a payment of principal of Pledged
Bonds, may only be withdrawn in an amount equal to the aggregate principal
amount of New Mortgage Bonds the Company would be entitled to issue on any basis
(with such entitlement being waived by operation of such withdrawal), or may,
upon the request of the Company, be applied to the purchase, redemption or
payment of New Mortgage Bonds at prices not exceeding, in the aggregate, the
principal amount thereof (see Sections 4.05 and 7.02).
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
The Company may not consolidate with or merge into any other corporation or
convey, transfer or lease the Mortgaged Property as or substantially as an
entirety to any Person unless (a) such transaction is on such terms as will
fully preserve in all material respects the lien and security of the New
Mortgage and the rights and powers of the New Mortgage Trustee and Holders, (b)
the corporation formed by such consolidation or into which the Company is merged
or the Person which acquires by conveyance or transfer, or which leases, the
Mortgaged Property as or substantially as an entirety is a corporation organized
and existing under the laws of the United States of America or any State or
Territory thereof or the District of Columbia, and such corporation executes and
delivers to the New Mortgage Trustee a supplemental indenture, which contains an
assumption by such corporation of the due and punctual payment of the principal
of and premium, if any, and
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interest, if any, on the New Mortgage Bonds and the performance of all of the
covenants of the Company under the New Mortgage and which contains a grant,
conveyance, transfer and mortgage by the corporation confirming the lien of the
New Mortgage on the Mortgaged Property and subjecting to such lien all property
thereafter acquired by the corporation which shall constitute an improvement,
extension or addition to the Mortgaged Property or a renewal, replacement or
substitution of or for any part thereof, and, at the election of the
corporation, subjecting to the lien of the New Mortgage such other property then
owned or thereafter acquired by the corporation as the corporation shall specify
and (c) in the case of a lease, such lease will be made expressly subject to
termination by the Company or the New Mortgage Trustee at any time during the
continuance of an Event of Default. (See Section 13.01.)
MODIFICATION OF NEW MORTGAGE
Without the consent of any Holders, the Company and the New Mortgage
Trustee may enter into one or more supplemental indentures for any of the
following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company in the
New Mortgage and in the New Mortgage Bonds; or
(b) to add one or more covenants of the Company or other provisions
for the benefit of all Holders or for the benefit of the Holders of, or to
remain in effect only so long as there shall be Outstanding, New Mortgage
Bonds of one or more specified series, or one or more Tranches thereof, or
to surrender any right or power conferred upon the Company by the New
Mortgage; or
(c) to correct or amplify the description of any property at any time
subject to the lien of the New Mortgage, or better to assure, convey and
confirm to the New Mortgage Trustee any property subject or required to be
subjected to the lien of the New Mortgage, or to subject to the lien of the
New Mortgage additional property; or
(d) to convey, transfer and assign to the New Mortgage Trustee and to
subject to the Lien of the New Mortgage with the same force and effect as
if included in the New Mortgage, property of subsidiaries of the Company
used or to be used for one or more purposes which if owned by the Company
would constitute property used or to be used for one or more of the Primary
Purposes of the Company's business, which property shall for all purposes
of the New Mortgage be deemed to be property of the Company, together with
such other provisions as may be appropriate to express the respective
rights of the New Mortgage Trustee and the Company in regard thereto; or
(e) to change or eliminate any provision of the New Mortgage or to add
any new provision to the New Mortgage, provided that if such change,
elimination or addition adversely affects the interests of the Holders of
the New Mortgage Bonds of any series or Tranche in any material respect,
such change, elimination or addition will become effective with respect to
such series or Tranche only when no New Mortgage Bond of such series or
Tranche remains outstanding under the New Mortgage; or
(f) to establish the form or terms of the New Mortgage Bonds of any
series or Tranche as permitted by the New Mortgage; or
(g) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest, if any,
thereon and for the procedures for the registration, exchange and
replacement thereof and for the giving of notice to, and the solicitation
of the vote or consent of, the holders thereof, and for any and all other
matters incidental thereto; or
(h) to evidence and provide for the acceptance of appointment by a
successor trustee or by a co-trustee or separate trustee; or
(i) to provide for the procedures required to permit the utilization
of a noncertificated system of registration for all, or any series or
tranche of, the New Mortgage Bonds; or
(j) to change any place where (1) the principal of and premium, if
any, and interest, if any, on the New Mortgage Bonds of any series, or any
Tranche thereof, will be payable, (2) any New Mortgage
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Bonds of any series, or any Tranche thereof, may be surrendered for
registration of transfer, (3) any New Mortgage Bonds of any series, or any
Tranche thereof, may be surrendered for exchange and (4) notices and
demands to or upon the Company in respect of the New Mortgage Bonds of any
series, or any Tranche thereof, and the New Mortgage may be served; or
(k) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other provision
therein, or to make any changes to the provisions thereof or to add other
provisions with respect to matters and questions arising under the New
Mortgage, so long as such other changes or additions do not adversely
affect the interests of the Holders of New Mortgage Bonds of any series or
Tranche in any material respect; or
(l) to reflect changes in Generally Accepted Accounting Principles; or
(m) to provide the terms and conditions of the exchange or conversion,
at the option of the holders of New Mortgage Bonds of any series, of the
New Mortgage Bonds of such series for or into New Mortgage Bonds of other
series or stock or other securities of the Company or any other
corporation; or
(n) to change the words "Mortgage Bonds" to "First Mortgage Bonds" in
the descriptive title of all Outstanding New Mortgage Bonds at any time
after the discharge of the First Mortgage; or
(o) to comply with the rules or regulations of any national securities
exchange on which any of the New Mortgage Bonds may be listed.
(See Section 14.01.)
Without limiting the generality of the foregoing, if the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date
of the New Mortgage in such a way as to require changes to the New Mortgage or
the incorporation therein of additional provisions or so as to permit changes
to, or the elimination of, provisions which, at the date of the New Mortgage or
at any time thereafter, were required by the Trust Indenture Act to be contained
in the New Mortgage, the Company and the New Mortgage Trustee may, without the
consent of any Holders, enter into one or more supplemental indentures to
evidence or effect such amendment. (See Section 14.01.)
Except as provided above, the consent of the Holders of a majority in
aggregate principal amount of the New Mortgage Bonds of all series then
Outstanding, considered as one class, is required for the purpose of adding any
provisions to, or changing in any manner, or eliminating any of the provisions
of, the New Mortgage pursuant to one or more supplemental indentures; provided,
however, if less than all of the series of New Mortgage Bonds Outstanding are
directly affected by a proposed supplemental indenture, then the consent only of
the Holders of a majority in aggregate principal amount of Outstanding New
Mortgage Bonds of all series so directly affected, considered as one class, will
be required; and provided, further, that if the New Mortgage Bonds of any series
have been issued in more than one Tranche and if the proposed supplemental
indenture directly affects the rights of the Holders of one or more, but less
than all, such Tranches, then the consent only of the Holders of a majority in
aggregate principal amount of the Outstanding New Mortgage Bonds of all Tranches
so directly affected, considered as one class, will be required; and provided,
further, that no such amendment or modification may, without the consent of each
Holder of the Outstanding New Mortgage Bonds of each series or Tranche directly
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any New Mortgage Bond, or reduce the
principal amount thereof or the rate of interest thereon (or the amount of any
installment of interest thereon) or change the method of calculating such rate
or reduce any premium payable upon the redemption thereof, or reduce the amount
of the principal of a Discount Bond that would be due and payable upon a
declaration of acceleration of maturity or change the coin or currency (or other
property) in which any New Mortgage Bond or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the redemption date), (b) permit the creation of any
lien ranking prior to the lien of the New Mortgage with respect to all or
substantially all of the Mortgaged Property or terminate the lien of the New
Mortgage on all or substantially all of the Mortgaged Property, or deprive such
Holder of the benefit of the security of the lien of the New Mortgage, (c)
reduce the percentage in principal amount of the Outstanding New Mortgage
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Bonds of such series or Tranche, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with any provision of the New Mortgage or
of any default thereunder and its consequences, or reduce the requirements for
quorum or voting, or (d) modify certain of the provisions of the New Mortgage
relating to supplemental indentures, waivers of certain covenants and waivers of
past defaults. A supplemental indenture which changes or eliminates any covenant
or other provision of the New Mortgage which has expressly been included solely
for the benefit of the Holders of, or which is to remain in effect only so long
as there shall be Outstanding New Mortgage Bonds of one or more specified
series, or one or more Tranches thereof, or modifies the rights of the Holders
of New Mortgage Bonds of such series or Tranches with respect to such covenant
or other provision, will be deemed not to affect the rights under the New
Mortgage of the Holders of the New Mortgage Bonds of any other series or
Tranche. (See Section 14.02.)
WAIVER
The Holders of a majority in aggregate principal amount of all New Mortgage
Bonds may waive the Company's obligations to comply with certain covenants,
including the Company's obligation to maintain its corporate existence and
properties, pay taxes and discharge liens, maintain certain insurance and to
make such recordings and filings as are necessary to protect the security of the
Holders and the rights of the New Mortgage Trustee, provided that such waiver
occurs before the time such compliance is required. The Holders of a majority of
the aggregate principal amount of Outstanding New Mortgage Bonds of all affected
series or Tranches, considered as one class, may waive, before the time for such
compliance, compliance with the Company's obligations to maintain an office or
agency where the New Mortgage Bonds of such series or Tranches may be
surrendered for payment, registration, transfer or exchange, and compliance with
any other covenant specified in a supplemental indenture respecting such series
or Tranches. (See Section 6.09.)
EVENTS OF DEFAULT
Each of the following events constitutes an Event of Default under the New
Mortgage:
(1) failure to pay interest on any New Mortgage Bond within 45 days
after the same becomes due;
(2) failure to pay principal of or premium, if any, on any New
Mortgage Bond within three business days after its Maturity;
(3) failure to perform or breach of any covenant or warranty of the
Company in the New Mortgage (other than a covenant or warranty a default in
the performance of which or breach of which is dealt with elsewhere under
this paragraph) for a period of 60 days after there has been given to the
Company by the New Mortgage Trustee, or to the Company and the New Mortgage
Trustee by the Holders of at least 25% in principal amount of Outstanding
New Mortgage Bonds, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default," unless the New Mortgage Trustee, or the New Mortgage Trustee and
the Holders of a principal amount of New Mortgage Bonds not less than the
principal amount of New Mortgage Bonds the Holders of which gave such
notice, as the case may be, agree in writing to an extension of such period
prior to its expiration; provided, however, that the New Mortgage Trustee,
or the New Mortgage Trustee and such Holders, as the case may be, will be
deemed to have agreed to an extension of such period if corrective action
has been initiated by the Company within such period and is being
diligently pursued;
(4) certain events relating to reorganization, bankruptcy or
insolvency of the Company or the appointment of a receiver or trustee for
its property; or
(5) the occurrence of a Matured Event of Default under any Prior
Mortgage; provided that the waiver or cure of any such event of default and
the rescission and annulment of the consequences thereof will constitute a
waiver of the corresponding Event of Default under the New Mortgage and a
rescission and annulment of the consequences thereof. (See Section 10.01.)
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REMEDIES
If an Event of Default occurs and is continuing, then the New Mortgage
Trustee or the Holders of not less than 33% in principal amount of New Mortgage
Bonds then Outstanding may declare the principal amount (or if any of the New
Mortgage Bonds are Discount Bonds, such portion of the principal amount as may
be provided for such Discount Bonds pursuant to the terms of the New Mortgage)
of all of the New Mortgage Bonds, together with the premium, if any, and
interest accrued, if any, thereon to be immediately due and payable. At any time
after such declaration of the maturity of the New Mortgage Bonds then
Outstanding, but before the sale of any of the Mortgaged Property and before a
judgment or decree for payment of money shall have been obtained by the New
Mortgage Trustee as provided in the New Mortgage, the Event or Events of Default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if
(a) the Company has paid or deposited with the New Mortgage Trustee a
sum sufficient to pay
(1) all overdue interest, if any, on all New Mortgage Bonds then
Outstanding;
(2) the principal of and premium, if any, on any New Mortgage Bonds
then Outstanding which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such New Mortgage Bonds; and
(3) all amounts due to the New Mortgage Trustee as compensation and
reimbursement as provided in the New Mortgage; and
(b) any other Event or Events of Default, other than the non-payment
of the principal of New Mortgage Bonds which shall have become due solely
by such declaration of acceleration, shall have been cured or waived as
provided in the New Mortgage. (See Sections 10.02 and 10.17.)
The New Mortgage provides that, under certain circumstances and to the
extent permitted by law, if an Event of Default occurs and is continuing, the
New Mortgage Trustee has the power to take possession of, and to hold, operate
and manage, the Mortgaged Property, or with or without entry, to sell the
Mortgaged Property. If the Mortgaged Property is sold, whether by the New
Mortgage Trustee or pursuant to judicial proceedings, the principal of the
Outstanding New Mortgage Bonds, if not previously due, will become immediately
due, together with premium, if any, and any accrued interest. (See Sections
10.03, 10.04 and 10.05.)
If an Event of Default occurs and is continuing, the Holders of a majority
in principal amount of the New Mortgage Bonds then Outstanding will have the
right to direct the time, method and place of conducting any proceedings for any
remedy available to the New Mortgage Trustee or exercising any trust or power
conferred on the New Mortgage Trustee, provided that (a) such direction does not
conflict with any rule of law or with the New Mortgage, and could not involve
the New Mortgage Trustee in personal liability in circumstances where indemnity
would not, in the New Mortgage Trustee's sole discretion, be adequate and (b)
the New Mortgage Trustee may take any other actions deemed proper by the New
Mortgage Trustee which is not inconsistent with such discretion (See Section
10.16.)
The New Mortgage provides that no Holder of any New Mortgage Bond will have
any right to institute any proceeding, judicial or otherwise, with respect to
the New Mortgage or the appointment of a receiver or trustee, or for any other
remedy thereunder unless (a) such Holder has previously given to the New
Mortgage Trustee written notice of a continuing Event of Default; (b) the
Holders of a majority in aggregate principal amount of the New Mortgage Bonds
then Outstanding have made written request to the New Mortgage Trustee to
institute proceedings in respect of such Event of Default and have offered the
New Mortgage Trustee reasonable indemnity against costs and liabilities incurred
in complying with such request; and (c) for sixty days after receipt of such
notice, the New Mortgage Trustee has failed to institute any such proceeding and
no direction inconsistent with such request has been given to the New Mortgage
Trustee during such sixty-day period by the Holders of a majority in aggregate
principal amount of New Mortgage Bonds then Outstanding. Furthermore, no Holder
will be entitled to institute any such action if and to the extent that such
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action would disturb or prejudice the rights of other Holders. (See Section
10.11.) Notwithstanding that the right of a Holder to institute a proceeding
with respect to the New Mortgage is subject to certain conditions precedent,
each Holder of a New Mortgage Bond has the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
interest, if any, on such New Mortgage Bond when due and to institute suit for
the enforcement of any such payment, and such rights may not be impaired without
the consent of such Holder. (See Section 10.12.) The New Mortgage provides that
the New Mortgage Trustee must give the Holders notice of any default under the
New Mortgage to the extent required by the Trust Indenture Act, unless such
default shall have been cured or waived, except that no such notice to Holders
of a default of the character described in paragraph (3) under "-- Events of
Default" may be given until at least 45 days after the occurrence thereof. (See
Section 11.02.) The Trust Indenture Act currently permits the New Mortgage
Trustee to withhold notices of default (except for certain payment defaults) if
the New Mortgage Trustee in good faith determines the withholding of such notice
to be in the interest of the Holders.
As a condition precedent to certain actions by the New Mortgage Trustee in
the enforcement of the lien of the New Mortgage and institution of action on the
New Mortgage Bonds, the New Mortgage Trustee may require adequate indemnity
against costs, expenses and liabilities to be incurred in connection therewith.
(See Sections 10.11 and 11.01.)
In addition to every other right and remedy provided in the New Mortgage,
the New Mortgage Trustee may exercise any right or remedy available to the New
Mortgage Trustee in its capacity as owner and holder of Pledged Bonds which
arises as a result of a default or Matured Event of Default under any Prior
Mortgage, whether or not an Event of Default under the New Mortgage has occurred
and is continuing. (See Section 10.20.)
DEFEASANCE
Any New Mortgage Bond or Bonds, or any portion of the principal amount
thereof, will be deemed to have been paid for purposes of the New Mortgage and
the entire indebtedness of the Company in respect thereof will be deemed to have
been satisfied and discharged, if there has been irrevocably deposited with the
New Mortgage Trustee, in trust: (a) money in the amount which will be
sufficient, or (b) Eligible Obligations (as described below) which do not
contain provisions permitting the redemption or other prepayment thereof at the
option of the issuer thereof, the principal of and the interest on which when
due, without any regard to reinvestment thereof, will provide monies which will
be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to
pay when due the principal of and premium, if any, and interest, if any, due and
to become due on such New Mortgage Bond or Bonds or portions thereof. (See
Section 9.01.) For this purpose, Eligible Obligations include direct obligations
of, or obligations unconditionally guaranteed by, the United States of America,
entitled to the benefit of the full faith and credit thereof, and certificates,
depositary receipts or other instruments which evidence a direct ownership
interest in such obligations or in any specific interest or principal payments
due in respect thereof.
RESIGNATION AND REMOVAL OF THE NEW MORTGAGE TRUSTEE
The New Mortgage Trustee may resign at any time by giving written notice
thereof to the Company or may be removed at any time by Act of the Holders of a
majority in principal amount of New Mortgage Bonds then Outstanding delivered to
the New Mortgage Trustee and the Company. No resignation or removal of the New
Mortgage Trustee and no appointment of a successor trustee will become effective
until the acceptance of appointment by a successor trustee in accordance with
the requirements of the New Mortgage. So long as no Event of Default or event
which, after notice or lapse of time, or both, would become an Event of Default
has occurred and is continuing, if the Company has delivered to the New Mortgage
Trustee a resolution of its Board of Directors appointing a successor trustee
and such successor has accepted such appointment in accordance with the terms of
the New Mortgage, the New Mortgage Trustee will be deemed to have resigned and
the successor will be deemed to have been appointed as trustee in accordance
with the New Mortgage. (See Section 11.10.)
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CONCERNING THE NEW MORTGAGE TRUSTEE
Harris Trust and Savings Bank, the Trustee under the New Mortgage, has been
a regular depositary of funds of the Company. From time to time the Company
borrows funds on a short-term basis from Harris Trust and Savings Bank. As
trustee under both the New Mortgage and the First Mortgage, Harris Trust and
Savings Bank would have a conflicting interest for purposes of the Trust
Indenture Act if an Event of Default were to occur under either mortgage. In
that case, the New Mortgage Trustee may be required to eliminate such
conflicting interest by resigning either as New Mortgage Trustee or as First
Mortgage Trustee. There are other instances under the Trust Indenture Act which
would require the resignation of the New Mortgage Trustee if an Event of Default
were to occur, such as an affiliate of the New Mortgage Trustee acting as
underwriter with respect to any of the New Mortgage Bonds.
TRANSFER
The transfer of New Mortgage Bonds may be registered, and New Mortgage
Bonds may be exchanged for other New Mortgage Bonds of the same series and
Tranche, of authorized denominations and of like tenor and aggregate principal
amount, at the office of Harris Trust and Savings Bank, of Chicago, Illinois, as
Bond Registrar for the New Mortgage Bonds. The Company may change the place for
registration of transfer of the New Mortgage Bonds, may appoint one or more
additional Bond Registrars (including the Company) and may remove any Bond
Registrar, all at its discretion. (See Section 6.02.) The applicable Prospectus
Supplement, or a supplement thereto, will identify any new place for
registration of transfer and any additional Bond Registrar appointed, and will
disclose the removal of any Bond Registrar effected, prior to the date of such
Prospectus Supplement, or supplement thereto. Except as otherwise provided in
the applicable Prospectus Supplement, no service charge will be made for any
transfer or exchange of the New Mortgage Bonds, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
the New Mortgage Bonds. The Company will not be required to issue and no Bond
Registrar will be required to register the transfer of or to exchange (a) New
Mortgage Bonds of any series (including the New Mortgage Bonds) during a period
of 15 days prior to giving any notice of redemption or (b) any New Mortgage Bond
selected for redemption in whole or in part, except the unredeemed portion of
any New Mortgage Bond being redeemed in part. (See Section 3.05.)
DESCRIPTION OF FIRST MORTGAGE BONDS
General. The following statements are brief summaries of certain
provisions of the First Mortgage and supplemental indentures, which are filed as
exhibits to the Registration Statement, and do not purport to be complete. They
make use of defined terms (including those appearing herein in italics) and are
qualified in their entirety by the references to provisions of the First
Mortgage and supplemental indentures, which provisions are incorporated in these
summaries by such references. The parenthetical references in this
"-- Description of First Mortgage Bonds" are to the Articles in Roman numerals
and Sections in Arabic numerals of the First Mortgage ("M").
Security. The First Mortgage Bonds will be secured, equally and ratably
(except as to any sinking or similar fund established for a particular series of
bonds) with all other bonds issued under the First Mortgage, by a valid first
mortgage lien on substantially all of the fixed property, franchises and rights
of the Company, subject to certain exceptions.
Limitations and Restrictions on Dividends. Certain supplemental indentures
to the First Mortgage dated on or after July 1, 1949 contain covenants
restricting the payment of dividends. None of the approximately $89,500,000 of
retained earnings of the Company at December 31, 1997 were restricted by these
covenants.
Sinking and Property Fund; Other Sinking Funds. Certain supplemental
indentures to the First Mortgage dated on or after July 1, 1949 provide for
annual cash deposits for Sinking and Property Funds for the bonds outstanding
thereunder, respectively, in each case beginning with the eleventh year after
the date of issuance, the overall effect of which is that the annual aggregate
requirements under all of such Sinking and
15
<PAGE> 17
Property Funds shall not exceed 1% of the total First Mortgage Bonds of the
various then outstanding series theretofore issued.
Maintenance and Renewal Fund. Certain supplemental indentures to the First
Mortgage dated on or after July 1, 1949 require the Company to deposit in cash
with the First Mortgage Trustee each year the amount of $2,000,000 plus 2 1/4%
of net property additions from January 1, 1946, which amount may be reduced in
any year by the principal amount of bonds of any series surrendered to the First
Mortgage Trustee for cancellation, or by application of the lesser of cost or
fair value of gross property additions not subject to an unfunded prior lien
acquired during the preceding calendar year.
Issuance of Additional First Mortgage Bonds. Additional bonds of any
series may be issued under the First Mortgage in a principal amount equal to (1)
75% of the net bondable value of property additions not subject to an unfunded
prior lien; (2) the principal amount of bonds retired other than out of trust
estate moneys; and (3) the amount of cash deposited with the First Mortgage
Trustee for such purpose (which may thereafter be withdrawn upon the same basis
that additional bonds are issuable under (1) and (2) above) but in each case
only if net earnings available for interest and property retirement
appropriations for 12 consecutive months within the 18 months immediately
preceding the month in which application for such additional bonds is made,
shall have been equal to at least two times annual interest charges on all bonds
which will be outstanding under the First Mortgage immediately after the issue
of the additional bonds applied for and all prior lien bonds, if any, except
that no net earnings requirements are applicable (i) to the withdrawal of cash
so deposited, or (ii) to the issuance of additional bonds to refund bonds of any
series at or within two years of their maturity if all or substantially all of
such additional bonds or their proceeds of sale will be applied to such
refunding or to the payment of moneys borrowed for such purpose. (M III 3, 4, 5
and 6 and VIII 3)
Defaults. Defaults are defined to include: (i) the failure to pay interest
on any bond within 45 days after the same becomes due; (ii) the failure to pay
the principal of or premium, if any, on any bond within three business days
after its maturity; (iii) the failure to make any payment to any sinking,
maintenance or analogous fund within 60 days after the same becomes due; (iv) a
breach of the terms of the covenant relating to dividends, or failure for 60
days after notice to perform any other covenant, agreement or condition
contained in the First Mortgage or any supplemental indenture or in the bonds;
(v) certain events of bankruptcy, receivership and similar proceedings; and (vi)
the occurrence of an Event of Default under the New Mortgage or a Matured Event
of Default under any Prior Mortgage; provided that the waiver or cure of any
such Event of Default or Matured Event of Default shall constitute a waiver of
the default and the rescission and annulment of the consequences thereof. (M IX
1)
Each bondholder has the absolute and unconditional right to enforce the
payment of principal of and interest on his bonds at or after the maturity
thereof. (M IX 12) The holders of 25% or more of the outstanding bonds, or the
First Mortgage Trustee, may declare the principal of all outstanding bonds due
upon the happening of any of the events of default, but holders of a majority of
the outstanding bonds may waive any such default and rescind any such
declaration, whether made by the First Mortgage Trustee or holders of 25% or
more of the outstanding bonds, if all defaults (other than payment of principal
due on account of such declaration) have been made good or secured to the
satisfaction of the First Mortgage Trustee or provision deemed by the First
Mortgage Trustee to be adequate shall be made therefor. Any waiver does not
affect any subsequent default. (M IX 1) The holders of a majority of the
outstanding bonds may, upon the happening of any of the events of default,
direct the First Mortgage Trustee to enforce payment of the bonds and the lien
of the First Mortgage. (M IX 4) The First Mortgage Trustee is under no
obligation to exercise any of its trusts or powers at the request of the
bondholders unless such bondholders have offered adequate indemnity against
costs, expenses and liabilities to be incurred thereby. (M XIII 1)
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<PAGE> 18
Within 90 days after the close of each fiscal year, the Company is required
to furnish to the First Mortgage Trustee an officer's certificate as to the
absence of default and as to compliance with the terms of the First Mortgage. (M
IV 8).
Concerning the First Mortgage Trustee. Harris Trust and Savings Bank, the
Trustee under the First Mortgage, has been a regular depositary of funds of the
Company. From time to time the Company borrows funds on a short-term basis from
Harris Trust and Savings Bank. As trustee under both the New Mortgage and the
First Mortgage, Harris Trust and Savings Bank would have a conflicting interest
under the Trust Indenture Act if an Event of Default were to occur under either
mortgage. In that case, the First Mortgage Trustee may be required to eliminate
such conflicting interest by resigning either as First Mortgage Trustee or as
New Mortgage Trustee. There are other instances under the Trust Indenture Act
which would require the resignation of the First Mortgage Trustee if an Event of
Default were to occur, such as an affiliate of the First Mortgage Trustee acting
as underwriter with respect to any First Mortgage Bonds.
Modification. The First Mortgage may be modified with the consent of the
holders of at least 66 2/3% in amount of the bonds outstanding under the First
Mortgage, and at least 66 2/3% in amount of each series affected, if less than
all series are affected, except that no modification is permitted which will
affect the terms of payment of the principal of, or premium, if any, or interest
on, any bond issued under the First Mortgage. (M XV 6) As described more fully
in "Description of New Mortgage Bonds," First Mortgage Bonds may be issued to
the New Mortgage Trustee as security for New Mortgage Bonds.
DESCRIPTION OF UNSECURED DEBT SECURITIES
If the Offered Securities are the Company's unsecured debentures, notes or
other evidences of indebtedness (the "Unsecured Debt Securities"), then the
following description is applicable to the Offered Securities.
GENERAL
The Unsecured Debt Securities are to be issued under an Indenture dated as
of July 15, 1986 (the "Indenture"), between the Company and The Chase Manhattan
Bank (the successor to Chemical Bank), as Trustee, as supplemented by one or
more Supplemental Indentures relating to the Unsecured Debt Securities. A copy
of the Indenture has been filed as an exhibit to the Registration Statement
under which the Securities are registered. The following summary does not
purport to be complete, and where particular provisions of the Indenture are
referred to, such provisions, including definitions of certain terms, are
incorporated by reference as a part of such summary, which is qualified in its
entirety by such reference.
The Indenture does not limit the amount of Unsecured Debt Securities which
can be issued thereunder and provides that Unsecured Debt Securities may be
issued thereunder in one or more series up to the aggregate principal amount
which may be authorized from time to time by the Company.
Reference is made to the Prospectus Supplement for a description of the
following terms of each series of Unsecured Debt Securities in respect of which
this Prospectus is being delivered: (i) the title of such Unsecured Debt
Securities; (ii) the limit, if any, upon the aggregate principal amount of such
Unsecured Debt Securities; (iii) the date or dates on which the principal of
such Unsecured Debt Securities is payable; (iv) the rate or rates at which such
Unsecured Debt Securities will bear interest, if any; the date or dates from
which such interest will accrue; the dates on which such interest will be
payable; and the regular record dates for the interest payable on such interest
payment dates; (v) the option, if any, of the Company to redeem such Unsecured
Debt Securities and the periods within which or the dates on which, the prices
at which and the terms and conditions upon which, such Unsecured Debt Securities
may be redeemed, in whole or in part, upon the exercise of such option; (vi) the
obligation, if any, of the Company to redeem or purchase such Unsecured Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of the holder and the periods within which or the dates on which, the prices at
which and the terms and conditions upon which such Unsecured Debt Securities
will be redeemed or purchased, in whole or in part, pursuant to such obligation;
(vii) the denominations in which such Unsecured Debt Securities will be
issuable; (viii) whether such
17
<PAGE> 19
Unsecured Debt Securities are to be issued in whole or in part in the form of
one or more global Unsecured Debt Securities and, if so, the identity of the
depositary for such global Unsecured Debt Securities; and (ix) any other terms
of such Unsecured Debt Securities not inconsistent with the provisions of the
Indenture.
The Amended and Restated Articles of Incorporation of the Company limit the
amount of unsecured indebtedness that the Company may issue or assume, without
the consent of the holders of a majority of the total number of shares of
Preferred Stock then outstanding, to 20% of the aggregate of the total principal
amount of all outstanding First Mortgage Bonds or other securities representing
secured indebtedness of the Company and the capital and surplus of the Company
as then stated on the Company's books (the "Debt Limitation Provision"). The
Company is currently engaged in a proxy solicitation in connection with a
special meeting of shareholders to be held on May 29, 1998 for the purpose of
considering and voting upon an amendment to the Company's Amended and Restated
Articles of Incorporation to remove the Debt Limitation Provision.
Except as may otherwise be set forth in the Prospectus Supplement, the
Company has designated the office of the Trustee in the Borough of Manhattan,
the City of New York (currently 450 West 33rd Street, 15th Floor, New York, New
York 10001-2697) as the place at which principal of and the premium, if any, and
the interest on the Unsecured Debt Securities will be payable and at which
Unsecured Debt Securities may be presented for registration of transfer and for
exchange for a like series of Unsecured Debt Securities of different
denominations, provided that payment of any interest may be made at the option
of the Company by check mailed to the registered holders of the Unsecured Debt
Securities at their registered addresses. (secs. 2.01, 2.03, 4.03)
The Unsecured Debt Securities will be issued only in fully registered
certificated or book-entry form without coupons. The Company may charge a
reasonable fee for any transfer or exchange of the Unsecured Debt Securities,
with certain exceptions. (sec. 2.06)
The Unsecured Debt Securities will be unsecured and will rank pari passu
with all other unsecured and unsubordinated indebtedness of the Company. The
Indenture does not restrict the amount of additional unsecured debt which the
Company may incur.
RESTRICTIONS ON CONSOLIDATION, MERGER OR TRANSFER OF ASSETS
The Company may not consolidate with or merge into another corporation, or
convey, transfer or lease its properties and assets substantially as an entirety
to another entity, unless the corporation formed by or surviving such
consolidation or merger (if other than the Company), or the entity which
acquires or leases such properties and assets, is a corporation organized under
the laws of the United States of America, any State thereof or the District of
Columbia and shall assume payment of the Unsecured Debt Securities and the
performance of all of the other covenants of the Company under the Indenture,
and immediately after giving effect to such transaction no default under the
Indenture shall have happened and be continuing. (sec. 5.01) Unless otherwise
indicated in the applicable Prospectus Supplement, the Indenture does not
contain covenants specifically designed to protect holders of Unsecured Debt
Securities in the event of a highly leveraged transaction.
MODIFICATION OF THE INDENTURE
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee only with the consent of the holders of a majority in
aggregate principal amount of the outstanding Unsecured Debt Securities of each
series issued under the Indenture which is affected by the modification or
amendment, provided that no such modification or amendment may, without the
consent of the holder of each Unsecured Debt Security affected thereby: (a)
change the stated maturity date of the principal of, or any installment of
interest on, any such Unsecured Debt Security; (b) reduce the principal amount
of, or interest (or premium, if any) on, any such Unsecured Debt Security; (c)
change the currency of payment of principal of, or interest (or premium, if any)
on, any such Unsecured Debt Security; (d) impair the right to institute suit for
the enforcement of any payment of the principal of, and premium, if any, and
interest on any such Unsecured Debt Security or adversely affect the right of
repayment, if any, at the option of the holder; or (e) reduce the
18
<PAGE> 20
percentage of holders of each affected series of Unsecured Debt Securities
necessary to modify or amend the Indenture or waive defaults with respect to the
series. (sec. 9.02)
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of
Unsecured Debt Securities as being any one of the following events and such
other event as may be established for the Unsecured Debt Securities of a
particular series: (a) default for 30 days in the payment of any interest on
such series; (b) default for 3 business days in any payment of principal, and
premium, if any, on such series when due; (c) default for 60 days, after
appropriate notice, in performance of any other agreement in the Indenture with
respect to such series or in the Unsecured Debt Securities of such series; or
(d) certain events in bankruptcy, insolvency or reorganization. No Event of
Default with respect to a particular series of Unsecured Debt Securities issued
under the Indenture (other than under preceding clause (d)) necessarily
constitutes an Event of Default with respect to any other series of Unsecured
Debt Securities issued thereunder. In case an Event of Default shall occur and
be continuing with respect to any series of Unsecured Debt Securities, the
Trustee or the holders of not less than 33% in aggregate principal amount of the
Unsecured Debt Securities then outstanding of the series may declare the
principal of such series (or such portion of the principal as may be specified
as due upon acceleration at that time in the terms of that series) to be due and
payable. Any Event of Default with respect to a particular series of Unsecured
Debt Securities may be waived by the holders of a majority in aggregate
principal amount of the outstanding Unsecured Debt Securities of such series,
except in each case a failure to pay principal or premium, if any, or any
interest on such Unsecured Debt Security. (secs. 6.01, 6.02, 6.04)
The Indenture requires the Company to file annually with the Trustee a
statement signed by two officers of the Company as to the absence of defaults
under the terms of the Indenture. The Indenture provides that the Trustee may
withhold notice to the holders of the Unsecured Debt Securities of any default
(except in payment of principal or premium, if any, or interest) if it considers
it in the interest of the holders of the Unsecured Debt Securities to do so.
(secs. 4.04, 7.05)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of the
holders of the Unsecured Debt Securities unless such holders shall have offered
to the Trustee satisfactory indemnity. Subject to such provisions for
indemnification and certain other rights of the Trustee, the Indenture provides
that the holders of a majority in principal amount of the outstanding Unsecured
Debt Securities of any series affected shall have the right to direct the time,
method and place of conducting any proceeding for any remedy for that series
which is available to the Trustee or exercising any trust or power conferred on
the Trustee for the benefit of such series. (secs. 6.05, 7.01)
DEFEASANCE
The Indenture provides that the Company may terminate its obligations under
the Indenture if (i) all the Unsecured Debt Securities either mature within one
year or are called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption and (ii) the
Company irrevocably deposits in trust with the Trustee money or U.S.
Governmental Obligations (as described below) sufficient to pay principal and
interest on the Unsecured Debt Securities to maturity or redemption, as the case
may be. (sec. 8.01) For this purpose, U.S. Government Obligations means
obligations issued or guaranteed by the United States of America the payment of
which the full faith and credit of the United States of America is pledged.
REGARDING THE TRUSTEE
The Chase Manhattan Bank is the Trustee under the Indenture. The Chase
Manhattan Bank makes loans to the Company in the normal course of its business.
19
<PAGE> 21
PLAN OF DISTRIBUTION
The Company may sell the Securities in the following ways: (i) through
dealers, (ii) through underwriters, (iii) through agents, (iv) directly to
purchasers, or (v) through any combination of the above. The Prospectus
Supplement with respect to the Offered Securities will set forth the terms of
the offering of the Offered Securities, including the name or names of any
underwriters, the price to the public of the Offered Securities and the proceeds
to the Company from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
underwriters. The underwriter or underwriters with respect to a particular
underwritten offering of Offered Securities will be named in the Prospectus
Supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover page of
such Prospectus Supplement. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase the Offered
Securities will be subject to certain conditions precedent, the underwriters
will be obligated to purchase all the Offered Securities if any are purchased,
and the Company will have agreed to indemnify the underwriters against certain
civil liabilities, including liabilities under the Securities Act.
If the Securities are sold directly by the Company or through agents
designated by the Company from time to time, any agent involved in the offer or
sale of the Offered Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement relating thereto. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment.
LEGAL OPINIONS
Certain legal matters in connection with the Securities will be passed upon
for the Company by Schiff Hardin & Waite, Chicago, Illinois and for any
underwriters, dealers or agents by counsel named in the applicable Prospectus
Supplement.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
have been so incorporated in reliance on the report of Price Waterhouse, LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
20
<PAGE> 22
======================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations in connection with the offer
contained in this Prospectus other than those contained in this Prospectus, and,
if given or made, such other information or representations must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date of this Prospectus or that the information
set forth herein is correct as of any time subsequent to the date hereof or the
date of filing of any documents incorporated by reference herein.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Documents Incorporated by
Reference.......................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Ratio of Earnings to Fixed Charges... 3
Description of the New Mortgage
Bonds.............................. 4
Description of Unsecured Debt
Securities......................... 17
Plan of Distribution................. 20
Legal Opinions....................... 20
Experts.............................. 20
</TABLE>
======================================================
======================================================
ILLINOIS
POWER
COMPANY
$200,000,000
DEBT SECURITIES
--------------------------------------
PROSPECTUS
--------------------------------------
, 1998
======================================================
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the
distribution of the Securities being registered. All amounts shown below are
estimates, except the registration fee:
<TABLE>
<S> <C>
Registration fee of Securities and Exchange Commission...... $ 59,000
Accountants' fees and expenses.............................. 25,000
Legal fees and expenses..................................... 80,000
Rating agency fees.......................................... 70,000
Trustee fees and expenses (including legal fees)............ 60,000
Printing and engraving fees................................. 50,000
Miscellaneous expenses...................................... 6,000
--------
Total.................................................. $350,000
--------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 8.75 of the Illinois Business Corporation Act of 1983, the
Company is empowered, subject to the procedures and limitations stated therein,
to indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
to which such person is made a party or threatened to be made a party by reason
of his being or having been a director, officer, employee or agent of the
Company, or serving or having served at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Section 8.75 further provides that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors, or otherwise, and that such
indemnification shall continue as to a director, officer, employee or agent of
the Company who has ceased to serve in such capacity, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
The By-Laws of the Company provide, in substance, that the Company shall
indemnify any person against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, to which such person
is made a party or threatened to be made a party by reason of his being or
having been a director, officer, employee or agent of the Company, or serving or
having served at the request of the Company in one or more of the foregoing
capacities with another corporation, partnership, joint venture, trust or other
enterprise. The indemnification is not exclusive of other rights and shall
continue as to a person who has ceased to be a director, officer, employer or
agent and shall inure to the benefit of his heirs, executors and administrators.
The Company presently has an insurance policy which, among other things,
includes liability insurance coverage for officers and directors under which
officers and directors are covered against any "loss" arising from any claim or
claims made against them by reason of any "wrongful act" in their respective
capacities of directors or officers. "Loss" is specifically defined to exclude
fines and penalties as well as matters deemed uninsurable under the law pursuant
to which the insurance policy shall be construed. The policy also contains other
specific exclusions, including illegally obtained personal profit or advantages,
and dishonesty. The policy also provides for reimbursement to the Company,
subject to certain deductibles, for loss incurred by having indemnified officers
or directors as authorized by state statute, the Company's By-laws or any other
agreement.
II-1
<PAGE> 24
ITEM 16. LIST OF EXHIBITS.
The Exhibits to this Registration Statement are listed in the Exhibit Index
located elsewhere herein.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the statutory and bylaw provisions referred to in
Item 15, or otherwise, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
II-2
<PAGE> 25
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b) (1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective;
and
2. For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 26
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DECATUR, AND STATE OF ILLINOIS ON THE 8TH DAY OF MAY,
1998.
ILLINOIS POWER COMPANY
(REGISTRANT)
/s/ LARRY F. ALTENBAUMER
By
Larry F. Altenbaumer
Senior Vice President and
Chief Financial Officer
<PAGE> 27
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Illinois Power Company and each of the
undersigned officers and directors of Illinois Power Company hereby constitute
and appoint each of Larry D. Haab, Larry F. Altenbaumer and Leah Manning
Stetzner the true and lawful attorney-in-fact and agent of the undersigned, with
full power of substitution and resubstitution for and in the name, place and
stead of the undersigned, in any and all capacities, to sign all or any
amendments (including post-effective amendments) of and supplements to this
Registration Statement on Form S-3 and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each such attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, to all intents and purposes and
as fully as said corporation itself and each said officer or director might or
could do in person, hereby ratifying and confirming all that each such
attorney-in-fact and agent, or his or her substitutes, may lawfully do or cause
to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ LARRY D. HAAB Chairman, President, Chief Executive May 8, 1998
- --------------------------------------------- Officer and Director
Larry D. Haab
(Principal Executive Officer)
/s/ LARRY F. ALTENBAUMER Senior Vice President and May 8, 1998
- --------------------------------------------- Chief Financial Officer
Larry F. Altenbaumer
(Principal Financial and
Accounting Officer)
/s/ J. JOE ADORJAN Director May 8, 1998
- ---------------------------------------------
J. Joe Adorjan
Director
- ---------------------------------------------
C. Steven McMillan
/s/ ROBERT M. POWERS Director May 8, 1998
- ---------------------------------------------
Robert M. Powers
/s/ SHELI Z. ROSENBERG Director May 8, 1998
- ---------------------------------------------
Sheli Z. Rosenberg
/s/ WALTER D. SCOTT Director May 8, 1998
- ---------------------------------------------
Walter D. Scott
/s/ JOE J. STEWART Director May 8, 1998
- ---------------------------------------------
Joe J. Stewart
/s/ RONALD L. THOMPSON Director May 8, 1998
- ---------------------------------------------
Ronald L. Thompson
/s/ WALTER M. VANNOY Director May 8, 1998
- ---------------------------------------------
Walter M. Vannoy
Director
- ---------------------------------------------
Marilou von Ferstel
/s/ JOHN D. ZEGLIS Director May 8, 1998
- ---------------------------------------------
John D. Zeglis
</TABLE>
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for New Mortgage Bonds.
1.2 Form of Underwriting Agreement for Unsecured Debt
Securities.
3.1 Amended and Restated Articles of Incorporation of the
Company. Filed as Exhibit 3(a) to the Current Report on Form
8-K dated September 7, 1994 (File No. 1-3004).+
3.2 By-laws of the Company. Filed as Exhibit 3(b)(1) to the
Annual Report on Form 10-K for the year ended December 31,
1994 (File No. 1-3004).+
4.1 Mortgage and Deed of Trust dated November 1, 1943. Filed as
Exhibit 2(b) Registration No. 2-14066.+
4.2 Supplemental Indenture dated July 1, 1949. Filed as Exhibit
7(a) Registration No. 2-8130.+
4.3 Supplemental Indenture dated May 1, 1974. Filed as Exhibit
2(v) Registration No. 2-51674.+
4.4 Supplemental Indenture dated May 1, 1977. Filed as Exhibit
2(w) Registration No. 2-59465.+
4.5 Supplemental Indenture dated July 1, 1979. Filed as Exhibit
2 to the Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1979. (File No. 1-3004).+
4.6 Supplemental Indenture dated March 1, 1985. Filed as Exhibit
4(a) to the Quarterly Report on Form 10-Q for the Quarter
Ended March 31,1985. (File No. 1-3004).+
4.7 Indenture dated as of July 15, 1986. Filed as Exhibit 4(b)
to the Current Report on Form 8-K dated June 25, 1986. (File
No. 1-3004).+
4.8 Supplemental Indenture dated July 1, 1987. Filed as Exhibit
4(ll) to the Annual Report on Form 10-K for the Year Ended
December 31, 1987. (File No. 1-3004).+
4.9 Supplemental Indenture dated December 13, 1989, to Indenture
dated as of July 15, 1996. Filed as Exhibit 4(nn) to the
Annual Report on Form 10-K for the Year Ended December 31,
1989. (File No. 1-3004).+
4.10 Supplemental Indenture dated July 1, 1991. Filed as Exhibit
4(mm) to the Annual Report on Form 10-K for the Year Ended
December 31, 1991. (File No. 1-3004).+
4.11 Supplemental Indenture No. 1 dated June 1, 1992. Filed as
Exhibit 4(nn) to the Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992. (File No. 1-3004).+
4.12 Supplemental Indenture No. 2 dated June 1, 1992. Filed as
Exhibit 4(oo) to the Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992. (File No. 1-3004).+
4.13 Supplemental Indenture No. 1 dated July 1, 1992. Filed as
Exhibit 4(pp) to the Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992. (File No. 1-3004).+
4.14 Supplemental Indenture No. 2 dated July 1, 1992. Filed as
Exhibit 4(qq) to the Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1992. (File No. 1-3004).+
4.15 Supplemental Indenture dated September 1, 1992. Filed as
Exhibit 4(rr) to the Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1992. (File No. 1-3004).+
4.16 General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(cc) to the Annual
Report on Form 10-K for the Year Ended December 31, 1992.
(File No. 1-3004).+
4.17 Supplemental Indenture dated February 15, 1993, to Mortgage
and Deed of Trust dated November 1, 1943. Filed as Exhibit
4(dd) to the Annual Report on Form 10-K for the Year Ended
December 31, 1992. (File No. 1-3004).+
4.18 Supplemental Indenture dated February 15, 1993, to General
Mortgage Indenture and Deed of Trust dated as of November 1,
1992. Filed as Exhibit 4(ee) to the Annual Report on Form
10-K for the Year Ended December 31, 1992. (File No.
1-3004).+
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
4.19 Supplemental Indenture No. 1 dated March 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943. Filed as
Exhibit 4(ff) to the Annual Report on Form 10-K for the Year
Ended December 31, 1992. (File No. 1-3004).+
4.20 Supplemental Indenture No. 1 dated March 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(gg) to the Annual
Report on Form 10-K for the Year Ended December 31, 1992.
(File No. 1-3004).+
4.21 Supplemental Indenture No. 2 dated March 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943. Filed as
Exhibit 4(hh) to the Annual Report on Form 10-K for the Year
Ended December 31, 1992. (File No. 1-3004).+
4.22 Supplemental Indenture No. 2 dated March 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(ii) to the Annual
Report on Form 10-K for the Year Ended December 31, 1992.
(File No. 1-3004).+
4.23 Supplemental Indenture dated July 15, 1993 to Mortgage and
Deed of Trust dated November 1, 1943. Filed as Exhibit 4(jj)
to the Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1993. (File No. 1-3004).+
4.24 Supplemental Indenture dated July 15, 1993 to General
Mortgage Indenture and Deed of Trust dated as of November 1,
1992. Filed as Exhibit 4(kk) to the Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1993. (File No.
1-3004).+
4.25 Supplemental Indenture dated August 1, 1993 to Mortgage and
Deed of Trust dated November 1, 1943. Filed as Exhibit 4(11)
to the Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1993. (File No. 1-3004).+
4.26 Supplemental Indenture dated August 1, 1993 to General
Mortgage Indenture and Deed of Trust dated as of November 1,
1992. Filed as Exhibit 4(mm) to the Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1993. (File No.
1-3004).+
4.27 Supplemental Indenture dated October 15, 1993, to Mortgage
and Deed of Trust dated November 1, 1943. Filed as Exhibit
4(nn) to the Quarterly Report on Form 10-Q for the Quarter
ended September 30, 1993. (File No. 1-3004).+
4.28 Supplemental Indenture dated October 15, 1993, to General
Mortgage Indenture and Deed of Trust dated as of November 1,
1992. Filed as Exhibit 4(oo) to the Quarterly Report on Form
10-Q for the Quarter ended September 30, 1993. (File No.
1-3004).+
4.29 Supplemental Indenture dated November 1, 1993, to Mortgage
and Deed of Trust dated November 1, 1943. Filed as Exhibit
4(pp) to the Quarterly Report on Form 10-Q for the Quarter
ended September 30, 1993. (File No. 1-3004).+
4.30 Supplemental Indenture dated November 1, 1993, to General
Mortgage Indenture and Deed of Trust dated as of November 1,
1992. Filed as Exhibit 4(qq) to the Quarterly Report on Form
10-Q for the Quarter ended September 30, 1993. (File No.
1-3004).+
4.31 Supplemental Indenture dated February 1, 1994, to Mortgage
and Deed of Trust dated November 1, 1943. Filed as Exhibit
4(hh) to the Annual Report on Form 10-K for the Year ended
December 31, 1993. (File No. 1-3004).+
4.32 Indenture dated as of October 1, 1994 between Illinois Power
Company and The First National Bank of Chicago. Filed as
Exhibit 4(a) to the Quarterly Report on Form 10-Q for the
Quarter ended September 30, 1994. (File No. 1-3004).+
4.33 First Supplemental Indenture dated as of October 1, 1994, to
Indenture dated as of October 1, 1994. Filed as Exhibit 4(b)
to the Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1994. (File No. 1-3004).+
4.34 Indenture dated as of January 1, 1996 between Illinois Power
Company and Wilmington Trust Company. Filed as Exhibit
4(b)(36) to the Annual Report on Form 10-K for the Year
ended December 31, 1995. (File No. 1-3004).+
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
4.35 First Supplemental Indenture dated as of January 1, 1996, to
Indenture dated January 1, 1996. Filed as Exhibit 4(b)(37)
to the Annual Report on Form 10-K for the Year ended
December 31, 1995. (File No. 1-3004).+
4.36 Supplemental Indenture dated April 1, 1997, to Mortgage and
Deed of Trust dated November 1, 1943. Filed as Exhibit 4(a)
to the Quarterly Report on Form 10-Q for the Quarter ended
March 31, 1997. (File No. 1-3004).+
4.37 Supplemental Indenture dated April 1, 1997 to General
Mortgage Indenture and Deed of Trust dated November 1, 1992.
Filed as Exhibit 4(b) to the Quarterly Report on Form 10-Q
for the Quarter ended March 31, 1997. (File No. 1-3004).+
4.38 Supplemental Indenture dated December 1, 1997 to Mortgage
and Deed of Trust dated November 1, 1943. Filed as Exhibit
4(b)(36) to the Annual Report on Form 10-K for the Year
Ended December 31, 1997. (File No. 1-3004).+
4.39 Form of Supplemental Indenture for New Mortgage Bonds.
4.40 Specimen New Mortgage Bond-included in Exhibit 4.39.
4.41 Form of Unsecured Note.
4.42 Form of Unsecured Debenture.
5 Opinion of Schiff Hardin & Waite.
12 Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Schiff Hardin & Waite (contained in its opinion
filed as Exhibit 5 to the Registration Statement).
25 Powers of Attorney (set forth on the signature pages of the
Registration Statement).
26.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Harris Trust and Savings Bank with respect to
New Mortgage Bonds.
26.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Chase Manhattan Bank with respect to
Unsecured Debt Securities.
</TABLE>
- ---------------
+ Incorporated herein by reference.
<PAGE> 1
EXHIBIT 1.1
___________, ____
CHICAGO, ILLINOIS
ILLINOIS POWER COMPANY
NEW MORTGAGE BONDS
UNDERWRITING AGREEMENT
To the Representative(s) named in Schedule I
hereto of the Underwriters named in Schedule II hereto.
Ladies and Gentlemen:
Illinois Power Company, an Illinois corporation (the "Company"), proposes
to issue and sell from time to time, in one or more series, its New Mortgage
Bonds which are registered under the registration statement referred to in
Section 1(a) ("Bonds"). The Bonds will be issued under the Company's General
Mortgage and Deed of Trust, dated as of November 1, 1992 (the "General
Mortgage"), and supplemental indentures thereto, including a supplemental
indenture (the "Supplemental Indenture") specifically relating to the Purchased
Bonds (as defined below), between the Company and the Harris Trust and Savings
Bank, as trustee (the "New Mortgage Trustee") (the General Mortgage and all
supplemental indentures thereto are collectively referred to as the "New
Mortgage"). The Bonds will be secured primarily by a bond issued to the New
Mortgage Trustee under the Company's Mortgage and Deed of Trust dated November
1, 1943 from the Company to Harris Trust and Savings Bank, as trustee (the
"First Mortgage Trustee") as amended and supplemented by various supplemental
indentures (the "First Mortgage"), including a supplemental indenture (the
"First Mortgage Supplemental Indenture") specifically relating to the bond (the
"First Mortgage Bond") securing the Purchase Bonds (as hereinafter deferred).
The Company proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters") for whom you are acting as Representative or
Representatives (the "Representatives"), Bonds in the aggregate principal
amount and of the series identified in Schedule I hereto (the "Purchased
Bonds").
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (No. 333- ) relating
to the Bonds has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act") and has
become effective. Such registration statement, including the prospectus
contained therein, as amended and supplemented to the date of this Agreement
(exclusive of supplements to the prospectus relating solely to Bonds that are
not the Purchased Bonds) and as supplemented by the
<PAGE> 2
prospectus supplement to be included as part of the prospectus to be filed
with the Commission pursuant to Rule 424(b) under the Act, as provided in
Section 3(a) hereof, are collectively referred to as the "Registration
Statement" and such prospectus is collectively referred to as the
"Prospectus." Any reference herein to the Registration Statement or the
Prospectus shall be deemed to include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") on or
before the date of this Agreement; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act deemed to be incorporated
therein by reference after the date of this Agreement.
(b) The Registration Statement and the Prospectus, both at the time
the Prospectus is filed with the Commission pursuant to Rule 424(b) under
the Act as provided in Section 3(a) hereof, and any further amendments and
supplements to the Prospectus when they become effective or are filed with
the Commission, as the case may be, prior to the Closing Date (as defined
below), will conform in all respects to the requirements of the Act, the
Exchange Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission (the "Rules
and Regulations"), and none of such documents will include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
the foregoing does not apply to statements or omissions in such documents
based upon written information furnished to the Company by any Underwriter
specifically for use therein or in reliance upon and in conformity with the
Form T-1 of the New Mortgage Trustee.
2. Purchase, Offering and Delivery. Subject to the terms and conditions
herein set forth, the Company agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company, at
the purchase price set forth in Schedule I hereto, the principal amount of the
Purchased Bonds set forth opposite such Underwriter's name in Schedule II
hereto. It is understood that the Underwriters propose to offer the Purchased
Bonds for sale to the public as set forth in the prospectus supplement relating
to the Purchased Bonds.
The Purchased Bonds to be purchased by each Underwriter shall be delivered
by the Company for the account of such Underwriter to the place specified in
Schedule I hereto against payment of the purchase price therefor by such
Underwriter or on its behalf in the type of funds and method of payment
specified in Schedule I hereto, drawn to the order of the Company, at the
office of Harris Trust and Savings Bank, 111 West Monroe Street, Chicago,
Illinois 60690, at the time and date specified in Schedule I hereto or at such
other time and date as the Representatives and the Company may agree, such time
and date being herein referred to as the "Closing Date." The Purchased Bonds so
to be delivered will be in definitive fully registered form in such authorized
denominations and registered in such names as the Representatives request at
least two full business
2
<PAGE> 3
days before the Closing Date and will be made available for checking and
packaging in the City designated in Schedule I as the place of delivery at
least 24 hours prior to the Closing Date.
3. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) Promptly following execution of this Agreement, the Company will
cause the Prospectus (including as part thereof a prospectus supplement
relating to the Purchased Bonds (the "Prospectus Supplement")) to be filed
with the Commission pursuant to Rule 424(b) under the Act and the Company
will promptly advise the Representatives when such filing has been made.
Prior to such filing, the Company will work with the Representatives in the
preparation of the Prospectus Supplement to assure that the Representatives
have no reasonable objection to the form or content thereof when filed.
(b) If at any time when a prospectus relating to the Purchased Bond
is required to be delivered under the Act any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend or supplement the
Registration Statement or Prospectus to comply with the Act or the Rules or
Regulations, the Company promptly will prepare and file with the Commission
an amendment or supplement which will correct such statement or omission,
or an amendment which will effect such compliance.
(c) The Company will furnish to each Underwriter such number of
copies of the Prospectus as may be reasonably requested in connection with
the offering of the Purchased Bonds.
(d) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, and will reimburse the Underwriters
for any expenses up to $__________ in the aggregate (including fees and
disbursements of counsel) incurred in connection with qualification of the
Purchased Bonds for sale and determination of their eligibility for
investment under the laws of such jurisdictions as the Representatives
designate and the printing of memoranda relating thereto.
(e) The Company will not, for the period ending on the day
immediately succeeding the Closing Date, without the prior written consent
of the Underwriters, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any other debt
securities of the Company.
4. Conditions to the Obligations of the Underwriters. The obligation of
the several Underwriters to purchase and pay for the Purchased Bonds hereunder
will be subject to the accuracy
3
<PAGE> 4
of the representations and warranties on the part of the Company herein, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) Subsequent to the execution and delivery of this Agreement there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or its subsidiaries which, in the judgment of a majority in
interest of the Underwriters, including you, materially impairs the
investment quality of the Purchased Bonds or (ii) any downgrading in the
rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act).
(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company, or the
Underwriters, shall be contemplated by the Commission.
(c) The Underwriters shall have received the following:
(i) A letter of Price Waterhouse, dated the Closing Date,
confirming that they are independent accountants within the meaning of the Act
and the Rules and Regulations, and stating in effect that (i) in their opinion,
the financial statements examined by them and incorporated by reference in the
Prospectus comply as to form in all material respects with the accounting
requirements of the Act and the Rules and Regulations applicable to annual
reports on Form 10-K (ii) on the basis of a reading of the interim financial
statements referred to in Clause (A) below, a reading of the latest available
interim financial statements of the Company, a reading of the minutes of the
Board of Directors and stockholders of the Company as set forth in the minute
books of the Company and inquiries of officials of the Company responsible for
financial and accounting matters, nothing came to their attention that caused
them to believe that (A) the unaudited financial statements included in the most
recent Quarterly Report on Form 10-Q incorporated by reference in the Prospectus
were not prepared on a basis substantially consistent with that of the audited
financial statements as of and for the fiscal year ended December 31, 199__
incorporated by reference in the Prospectus, or (B) at the date of the latest
available balance sheet read by such accountants or at a subsequent specified
date not more than five days prior to the Closing Date, there was any change in
the capital stock or long-term debt of the Company or, at the date of the latest
available balance sheet read by such accountants, there was any decrease in net
assets, in each case as compared with the corresponding amounts shown in the
December 31, 199__ balance sheet incorporated by reference in the Prospectus, or
(C) for the period of twelve months ended with the Closing Date or of the latest
available income statement read by such accountants, there were any decreases,
as compared with the twelve months ended December 31, 199__ in operating
revenues, operating income, net income, earnings per share of common stock or
the ratio of earnings to fixed charges, except in all cases set forth
4
<PAGE> 5
in clauses (B) and (C) above for changes or decreases which the
Prospectus discloses have occurred or may occur, or which are
described in such letter, and (iii) they have compared the dollar
amounts (or percentages derived from such dollar amounts) and other
financial information contained in the Prospectus under the captions
"Use of Proceeds," "Ratio of Earnings to Fixed Charges," and
"Description of First Mortgage Bonds" and contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 199__ and
Quarterly Report on Form 10-Q for the quarter ended __________, ______
(which are incorporated by reference in the Prospectus) (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting records
of the Company subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter, and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results except as otherwise specified in such letter. All
financial statements included in material incorporated by reference in
the Prospectus shall be deemed included in the Prospectus for purposes
of this subsection.
(ii) An opinion of Schiff Hardin & Waite, counsel for the
Company, dated the Closing Date, to the effect that:
(A) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Illinois, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus, and the Company is not required to be qualified as a
foreign corporation in any jurisdiction.
(B) The Purchased Bonds have been duly authorized,
executed, authenticated, issued and delivered, and constitute the
valid and binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting the enforcement of creditors'
rights, and (b) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and (subject to the qualifications mentioned
in subparagraph C below with respect to the enforceability of the
General Mortgage and to the provisions of any purchase or sinking
fund or analogous provisions for any particular series of bonds
established by any indenture supplemental to the General
Mortgage) are entitled to the benefit and security of the General
Mortgage in accordance with the terms thereof equally and ratably
with all other bonds issued under the General Mortgage.
5
<PAGE> 6
(C) The General Mortgage and the Supplemental Indenture have each been
duly authorized, executed and delivered and are valid and binding instruments
enforceable in accordance with their terms, except as the same may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights or the
enforcement of the security provided by the General Mortgage, and (b) general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and except that no opinion is expressed
with respect to the enforceability of the lien of the General Mortgage on
chattels as against third parties (other than chattels delivered in pledge to
the New Mortgage Trustee) or with respect to the enforceability of the lien of
the New Mortgage on after-acquired property (in respect of which a supplemental
indenture shall not have been executed, delivered and recorded) as against
purchasers for value and without notice. The laws of the State of Illinois
provide that no real estate in the State of Illinois shall be sold by virtue of
any power of sale contained in any mortgage, but that all such mortgages shall
be foreclosed only in the manner provided for foreclosing mortgages containing
no power of sale, and that no real estate shall be sold to satisfy any mortgage
except as authorized under the Illinois Mortgage Foreclosure Law. Such laws,
however, provide for the foreclosing of mortgages by judicial proceedings and,
in the judgment of such counsel, provide adequate remedies for the realization
of the benefits of the security provided in the General Mortgage.
(D) The First Mortgage Bond has been duly authorized, executed,
authenticated, issued and delivered to the New Mortgage Trustee, and
constitutes the valid and binding obligation of the Company enforceable in
accordance with its terms, except as the same may be limited by (a) bankruptcy,
insolvency, reorganization moratorium or other laws relating to or affecting
the enforcement of creditors' rights, and (b) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and (subject to the qualifications mentioned in subparagraph
(E) below with respect to the enforceability of the First Mortgage and to the
provisions of any purchase or sinking fund or analogous provisions for any
particular series of bonds established by any indenture supplemental to the
First Mortgage) is entitled to the benefit and security of the First Mortgage
in accordance with the terms thereof equally and ratably with all other bonds
issued under the First Mortgage; and the New Mortgage Trustee as the registered
owner of the First Mortgage Bond will be entitled to the payment of principal
and interest, and premium, if any, in case of redemption, as therein provided.
6
<PAGE> 7
(E) The First Mortgage and the First Mortgage Supplemental Indenture have
each been duly authorized, executed and delivered and are valid and binding
instruments enforceable in accordance with their terms, except as the same may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting the enforcement of creditors' rights or the
enforcement of the security provided by the First Mortgage, and (b) general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and except that no opinion is expressed
with respect to the enforceability of the lien of the First Mortgage on
chattels as against third parties (other than chattels delivered in pledge to
the First Mortgage Trustee), or with respect to the enforceability of the lien
of the First Mortgage on after-acquired property (in respect of which a
supplemental indenture shall not have been executed, delivered and recorded) as
against purchasers for value and without notice. The laws of the State of
Illinois provide that no real estate in the State of Illinois shall be sold by
virtue of any power of sale contained in any mortgage, but that all such
mortgages shall be foreclosed only in the manner provided for foreclosing
mortgages containing no power of sale, and that no real estate shall be sold to
satisfy any mortgage except as authorized under the Illinois Mortgage
Foreclosure Law. Such laws, however, provide for the foreclosing of mortgages
by judicial proceedings and, in our judgment, provide adequate remedies for the
realization of the benefits of the security provided in the First Mortgage.
(F) The General Mortgage constitutes a valid and legally effective
mortgage creating a valid lien, which lien is junior to the lien of the First
Mortgage, for the security of all bonds duly issued thereunder upon
substantially all of the Company's properties used in the generation, purchase,
transmission, distribution and sale of electricity or gas, with the exceptions,
and subject to the reservations, encumbrances (including the lien of the First
Mortgage) and restrictions recited in the granting and habendum clauses of, and
as provided in, the General Mortgage, or referred to in the Prospectus under
the subcaption "Security" under the caption "Description of the New Mortgage
Bonds." Except as to after-acquired property, and except as to property sold,
or under contract to be sold, or otherwise disposed of by the Company and
released from the lien of the General Mortgage, or abandoned, pursuant to the
provisions thereof, the Company has good and sufficient title to all the
properties described in, and conveyed or pledged by, the General Mortgage with
the exceptions and subject to the reservations, encumbrances (including the
lien of the First Mortgage) and restrictions recited in the granting and
habendum clauses of, and as provided in, the General Mortgage, or referred to
in the Prospectus under said sub-caption "Security."
7
<PAGE> 8
(G) The First Mortgage constitutes a valid and legally effective mortgage
creating a valid first lien for the security of all bonds duly issued thereunder
upon substantially all of the fixed properties owned and franchises and rights
held by the Company, with the exceptions, and subject to the reservations,
encumbrances and restrictions recited in the granting and habendum clauses of,
and as provided in, the First Mortgage, or referred to in the Prospectus under
the subcaption "Description of First Mortgage Bonds -- Security." Except as to
after-acquired property, and except as to property sold, or under contract to be
sold, or otherwise disposed of by the Company and released from the lien of the
First Mortgage, or abandoned, pursuant to the provisions thereof, the Company
has good and sufficient title to all the properties described in, and conveyed
or pledged by, the First Mortgage with the exceptions, and subject to the
reservations, encumbrances, and restrictions recited in the granting and
habendum clauses of, and as provided in, the First Mortgage, or referred to in
the Prospectus under said subcaption "Security."
(H) The Registration Statement has become effective under the Act; the
General Mortgage has been duly qualified under the Trust Indenture Act to the
extent required; to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and the Registration Statement and the Prospectus,
and each amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the requirements
of the Act, the Exchange Act, the Trust Indenture Act and the Rules and
Regulations; such counsel has no reason to believe that the Registration
Statement or the Prospectus, or any such amendment or supplement, as of such
respective dates, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; the descriptions in the Registration
Statement and Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the information
required to be shown; and such counsel does not know of any legal or
governmental proceedings required to be described in the Prospectus which are
not described as required, nor of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement which are not described
and filed as required; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus.
8
<PAGE> 9
(I) This Agreement has been duly authorized, executed and delivered by the
Company.
(J) The Illinois Commerce Commission has entered orders (a) permitting the
execution and delivery of the General Mortgage, the Supplemental Indenture, the
First Mortgage, and the First Mortgage Supplemental Indenture, respectively,
and (b) approving the issuance and sale of the Purchased Bonds and the issuance
and pledge of the First Mortgage Bond; said, orders are valid and in effect and
no further approval, authorization, consent or order of, or action by, any
other regulatory authority is necessary with respect to the execution and
delivery of the General Mortgage, the Supplemental Indenture, the First
Mortgage or the First Mortgage Supplemental Indenture, the issuance and
sale of the Purchased Bonds, or the issuance and pledge of the First Mortgage
Bond, each as contemplated by this Agreement; it being understood that in
giving such opinion such counsel is not passing upon the authorizations or
approvals which may be necessary under the securities or blue sky laws of any
jurisdiction other than the United States of America. The issuance and sale of
the Purchased Bonds and the issuance and pledge of the First Mortgage Bond,
each as contemplated by this Agreement, are in conformity with the terms of
said orders of the Illinois Commerce Commission.
(K) The statements made in the Prospectus under the caption "Description of
the New Mortgage Bonds" and the subcaption "Description of First Mortgage
Bonds," insofar as they purport to summarize provisions of the documents
specifically referred to under said captions, fairly present the information
called for with respect thereto by Form S-3.
(L) The statements in the Prospectus and in the Company's Annual Report on
Form 10-K for the year ended December 31, 199_ (which is incorporated by
reference in the Prospectus) as to matters of law and legal conclusions which
are stated in the Prospectus to have been made on the authority of such counsel,
have been reviewed by such counsel and, as to matters of law and legal
conclusions, are correct.
(M) The execution, delivery and performance by the Company of this
Agreement, the General Mortgage, the Supplemental Indenture and the First
Mortgage Supplemental Indenture, and the incurrence by the Company of the
obligations and the consummation of the transactions contemplated by this
Agreement and the foregoing Supplemental Indenture and First Mortgage
Supplemental Indenture, will not conflict with or constitute a breach of, or
default under, the Restated Articles of Incorporation or By-Laws of the Company
or, to such counsel's knowledge, any mortgage, contract, lease,
9
<PAGE> 10
note or other instrument to which the Company or any significant
subsidiary of the Company is a party or by which the Company or any
significant subsidiary of the Company may be bound, or any law,
administrative regulation or any administrative, arbitration or court
order.
(iii) An opinion from __________________, counsel for the
Underwriters, as to those matters as the Underwriters may reasonably
require.
(iv) A certificate of the Chairman, President, an Executive Vice
President, a Senior Vice President, a Vice President or General Counsel and
the Treasurer or the principal financial or accounting officer of the
Company, dated the Closing Date, in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are true
and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date, that no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated by the Commission, and
that, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial
position or results of operations of the Company except as set forth or
contemplated in the Prospectus or as described in such certificate.
(v) An order or orders of the Illinois Commerce Commission authorizing
the issuance and sale of the Purchased Bonds in accordance with the terms
and conditions hereof shall be in full force and effect and shall contain
no condition or provision unacceptable to the Underwriters, it being
understood that no order in effect as of the date hereof contains any such
unacceptable condition or provision.
(vi) A copy of the Company's audited financial statements at December
31, 199_, manually signed by Price Waterhouse.
The Company will furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and documents as the Underwriters reasonably
request.
5. Conditions to the Obligation of the Company. The obligation of the
Company to sell and deliver the Purchased Bonds on the Closing Date is subject
to the following conditions precedent:
(a) Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted, or, to the
knowledge of the Company or the Underwriters, shall be contemplated by the
Commission.
10
<PAGE> 11
(b) There shall be in effect on the Closing Date an order of the
Illinois Commerce Commission authorizing the issuance and sale of the
Purchased Bonds in accordance with the terms and conditions thereof, and no
order of the Illinois Commerce Commission shall be in effect at the Closing
Date, which would prevent the sale and delivery of the Purchased Bonds or
which contains any condition or provision with respect to such sale which
is not acceptable to the Company, it being understood that no order in
effect at the date of this Agreement contains any such unacceptable
condition or provision.
If any such condition shall not have been satisfied, then the Company shall be
entitled, by notice in writing to the Underwriters, to terminate this Agreement
without liability on the part of the Company or any Underwriter, except as
provided herein.
6. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the
Act against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter or such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
will reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for
use therein or in reliance upon and in conformity with the Form T-1 of the
New Mortgage Trustee. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company,
each of its directors and officers and each person, if any, who controls
the Company within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Company or any such director, officer
or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the
11
<PAGE> 12
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriters specifically for use therein; and will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which such
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, except as otherwise provided in the succeeding sentence.
If the indemnifying party shall not have employed counsel to have charge of
the defense of any such action, or if any such indemnified party or parties
shall have reasonably concluded that there is a conflict of interest which may
give rise to defenses available to them which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), legal and other expenses thereafter
reasonably incurred by the indemnified party shall be borne by the indemnifying
party. Neither the indemnifying party nor indemnified party shall be liable for
any settlement of any such action effected without its written consent.
(d) If recovery is not available under the foregoing indemnification
provisions of this Section, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that contribution
is not permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
Purchased Bonds (taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement
12
<PAGE> 13
or omission, and any other equitable considerations appropriate under
the circumstances. The Company and the Underwriters agree that it would
not be equitable if the amount of such contribution were determined by
pro rata or per capita allocation. The Underwriters or person
controlling such Underwriters shall not be obligated to make
contribution hereunder which in the aggregate exceeds the total public
offering price of the Purchased Bonds less the aggregate amount of any
damages which the Underwriters and their controlling persons have
otherwise been required to pay in respect of the same claim or any
substantially similar claim.
7. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase the Purchased Bonds hereunder on the Closing
Date and the aggregate principal amount of Purchased Bonds which such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the aggregate principal amount of the Purchased Bonds which the
Underwriters are obligated to purchase on the Closing Date, you may make
arrangements satisfactory to the Company for the purchase of such Purchased
Bonds by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Purchased Bonds which such defaulting Underwriters
agreed but failed to purchase on the Closing Date. If any Underwriter or
Underwriters so default and the aggregate principal amount of the Purchased
Bonds with respect to which such default or defaults occur is more than the
above percentage and arrangements satisfactory to you and the Company for the
purchase of such bonds by other persons are not made within thirty-six hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company, except as provided in
Section 8 hereof. In the event that any Underwriter or Underwriters default in
their obligations to purchase the Purchased Bonds hereunder, the Company may by
prompt written notice to you postpone the Closing Date for a period of not more
than seven full business days in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents, and the Company will promptly file any amendments to the Registration
Statement or supplements to the Prospectus which may thereby be made necessary.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 7. Nothing herein will relieve
a defaulting Underwriter, from liability for its default.
8. Survival of Representations, Warranties, etc. The respective
representations, warranties, agreements and indemnities of the Company and the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of the Underwriters or the Company or any
of their officers or directors or any controlling person, and will survive
delivery of any payment for the Purchased Bonds.
9. Termination of Agreement. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Date (i) if there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Registration
13
<PAGE> 14
Statement, any material adverse change in the condition, financial or
otherwise, or in the earnings, or business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
national or international calamity or crisis, the effect of which is such as to
make it, in the judgment of the Representatives, impracticable to market the
Purchased Bonds or to enforce contracts for the sale of the Purchased Bonds, or
(iii) if trading on the New York Stock Exchange has been suspended, or if a
banking moratorium has been declared by either Federal or New York authorities.
If this Agreement is terminated pursuant to this Section 9, such termination
shall be without liability of any party to any other party except as provided
in Section 8 hereof.
10. Notice. All communications hereunder shall be in writing and if
sent to the Company will be mailed, delivered or transmitted via facsimile and
confirmed to it at 500 South 27th Street, Decatur, Illinois 62525 and if sent
to any of the Underwriters will be mailed, delivered or transmitted via
facsimile and confirmed to such addresses as the Representatives of the
Underwriters shall advise the Company in writing.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 6 hereof,
and no other person will have any right or obligation hereunder.
12. Counterparts. This Agreement may be executed in counterparts all
of which, taken together, shall constitute a single agreement among the parties
to such counterparts.
13. Representation of the Underwriters. The Representatives represent
and warrant to the Company that they are authorized to act as the
representatives of the Underwriters in connection with this financing, and the
Representatives' execution and delivery of this Agreement and any action under
this Agreement taken by such Representatives will be binding upon all
Underwriters.
14. Interpretation When No Representatives. In the event no
Underwriters are named in Schedule II hereto, the term "Underwriters" shall be
deemed for all purposes of this Agreement to be the Underwriter or Underwriters
named as such in Schedule I hereto, the principal amount of the Purchased Bonds
to be purchased by any such Underwriter shall be that set forth opposite its
name in Schedule I hereto and all reference to the "Representatives" shall be
deemed to be the Underwriter or Underwriters named in such Schedule I.
[Signature Page Follows]
14
<PAGE> 15
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
ILLINOIS POWER COMPANY
By: ____________________________
Its:____________________________
Accepted as of the date of this Underwriting
Agreement set forth in Schedule I hereto.
____________________________________________ ,
as Representatives
By: ____________________________
Its:____________________________
15
<PAGE> 16
SCHEDULE I
NEW MORTGAGE BONDS, ____% SERIES DUE _____
Name and address of Representatives:
______________________________________
______________________________________
______________________________________
Purchase Price and Description of Purchased Bonds:
Principal Amount: $ _________________
Purchase Price: ____% of the Principal Amount
Interest Rate: ____%
Initial Public Offering Price: ____%
Selling Concession: ____%
Reallowance to Dealers: ____%
Maturity: ______
Sinking Fund Provisions: ______
Redemption Provisions: ___________________________________________________
Other Provisions: _____________________________________________________________
Time and Date of Delivery and Payment (the "Closing Date")
Date: _______________
Time: _______________
Place of Delivery of Purchased Bonds: ______________________
Type of Funds: _________________________
I-1
<PAGE> 17
Method of Payment: _________________
Underwriting Agreement Dated: ___________, ____________
I-2
<PAGE> 18
SCHEDULE II
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NAME OF UNDERWRITER PURCHASED BONDS
- ------------------- -------------------
<S> <C>
TOTAL: $
===============
</TABLE>
II-1
<PAGE> 1
EXHIBIT 1.2
ILLINOIS POWER COMPANY
UNSECURED DEBT SECURITIES
UNDERWRITING AGREEMENT
--------------, -------
Chicago, Illinois
To the Representative(s) named in Schedule I hereto of the Underwriters named in
Schedule II hereto.
Dear Sirs:
Illinois Power Company, an Illinois corporation (the "Company"),
proposes to issue and sell from time to time, in one or more series, its
Unsecured Debt Securities which are registered under the registration statement
referred to in Section 1(a) (the "Securities"). The Securities will be issued
under an Indenture, dated as of July 15, 1986, between the Company and The Chase
Manhattan Bank, as Trustee, which provides for the issuance of an unlimited
principal amount of Debt Securities of the Company in one or more series. The
Company proposes to sell to the underwriters named in Schedule II hereto (the
"Underwriters") for whom you are acting as Representative or Representatives
(the "Representatives"), Securities in the aggregate principal amount and of the
series identified in Schedule I hereto ("Purchased Securities").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with the Underwriters that:
(a) A Registration statement (No. 333- ), including a
prospectus, relating to the Securities has been filed with the
Securities and Exchange Commission (the "Commission") and has become
effective. Such registration statement, including the prospectus
therein, as amended and supplemented to the date of this Agreement
(exclusive of the supplements to the prospectus relating solely to
Securities that are not the Purchased Securities) and as supplemented
by the Prospectus Supplement to be included as part of the prospectus
to be filed with the Commission pursuant to Rule 424 (c) under the
Securities Act of 1933 ("Act") as provided in Section 3(a) hereof, are
hereinafter referred to as the "Registration Statement" and such
prospectus is hereinafter referred to as the "Prospectus." Any
reference herein to the Registration Statement or the Prospectus shall
be deemed to include the document incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934 ("Exchange Act") on or before the date of this
Agreement; and any reference herein to the terms "amend," "amendment"
or "supplement" with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act deemed to be incorporated therein by
reference after the date of this Agreement.
(b) The Registration Statement and the Prospectus, both
at the time the Prospectus is filed with the Commission pursuant to
Rule 424(c) under the Act as provided in Section 3(a) hereof, and any
further amendments and supplements to the Prospectus when they become
effective or are filed with the Commission, as the case may be, prior
to the Closing Date, will conform in all respects to the requirements
of the Act, the Trust Indenture Act of 1939 ("Trust Indenture Act") and
the rules
<PAGE> 2
and regulations of the Commission ("Rules and Regulations"), and none
of such documents will include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
the foregoing does not apply to statements or omissions in such
documents based upon written information furnished to the Company by
any Underwriter specifically for use therein or in reliance upon and in
conformity with the Form T-l of the Trustee.
2. PURCHASE, OFFERING AND DELIVERY. Subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the
Company, at the purchase price set forth in Schedule I hereto, the principal
amount of the Purchased Securities set forth opposite such Underwriter's name in
Schedule II hereto. It is understood that the Underwriters propose to offer the
Purchased Securities for sale to the public as set forth in the Prospectus
Supplement relating to the Purchased Securities.
The Purchased Securities to be purchased by each Underwriter shall be
delivered by the Company for the account of such Underwriter to the place
specified in Schedule I hereto against payment of the purchase price therefor by
such Underwriter or on its behalf by certified or official check or checks in
immediately available funds drawn to the order of the Company, at the location
and at the time and date specified in Schedule I hereto or at such other time
and date as the Representatives and the Company may agree, such time and date
being herein referred to as the "Closing Date." The Purchased Securities so to
be delivered will be in fully registered form in such authorized denominations
and registered in such names as the Representatives request at least four full
business days before the Closing Date and will be made available for checking
and packaging in the city designated in Schedule I as the place of delivery at
least 24 hours prior to the Closing Date.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Underwriters that:
(a) Promptly following execution of this Agreement, the
Company will cause the Prospectus (including as part thereof a
prospectus supplement relating to the Purchased Securities ("Prospectus
Supplement")) to be filed with the Commission pursuant to Rule 424(c)
under the Act the Company will promptly advise the Representatives when
such filing has been made. Prior to such filing the Company will work
with the Representatives in the preparation of the Prospectus
Supplement to assure that the Representatives have no reasonable
objection to the form or content thereof when filed.
(b) If at any time when a prospectus relating to the
Purchased Securities is required to be delivered under the Act any
event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact, or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend or
supplement the Registration Statement or Prospectus to comply with the
Act or the Rules and Regulations, the Company promptly will prepare and
file with the Commission an amendment or supplement which will correct
such statement or omission, or an amendment which will effect such
compliance.
2
<PAGE> 3
(c) The Company will furnish to each Underwriter such
number of copies of the Prospectus as may be reasonably requested in
connection with the offering of the Purchased Securities.
(d) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, and will reimburse
the Underwriters for any expenses up to $___________ in the aggregate
(including fees and disbursements of counsel) incurred in connection
with qualification of the Purchased Securities for sale and
determination of their eligibility for investment under the laws of
such jurisdictions as the Representatives designate and the printing of
memoranda relating thereto.
4. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligation of
the several Underwriters to purchase and pay for the Purchased Securities
hereunder will be subject to the accuracy of the representations and warranties
on the part of the Company herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the
business or properties of the Company or its subsidiaries which, in the
judgment of a majority in interest of the Underwriters, including you,
materially impairs the investment quality of the Purchased Securities.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Company, or the Underwriters, shall be contemplated by the Commission.
(c) The Underwriters shall have received the following:
(i) A letter of Price Waterhouse, dated the
Closing Date, confirming that they are independent accountants within
the meaning of the Act and the Rules and Regulations, and stating in
effect that (i) in their opinion, the financial statements examined by
them and incorporated by reference in the Prospectus comply as to form
in all material respects with the accounting requirements of the Act
and the Rules and Regulations applicable to annual reports on Form 10-K
(ii) on the basis of a reading of the interim financial statements
referred to in clause (A) below, a reading of the latest available
interim financial statements of the Company, a reading of the minutes
of the Board of Directors and stockholders of the Company as set forth
in the minute books of the Company and inquiries of officials of the
Company responsible for financial and accounting matters, nothing came
to their attention that caused them to believe that (A) the unaudited
financial statements included in the most recent Quarterly Report on
Form 10-Q incorporated by reference in the Prospectus were not prepared
on a basis substantially consistent with that of the audited financial
statements as of and for the fiscal year ended December 31, 199__
incorporated by reference in the Prospectus, or (B) at the date of the
latest available balance sheet read by such accountants or at a
subsequent specified date not more than five days prior to the Closing
Date, there was any change in the capital stock or long term debt of
the Company or, at the date of the latest available balance sheet read
by such accountants, there was any decrease in net assets, in each case
as compared with the corresponding amounts shown in the December
3
<PAGE> 4
31, 199__ balance sheet incorporated by reference in the Prospectus, or
(C) for the period of twelve months ended with the closing date of the
latest available income statement read by such accountants there were
any decreases, as compared with the twelve months ended December 31,
199__ in operating revenues, operating income, net income, earnings per
share of common stock or the ratio of earnings to fixed charges, except
in all cases set forth in clauses (B) and (C) above for changes or
decreases which the Prospectus discloses have occurred or may occur, or
which are described in such letter, and (iii) they have compared the
dollar amounts (or percentages derived from such dollar amounts) and
other financial information contained in the Prospectus under the
captions "Summary Information," "Ratio of Earnings to Fixed Charges"
and "Description of Unsecured Debt Securities" and contained in the
Company's Annual Report on Form 10-K for the year ended December 31,
199__ (which is incorporated by reference in the Prospectus) (in each
case to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting records
of the Company subject to the internal controls of the Company's
accounting system or are derived directly from such records by analysis
or computation) with the results obtained from inquiries, a reading of
such general accounting records and other procedures specified in such
letter, and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except as
otherwise specified in such letter. All financial statements included
in material incorporated by reference in the Prospectus shall be deemed
included in the Prospectus for purposes of this subsection.
(ii) An opinion of Schiff Hardin & Waite, counsel
for the Company, dated the Closing Date, to the effect that:
(A) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Illinois, with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the
Company is not required to be qualified as a foreign
corporation in any jurisdiction.
(B) The Purchased Securities have been
duly authorized, executed, authenticated, issued and delivered
and constitute the valid and binding obligations of the
Company enforceable in accordance with their terms, and
(subject to the qualifications mentioned in subparagraph (C)
below with respect to the enforceability of the Indenture and
to any variations established for any particular series of
Securities) are entitled to the benefit of the Indenture in
accordance with the terms thereof equally and ratably with all
other securities issued under the Indenture.
(C) The Indenture has been duly
authorized, executed and delivered and is a valid and binding
instrument enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally.
(D) The Registration Statement has
become effective under the Act; the Indenture has been duly
qualified under the Trust Indenture Act; to the best of the
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<PAGE> 5
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are pending or contemplated under the Act, and the
Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with
the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations; such counsel have no reason to believe
that either the Registration Statement or the Prospectus, or
any such amendment or supplement, as of such respective dates,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; the
descriptions in the Registration Statement and Prospectus of
statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information required to be shown; and such counsel do not know
of any legal or governmental proceedings required to be
described in the Prospectus which are not described as
required, nor of any contracts or documents of a character
required to be described in the Registration Statement or
Prospectus or to be filed as Exhibits to the Registration
Statement which are not described and filed as required; it
being understood that such counsel need express no opinion as
to the financial statements or other financial data contained
in Registration Statement or the Prospectus.
(E) This Agreement has been duly
authorized, executed and delivered by the Company.
(F) The Illinois Commerce Commission
has entered an order permitting the issue and sale of the
Purchased Securities; and said order is valid and in effect
and no further approval, authorization, consent or order of,
or action by, any other regulatory authority is necessary with
respect to the execution and delivery of the Indenture or the
issue and sale of the Purchased Securities, as contemplated by
this Agreement, it being understood that in giving such
opinion such counsel are not passing upon the authorizations
or approvals which may be necessary under the securities or
blue sky laws of any jurisdiction. The issue and sale of the
Purchased Securities, as contemplated by this Agreement, is in
conformity with the terms of said order of the Illinois
Commerce Commission.
(G) The statements made in the
Prospectus under the caption "Description of the Unsecured
Debt Securities" insofar as they purport to summarize
provisions of the documents specifically referred to under
said caption, fairly present the information called for with
respect thereto by Form S-3.
(H) The statements in the Prospectus
and in the Company's most recent Annual Report on Form 10- K
(which is incorporated by reference in the Prospectus) as to
matters of law and legal conclusions which are stated n the
Prospectus to have been made on the authority of such counsel
have been reviewed by them and, as to matters of law and legal
conclusions, are correct.
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<PAGE> 6
(iii) An opinion from ___________, counsel for the
Underwriters, as to those matters as the Underwriters may reasonably
require.
(iv) A certificate of the Chairman, President, an
Executive Vice President, a Senior Vice President or a Vice President
and the Treasurer or the principal financial or accounting officer of
the Company, dated the Closing Date, in which such officers, to the
best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this
Agreement are true and correct, that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date that no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission, and that, subsequent to the date of the most recent
financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operations of
the Company except as set forth or contemplated in the Prospectus or as
described in such certificate.
(v) An order of the Illinois Commerce Commission
authorizing the issuance and sale of the Purchased Securities in
accordance with the terms and conditions hereof shall be in full force
and effect and shall contain no conditions or provision unacceptable to
Underwriters, it being understood that no order in effect as of the
date hereof contains any such unacceptable condition or provision.
The Company will furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and documents as the Underwriters reasonably
request.
5. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of
the Company to sell and deliver the Purchased Securities on the Closing Date is
subject to the following conditions precedent:
(a) Prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have instituted, or, to the
knowledge of the Company or the Underwriters, shall be contemplated by
the Commission.
(b) There shall be in effect on the Closing Date an order
of the Illinois Commerce Commission authorizing the issuance and sale
of the Purchased Securities in accordance with the terms and conditions
thereof, and no order of the Illinois Commerce Commission shall be in
effect at the Closing Date, which would prevent the sale and delivery
of the Purchased Securities or which contains any condition or
provision with respect to such sale which is not acceptable to the
Company, it being understood that no order in effect at the date of
this Agreement contains any such unacceptable condition or provision.
If any such condition shall not have been satisfied, then the Company
shall be entitled, by notice in writing to the Underwriters, to terminate this
Agreement without liability on the part of the Company or any Underwriter,
except as provided herein.
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<PAGE> 7
6. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein or in reliance upon and in
conformity with the Form T-1 of the Trustee. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each of its directors and officers and each person, if any,
who controls the Company within the meaning of the Act, against any
losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriters specifically for use therein; and will reimburse any legal
or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability
which such Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement
7
<PAGE> 8
thereof the indemnifying party will be entitled to participate therein
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party) , and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If recovery is not available under the foregoing
indemnification provisions of this Section, for any reason other than
as specified therein, the parties entitled to indemnification by the
terms thereof shall be entitled to contribution for liabilities and
expenses, except to the extent that contribution is not permitted under
Section 11(f) of the Act. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered
the relative benefits received by each party from the offering of the
Purchased Securities (taking into account the portion of the proceeds
of the offering realized by each) , the parties' relative knowledge and
access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations
appropriate under the circumstances. The Company and the Underwriters
agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation. The Underwriters
or person controlling such Underwriters shall not be obligated to make
contribution hereunder which in the aggregate exceeds the total public
offering price of the Purchased Securities less the aggregate amount of
any damages which the Underwriters and their controlling persons have
otherwise been required to pay in respect of the same claim or any
substantially similar claim.
7. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase the Purchased Securities hereunder on
the Closing Date and the aggregate principal amount of Purchased Securities
which such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the aggregate principal amount of the Purchased
Securities which the Underwriters are obligated to purchase on the Closing Date,
you may make arrangements satisfactory to the Company for the purchase of such
Purchased Securities by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Purchased Securities which such
defaulting Underwriters agreed but failed to purchase on the Closing Date. If
any Underwriter or Underwriters so default and the aggregate principal amount of
the Purchased Securities with respect to which such default or defaults occur is
more than the above percentage and arrangements satisfactory to you and the
Company for the purchase of such Purchased Securities by other persons are not
made within thirty-six hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except as provided in Section 8. In the event that any Underwriter or
Underwriters default in their obligations to purchase the Purchased Securities
hereunder, the Company may, by prompt written notice to you, postpone the
Closing Date for a period of not more than seven full business days in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or the Registration Statement or
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<PAGE> 9
supplements to the Prospectus which may thereby be made necessary. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC. The respective
representations, warranties, agreements and indemnities of the Company and the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of the Underwriters or the Company or any
of their officers or directors or any controlling person, and will survive
delivery of any payment for the Purchased Securities.
9. NOTICE. All communications hereunder shall be in writing and
if sent to the Company will be mailed, delivered or transmitted via facsimile
and confirmed to it at 500 South 27th Street, Decatur, Illinois 62525 and if
sent to any of the Underwriters will be mailed, delivered or transmitted via
facsimile and confirmed to such addresses as the Representatives of the
Underwriters shall advise the Company in writing.
10. SUCCESSORS. This Underwriting Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. COUNTERPARTS. This Agreement may be executed in counterparts
all of which, taken together, shall constitute a single agreement among the
parties to such counterparts.
12. REPRESENTATION OF THE UNDERWRITERS. The Representatives
represent and warrant to the Company that they are authorized to act as the
representatives of the Underwriters in connection with this financing, and the
Representatives' execution and delivery of this Agreement and any action under
this Agreement taken by such Representatives will be binding upon all
Underwriters.
13. INTERPRETATION WHEN NO REPRESENTATIVES. In the event no
Underwriters are named in Schedule II hereto, the term "Underwriters" shall be
deemed for all purposes of this Agreement to be the Underwriter or Underwriters
named as such in Schedule I hereto, the principal amount of the Purchased
Securities to be purchased by any such Underwriter shall be that set forth
opposite its name in Schedule I hereto and all reference to the
"Representatives" shall be deemed to be the Underwriter or Underwriters named in
Schedule I.
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<PAGE> 10
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between the Company and the Underwriters in
accordance with its terms.
Very truly yours,
Illinois Power Company
By___________________________
Its________________________
Accepted as of the date of this
Underwriting Agreement set forth
in Schedule I hereto.
__________________________________,
as Representatives
By________________________________
Its_____________________________
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<PAGE> 11
SCHEDULE I
[Representatives of the] Underwriters and addresses [and any Principal Amount of
Purchased Securities if no Underwriters named in Schedule II].
Purchase Price and Description of Purchased Securities:
Aggregate Principal Amount: $_______
Purchase price:_______% of the Principal Amount
Interest Rate:_______%
Initial Public Offering Price:_______%
Dealer Discount:_______%
Reallowance to Dealers:_______%
Maturity:_______
Sinking Fund Provisions:_______
Redemption Provisions:_______
Other Provisions:_______
Time and Date of Delivery and Payment ("Closing Date"):
Date:_______
Time:_______
Place of delivery of payment:_______
Type of Funds:_______
Method of payment:_______
Place of delivery of Purchased Securities:_______
Underwriting Agreement Dated:_______
11
<PAGE> 12
SCHEDULE II
Principal
Amount of
Purchased
Underwriter Securities
- ----------- ----------
12
<PAGE> 1
EXHIBIT 4.39
SUPPLEMENTAL INDENTURE, dated as of _____________, _______ (the "Supplemental
Indenture), made by and between ILLINOIS POWER COMPANY, a corporation organized
and existing under the laws of the State of Illinois (the "Company"), party of
the first part, and HARRIS TRUST AND SAVINGS BANK, a corporation organized and
existing under the laws of the State of Illinois (the "Trustee"), as Trustee
under the General Mortgage indenture and Deed of Trust dated as of November 1,
1992, hereinafter mentioned, party of the second part;
WHEREAS, the Company has heretofore executed and delivered its General
Mortgage Indenture and Deed of Trust dated as of November 1, 1992 (the
"Indenture"), to the Trustee, for the security of the Bonds of the Company
issued and to be issued thereunder (the "Bonds"); and
WHEREAS, pursuant to the terms and provisions of the Indenture there
were created and authorized by Supplemental Indentures thereto bearing the
following dates, respectively, the New Mortgage Bonds of the series issued
thereunder and respectively identified opposite such dates:
<TABLE>
<CAPTION>
Date of Supplemental Identification
Indenture of Series Called
-------------------- -------------- ------
<S> <C> <C>
February 15, 1993 8% Series due Bonds of the 2023 Series
March 15, 1993 6 1/2% Series due Bonds of the 2000 Series
March 15, 1993 6 3/4% Series due Bonds of the 2005 Series
July 15, 1993 7 1/2% Series due Bonds of the 2025 Series
August 1, 1993 6 1/2% Series due Bonds of the 2003 Series
October 15, 1993 55/8% Series due 2000 Bonds of the Second 2000 Series
November 1, 1993 Pollution Control Series M Bonds of the Pollution Control Series M
November 1, 1993 Pollution Control Series N Bonds of the Pollution Control Series N
November 1, 1993 Pollution Control Series O Bonds of the Pollution Control Series O
April 1, 1997 Pollution Control Series P Bonds of the Pollution Control Series P
April 1, 1997 Pollution Control Series Q Bonds of the Pollution Control Series Q
April 1, 1997 Pollution Control Series R Bonds of the Pollution Control Series R
March 1, 1998 Pollution Control Series S Bonds of the Pollution Control Series S
March 1, 1998 Pollution Control Series T Bonds of the Pollution Control Series T
</TABLE>
WHEREAS, the Company desires to create a new series of Bonds to be
issued under the Indenture, to be known as New Mortgage Bonds, ____% Series due
____ (the "New Mortgage Bonds of the ____ Series"); and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the indenture, and
pursuant to appropriate resolutions of the Board of Directors, has duly resolved
and determined to make, execute and deliver to the Trustee a Supplemental
Indenture in the form hereof for the purposes herein provided; and
<PAGE> 2
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been done,
performed and fulfilled and the execution and delivery hereof have been in all
respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
THAT Illinois Power Company, in consideration of the purchase and
ownership from time to time of the Bonds and the service by the Trustee, and its
successors, under the Indenture and of One Dollar to it duly paid by the Trustee
at or before the ensealing and delivery of these presents, the receipt whereof
is hereby acknowledged, hereby covenants and agrees to and with the Trustee and
its successors in the trust under the Indenture, for the benefit of those who
shall hold the Bonds as follows:
ARTICLE I.
DESCRIPTION OF NEW MORTGAGE BONDS OF THE ____ SERIES.
SECTION 1. The Company hereby creates a new series of Bonds to be known
as "New Mortgage Bonds of the ____ Series." The New Mortgage Bonds of the ____
Series shall be executed, authenticated and delivered in accordance with the
provisions of, and shall in all respects be subject to, all of the terms,
conditions and covenants of the Indenture, as supplemented and modified.
The commencement of the first interest period shall be ___________,
______. All New Mortgage Bonds of the ____ Series shall mature _____________,
and shall bear interest at the rate of ______________ per cent (______%) per
annum, payable semi-annually on the first day of _________ and the first day of
___________ in each year. The person in whose name any of the New Mortgage Bonds
of the ____ Series are registered at the close of business on any record date
(as hereinafter defined) with respect to any interest payment date shall be
entitled to receive the interest payable on such interest payment date
notwithstanding the cancellation of such New Mortgage Bonds of the ____ Series
upon any transfer or exchange subsequent to the record date and prior to such
interest payment date; provided, however, that if and to the extent the Company
shall default in the payment of the interest due on such interest payment date,
such defaulted interest shall be paid as provided in Section 3.07 of the
Indenture.
The term "record date" as used in this Section with respect to any
interest payment date shall mean the _________ or ___________, as the case may
be, next preceding the semi-annual interest payment date, or, if such _________
or _________ shall be a legal holiday or a day on which banking institutions in
the City of Chicago, Illinois, are authorized by law to close, then the next
preceding day which shall not be a legal holiday or a day on which such
institutions are so authorized to close.
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<PAGE> 3
SECTION 2. The New Mortgage Bonds of the _____ Series shall be issued
only as registered Bonds without coupons of the denomination of $1,000, or any
integral multiple of $1,000, appropriately numbered. The New Mortgage Bonds of
the ______ Series may be exchanged, upon surrender thereof, at the agency of the
Company in the City of Chicago, Illinois, for one or more new New Mortgage Bonds
of the ____ Series of other authorized denominations, for the same aggregate
principal amount, subject to the terms and conditions set forth in the
Indenture.
New Mortgage Bonds of the ____ Series may be exchanged or transferred
without expense to the registered owner thereof except that any taxes or other
governmental charges required to be paid with respect to such transfer or
exchange shall be paid by the registered owner requesting such transfer or
exchange as a condition precedent to the exercise of such privilege.
SECTION 3. The New Mortgage Bonds of the ____ Series and the Trustee's
Certificate of Authentication shall be substantially in the following forms
respectively:
3
<PAGE> 4
[FORM OF FACE OF BOND]
ILLINOIS POWER COMPANY
(Incorporated under the laws of the State of Illinois)
NEW MORTGAGE BOND, ____% SERIES DUE ____
No.____________ $_______________
ILLINOIS POWER COMPANY, a corporation organized and existing under the
laws of the State of Illinois (the "Company", which term shall include any
successor corporation as defined in the Indenture hereinafter referred to), for
value received, hereby promises to pay to ________ or registered assigns, the
sum of __________ Dollars ($_________) on the _____ day of ___________, in any
coin or currency of the United States of America which at the time of payment is
legal tender for public and private debts, and to pay interest thereon in like
coin or currency from _____________, payable semi-annually, on the _______ days
of ___________ and _____________ in each year, at the rate of _____________ per
cent (_____%) per annum, until the Company's obligation with respect to the
payment of such principal shall be discharged as provided in the Indenture
hereinafter mentioned. The interest so payable on any ____________ or
___________ will, subject to certain exceptions provided in the Supplemental
Indenture dated as of ____________, _______, be paid to the person in whose name
this Bond is registered at the close of business on the immediately preceding
________ or __________, as the case may be. Both principal of, and interest on,
this Bond are payable at the agency of the Company in the City of Chicago,
Illinois.
This Bond shall not be entitled to any benefit under the Indenture or
any indenture supplemental thereto, or become valid or obligatory for any
purpose, until the form of certificate endorsed hereon shall have been signed by
or on behalf of Harris Trust and Savings Bank, the Trustee under the Indenture,
or a successor trustee thereto under the Indenture.
The provisions of this New Mortgage Bond are continued on the reverse
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
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<PAGE> 5
IN WITNESS WHEREOF, Illinois Power Company has caused this New Mortgage
Bond to be signed (manually or by facsimile signature) in its name by an
Authorized Executive Officer, as defined in the Indenture, and its corporate
seal (or a facsimile thereof) to be hereto affixed and attested (manually or by
facsimile signature) by an Authorized Executive Officer, as defined in this
Indenture.
Dated ________________, _______ ILLINOIS POWER COMPANY,
By__________________________________
Authorized Executive Officer
ATTEST:
__________________________________
Authorized Executive Officer
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture dated as of November 1, 1992 and Supplemental
Indenture dated as of ______________, _______.
HARRIS TRUST AND SAVINGS BANK,
Trustee,
By__________________________________
Authorized Signatory
[FORM OF REVERSE OF BOND]
This New Mortgage Bond of the _______ Series is one of a duly
authorized issue of Bonds of the Company (the "Bonds") in unlimited aggregate
principal amount, of the series hereinafter specified, all issued and to be
issued under and equally secured by a General Mortgage Indenture and Deed of
Trust (the "Indenture"), dated as of November 1, 1992, executed by the Company
to Harris Trust and Savings Bank (the "Trustee"), as Trustee, to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the properties mortgaged and pledged, the nature and extent of
the security, the rights of registered owners of the Bonds and of the Trustee in
respect thereof, and the terms and conditions upon which the Bonds are, and are
to be, secured. The Bonds may be issued in series, for various principal sums,
may mature at different
5
<PAGE> 6
times, may bear interest at different rates and may otherwise vary as provided
in the Indenture. This New Mortgage Bond of the _______ Series is one of a
series designated as the "New Mortgage Bonds, ______% Series Due ________" (the
"New Mortgage Bonds of the ________ Series") of the Company, unlimited in
aggregate principal amount, issued under and secured by the Indenture and
described in the supplemental indenture dated as of ____________, _______ (the
"Supplemental Indenture dated as of __________, _______"), between the Company
and the Trustee, supplemental to the Indenture.
The New Mortgage Bonds of the ________ Series are not subject to
redemption prior to maturity.
In case an Event of Default, as defined in the Indenture, shall occur,
the principal of all the New Mortgage Bonds of the ________ Series at any such
time outstanding under the Indenture may be declared or may become due and
payable, upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may be rescinded
under certain circumstances.
ARTICLE II.
ISSUE OF NEW MORTGAGE BONDS OF THE _____ SERIES.
SECTION 1. The Company hereby exercises the right to obtain the
authentication of $___________ principal amount of Bonds pursuant to the terms
of Section 4.02 of the Indenture.
All such Bonds shall be New Mortgage Bonds of the _____ Series.
SECTION 2. Such New Mortgage Bonds of the _____ Series may be
authenticated and delivered prior to the filing for recordation of this
Supplemental Indenture.
ARTICLE III.
REDEMPTION.
New Mortgage Bonds of the _____ Series [are] [are not] subject to
redemption prior to maturity [as follows].
ARTICLE IV.
THE TRUSTEE
The Trustee hereby accepts the trusts hereby declared and provided, and
agrees to perform the same upon the terms and conditions in the Indenture set
forth and upon the following terms and conditions:
6
<PAGE> 7
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and
condition contained in Article Eleven of the Indenture shall apply to
this Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations and
modifications thereof as may be appropriate to make the same conform to
this Supplemental Indenture.
ARTICLE V.
MISCELLANEOUS PROVISIONS.
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, Illinois Power Company has caused this Indenture to
be executed on its behalf by an Authorized Executive Officer as defined in the
Indenture, and its corporate seal to be hereto affixed and said seal and this
Indenture to be attested by an Authorized Executive Officer as defined in the
Indenture; and said Harris Trust and Savings Bank, in evidence of its acceptance
of the trust hereby created, has caused this Indenture to be executed on its
behalf by its President or one of its Vice Presidents and its corporate seal to
be hereto affixed and said seal and this Indenture to be attested by its
Secretary or one of its Assistant Secretaries; all as of the _____ day of
__________, _______.
ILLINOIS POWER COMPANY
By__________________________________
(CORPORATE SEAL) [President/Vice President]
ATTEST:
__________________________________
[Secretary/Assistant Secretary]
HARRIS TRUST AND SAVINGS BANK, Trustee
By__________________________________
(CORPORATE SEAL) [President/Vice President]
7
<PAGE> 8
ATTEST:
__________________________________
[Secretary/Assistant Secretary]
8
<PAGE> 9
STATE OF ILLINOIS )
) SS.:
COUNTY OF __________ )
BE IT REMEMBERED, that on this _____ day of ____________, _______,
before me, the undersigned ____________, a Notary Public within and for the
County and State aforesaid, personally came _____________________________ and
_________________________ of Illinois Power Company, a corporation duly
organized, incorporated and existing under the laws of the State of Illinois,
who are personally known to me to be such officers, and who are personally known
to me to be the same persons who executed as such officers the within instrument
of writing, and such persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary act as such
_________________ and _____________, respectively, and as the free and voluntary
act of said Illinois Power Company for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
__________________________________________________
Notary Public, ________ County, Illinois
My Commission Expires _______________.
(NOTARIAL SEAL)
STATE OF ILLINOIS )
)
COUNTY OF ______ ) SS.:
BE IT REMEMBERED, that on this ____ day of _________, ______, before
me, the undersigned ________________, a Notary Public within and for the County
and State aforesaid, personally came _________________________ and
___________________________, of Harris Trust and Savings Bank, a corporation
duly organized, incorporated and existing under the laws of the State of
Illinois, who are personally known to me to be the same persons who executed as
such officers the within instrument of writing, and such persons duly
acknowledged that they signed, sealed and delivered the said instrument as their
free and voluntary act as such ______________ and ________________,
respectively, and as the free and voluntary act of said Harris Trust and Savings
Bank for the uses and purposes therein set forth.
9
<PAGE> 10
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year last above written.
__________________________________________________
Notary Public, __________ County, Illinois
My Commission Expires ____________.
(NOTARIAL SEAL)
Return To: This Instrument Was Prepared By:
ILLINOIS POWER COMPANY Schiff Hardin & Waite
Attention: ________________ 7200 Sears Tower
500 S. 27th Street Chicago, IL 60606
Decatur, IL 62525
10
<PAGE> 1
EXHIBIT 4.41
(Note Form)
[Form of Face of Security]
No.___________ $______________
ILLINOIS POWER COMPANY
(Incorporated Under the Laws of the State of Illinois)
_____% Note Due _____
Illinois Power Company, a corporation organized and existing under the
laws of the State of Illinois (hereinafter called the "Company," which term
shall include any successor corporation as defined in the Indenture hereinafter
referred to) for value received hereby promises to pay to
_______________________ or registered assigns, the principal sum of
_______________________ Dollars ($___________) on __________________.
Interest Payment Dates:_____________________
Record Dates:_______________________
See the reverse side hereof for additional provisions, including
certain definitions.
In Witness Whereof, Illinois Power Company has caused this Note to be
signed (manually or by facsimile signature) in its name by its President or any
Vice President, and its corporate seal (or a facsimile thereof) to be hereto
affixed and attested (manually or by facsimile signature) by its Secretary or an
Assistant Secretary.
Dated: ______________, _____
Authenticated: ______________, _____
THE CHASE MANHATTAN BANK ILLINOIS POWER COMPANY
as Trustee
By _______________________________ By _________________________
Authorized Officer Its ____________________
or (SEAL)
___________________________________ By _________________________
as Authenticating Agent Its
By ________________________________
Authorized Officer
<PAGE> 2
[Form of Reverse of Security]
ILLINOIS POWER COMPANY
______% Note Due _____
1. Interest. Illinois Power Company, an Illinois corporation (the
"Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay
interest semiannually on _______________ and _______________ of each
year. Interest on the Securities (as hereinafter defined) will accrue
from the most recent date to which interest has been paid or, if no
interest has been paid or duly provided for, from ________________.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered holders
of Securities at the close of business on the ___________ or
____________ next preceding the interest payment date even though
Securities are cancelled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying
Agent at a Place of Payment to collect principal payments. The Company
will pay principal (and premium, if any) and interest in money of the
United States that at the time of payment is legal tender for payment
of public and private debts. However, the Company may pay principal
(and premium, if any) and interest by its check payable in such money.
The Company may mail an interest check to a holder's registered
address.
3. Paying Agent, Registrar, Place of Payment. The Company maintains an
office or agency in the Borough of Manhattan, in the City of New York,
New York where the Securities may be presented or surrendered for
payment, registration of transfer or exchange and where notices and
demands with respect to the Securities may be made. Initially, The
Chase Manhattan Bank (the "Trustee"), ______________________, New York,
New York _______, will act as Paying Agent and Registrar and the Place
of Payment is the office of the Trustee set forth above, Attention:
__________________. The Company may appoint Co-Paying Agents or
Co-Registrars and change any Paying Agent, Registrar, Place of Payment
or Co-Paying Agent or Co-Registrar without notice. The Company may act
as Paying Agent, Registrar or Co-Registrar.
4. Indenture. This Security is one of a duly authorized issue of
debentures, notes or other evidences of indebtedness of the Company
(hereinafter called the "Debt Securities") of the series hereinafter
specified, all issued or to be issued under and pursuant to an
indenture dated as of July 15, 1986 (hereinafter called the
"Indenture"), between the Company and the Trustee to which Indenture
and all indentures supplemental thereto (including those provisions of
the Trust Indenture Act of 1939 made a part thereof) reference is
hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debt Securities. The Debt Securities may
be issued in one or more series, which different series may be issued
in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to different
sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in
the Indenture provided. This Security is one of a series designated as
the ___________ Notes Due _________ of the Company (herein called the
"Securities"), limited in aggregate principal amount to $__________
(except for Securities issued in substitution for destroyed, lost or
stolen Securities).
2
<PAGE> 3
The Securities are unsecured general obligations of the Company.
5. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $__________ and whole
multiples of $___________ . The transfer of Securities may be
registered and Securities may be exchanged as provided in the
Indenture. The Registrar may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. [The
Registrar need not exchange or register the transfer of any Security or
portion of a Security selected for redemption. Also, it need not
exchange or register the transfer of any Securities for a period of 15
days before a selection of Securities to be redeemed. ]
6. Persons Deemed Owners. The registered holder of a Security may be
treated as its owner for all purposes.
7. Amendments and Waivers. Subject to certain exceptions, the Indenture
may be amended with the consent of the holders of at least a majority
in aggregate principal amount of the Securities together with the
consent of the holders of at least a majority in aggregate principal
amount of each other series of Debt Securities which are affected by
the amendment. Subject to certain exceptions, the Securities may be
amended with the consent of the holders of at least a majority in
aggregate principal amount of the Securities and any existing default
may be waived with the consent of the holders of a majority in
aggregate principal amount of the Securities. Without the consent of
any Securityholder, the Indenture or the Securities may be amended to
cure any ambiguity, defect or inconsistency, to provide for assumption
of Company obligations to Securityholders or to make any change that
does not adversely affect the rights of any Securityholder.
8. Defaults and Remedies. An Event of Default is: (a) default for 30
days in payment of interest on the Securities; (b) default for 3
Business Days in payment of principal (and premium, if any) on these
Securities; (c) failure by the Company for 60 days after notice to it
to comply with any of its other agreements in the Indenture or the
Securities; and (d) certain events of bankruptcy or insolvency. If an
Event of Default occurs and is continuing, the Trustee or the holders
of at least 33% in aggregate principal amount of the Securities may
declare all the Securities to be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before tit enforces the Indenture or the Securities.
Subject to certain limitations, holders of a majority in aggregate
principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in
payment of principal (and premium, if any) or interest) if it
determines that withholding notice is in their interests. The Company
must furnish an annual compliance statement to the Trustee.
9. Trustee Dealings with Company. The Chase Manhattan Bank, the Trustee
under the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or
its affiliates, and may otherwise deal with the Company or its
affiliates, as if it were not Trustee.
10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for
any obligations of the Company under the Securities or
3
<PAGE> 4
the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
11. Authentication. This Security shall not be valid or obligatory for
any purpose or be entitled to any benefit under the Indenture unless
the Certificate of Authorization hereon has been executed by the
Trustee or an authenticating agent by the manual signature of the
Trustee or an authenticating agent.
12. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right
of survivorship and not as tenants in common), CUST (=Custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture. Requests may be made to: Illinois Power
Company, Attention: Secretary, 500 South 27th Street, Decatur, Illinois 62525.
4
<PAGE> 1
EXHIBIT 4.42
(Debenture with
Sinking Fund Form)
[Form of Face of Security]
No._____________ $____________
ILLINOIS POWER COMPANY
(Incorporated Under the Laws of the State of Illinois)
_____% Debenture Due ___________
Illinois Power Company, a corporation organized and existing under the
laws of the State of Illinois (hereinafter called the "Company", which term
shall include any successor corporation as defined in the Indenture hereinafter
referred to) for value received, hereby promises to pay to ________or registered
assigns, the principal sum of __________ Dollars ($___________) on ___________.
Interest Payment Dates: ______________________
Record Dates:___________________
See the reverse side hereof for additional provisions, including
certain definitions.
In Witness Whereof, Illinois Power Company has caused this Security to
be signed (manually or by facsimile signature) in its name by its President or
any Vice President, and corporate seal (or a facsimile thereof) to be hereto
affixed and attested (manually or by facsimile signature) by its Secretary or an
Assistant Secretary.
Dated: ______________, _____
Authenticated: ______________, _____
THE CHASE MANHATTAN BANK ILLINOIS POWER COMPANY
as Trustee
By _______________________________ By _________________________
Authorized Officer Its ____________________
or (SEAL)
___________________________________ By _________________________
as Authenticating Agent Its
By ________________________________
Authorized Officer
<PAGE> 2
[Form of Reverse of Security]
ILLINOIS POWER COMPANY
______% Debenture Due ____________
1. Interest. Illinois Power Company, an Illinois corporation
(the "Company"), promises to pay interest on the principal amount of
this Security at the rate per annum shown above. The Company will pay
interest semiannually on ____________ and _________ of each year.
Interest on the Securities (as hereinafter defined) will accrue from
the most recent (date to which interest has been paid or, if no
interest has been paid, from ________________.
2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the persons who are
registered holders of Securities at the close of business on the
_____________ or _______________ next preceding the interest payment
date even though Securities are cancelled after the record date and on
or before the interest payment date. Holders must surrender Securities
to a Paying Agent at a Place of Payment to collect principal payments.
The Company will pay principal (and premium, if any) and interest in
money of the United States that at the time of payment is legal tender
for payment of public and private debts. However, the Company may pay
principal (and premium, if any) and interest by its check payable in
such to collect principal payments. The Company will pay principal (and
premium. if any) and interest in money of the United States that at the
time of payment is legal tender for payment of public and private
debts. However. the Company may pay principal (and premium; if any) and
interest by its check payable in such money. The Company may mail an
interest check to a holder's registered address.
3. Paying Agent, Registrar, Place of Payment. The Company
maintains an office or agency in the Borough of Manhattan in the City
of New York, New York where the Securities may be presented or
surrendered for payment, registration of transfer or exchange and where
notices and demands with respect to the Securities may be made.
Initially, The Chase Manhattan Bank (the "Trustee"), _______________,
New York, New York ______, will act as Paying Agent and Registrar and
the Place of Payment is the office of the Trustee set forth above,
Attention: ________________. The Company may appoint Co-Paying Agents
or Co-Registrars and change any Paying Agent, Registrar, Place of
Payment or Co-Paying Agent or Co-Registrar without notice. The Company
may act as Paying Agent, Registrar or Co-Registrar.
4. Indenture. This Security is one of a duly authorized issue
of debentures, notes or other evidences of indebtedness of the Company
(hereinafter called the "Debt Securities") of the series hereinafter
specified, all issued or to be issued under and pursuant to an
indenture dated as of July 15, 1986 (herein called the "Indenture"),
between the Company and the Trustee to which Indenture and all
indentures supplemental thereto (including those provisions of the
Trust Indenture Act of 1939 made a part thereof) reference is hereby
made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debt Securities. The Debt Securities may
be issued in one or more series, which different series may be issued
in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to
different redemption
2
<PAGE> 3
provisions (if any), may be subject to different sinking, purchase or
analogous funds (if any), may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture provided.
This Security is one of a series designated as the _____% Debentures
Due ______________ of the Company (herein called the "Securities"),
limited in aggregate principal amount to $___________ (except for
Securities issued in substitution for destroyed, lost or stolen
Securities). The Securities are unsecured general obligations of the
Company.
5. [Optional Redemption. The Company may redeem all the
Securities at any time or some of them from time to time at the
following redemption prices (expressed in percentages of principal
amount), plus accrued interest to the redemption date:
YEAR PERCENTAGE YEAR PERCENTAGE
_______ _________ _______ __________
_______ _________ _______ __________
_______ _________ _______ __________
_______ _________ _______ __________
_______ _________ _______ __________
However, the Company may not so redeem Securities before ____________
directly or indirectly from or in anticipation of money borrowed by or
for the account of the Company or a subsidiary at an interest cost of
less than ______% per annum.]
6. [Mandatory Redemption. (a) The Company will redeem $_______
principal amount of Securities on ___________ and on each _______
thereafter through _________ at a redemption price of 100% of principal
amount, plus accrued interest to the redemption date. As and for a
sinking fund for the retirement of such Securities, the Company will,
until all the Securities are paid or payment thereof provided for,
deposit with the Trustee, prior to _______ in each of the years _______
to _________, inclusive an amount in cash sufficient to pay the
redemption price of the Securities to be redeemed in such year as
provided above in this subparagraph (a), less the amount of any credit
against such payment received by the Company under the following
subparagraph. Each such sinking fund payment shall be applied to the
redemption of Securities on such __________ as herein provided.
(b) The Company may deliver Securities theretofore acquired by
the Company or apply Securities previously redeemed (other than any
Securities previously redeemed through the operation of the sinking
fund) in satisfaction of all or any part of any sinking fund payment
required to be made pursuant to the preceding subparagraph; provided
that such Securities shall not have been theretofore used for the
purpose of any such credit. Each such Security shall be credited for
such purpose by the Trustee at the redemption price set forth in the
preceding subparagraph for redemption through the operation of the
sinking fund and the amount of such sinking fund payment shall be
reduced accordingly.
(c) If in any year commencing with the year __________ to and
including the year ____________ the Company shall elect to satisfy all
or any part of the next ensuing sinking fund payment by crediting
Securities pursuant to the preceding subparagraph, then on or before
_______________ in such year the Company will deliver to the Trustee an
Officers' Certificate specifying the portions of the next ensuing
sinking fund payment which are to be satisfied,
3
<PAGE> 4
respectively, by payment of cash, by delivering Securities theretofore
acquired and by application of previously redeemed Securities, and will
deliver to the Trustee any Securities to be so delivered. In case of
the failure, on or before __________ in any such year, of the Company
to give such notice and to deliver any such Securities, the next
ensuing sinking fund obligation shall be paid entirely in cash. On or
before ______________ in each such year the Trustee shall select the
Securities to be redeemed upon the next ensuing ________________ in the
manner specified in the Indenture, and shall cause notice of the
redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in the Indenture. Such notice having
been duly given, the redemption of such Securities shall be made on
such _____________ upon the terms and in the manner set forth herein. ]
7. [Additional Optional Redemption. In addition to redemptions
pursuant to paragraph ________, the company may redeem not more than
$__________ principal amount of Securities on _________ and on each
__________ thereafter through _____________ at a redemption price of
100% of aggregate principal amount, plus accrued interest to the
redemption date.]
8. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date
to each holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $_____________ may be redeemed
in part but only in whole multiples of $________________. On and after
the redemption date interest ceases to accrue on Securities or portions
of them called for redemption.
9. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $____________ and
whole multiples of $____________. The transfer of Securities may be
registered and Securities may be exchanged as provided in the
Indenture. The Registrar may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Security or
portion of a Security selected for redemption. Also, it need not
exchange or register the transfer of any Securities for a period of 15
days before a selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered holder of a Security
may be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture may be amended with the consent of the holders of at least a
majority in aggregate principal amount of the Securities together with
the consent of the holders of at least a majority in aggregate
principal amount of each other series of Debt Securities which are
affected by the amendment. Subject to certain exceptions, the
Securities may be amended with the consent of the holders of at least a
majority in aggregate principal amount of the Securities and any
existing default may be waived with the consent of the holders of a
majority in aggregate principal amount of the Securities. Without the
consent of any Securityholder, the Indenture or the Securities may be
amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of Company obligations to Securityholders or to make any
change that does not adversely affect the rights of any Securityholder.
4
<PAGE> 5
12. Defaults and Remedies. An Event of Default is: (a) default
for 30 days in payment of interest on the Securities; (b) default for 3
Business Days in payment of principal (and premium, if any) on them;
(c) failure by the Company for 60 days alter notice to it to comply
with any of its other agreements in the Indenture or the Securities;
and (d) certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Trustee or the holders of at
least 33% in aggregate principal amount of Securities may declare all
the Securities to be due and payable immediately. Securityholders may
not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before
it enforces the Indenture or the Securities. Subject to certain
limitations, holders of a majority in aggregate principal amount of the
Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any
continuing default (except a default in payment of principal (and
premium, if any) or interest) if it determines that withholding notice
is in their interests. The Company must furnish an annual compliance
statement to the Trustee.
13. Trustee Dealings with Company. The Chase Manhattan Bank,
the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services
for the Company or its affiliates, and may otherwise deal with the
Company or its affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the
Indenture or for any claim made on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A(= Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture. Requests may be made to: Illinois Power
Company, Attention: Secretary, 500 South 27th Street, Decatur, Illinois 62525.
5
<PAGE> 1
Illinois Power Company
May 8, 1998
Page 2
EXHIBIT 5
[Schiff Hardin & Waite Letterhead]
Robert J. Regan
(312) 258-5606
May 8, 1998
Illinois Power Company
500 S. 27th Street
Decatur, Illinois 62525-1805
RE: $200,000,000 PRINCIPAL AMOUNT OF DEBT SECURITIES
Ladies and Gentlemen:
We are acting as counsel for Illinois Power Company (the
"Company") in connection with the registration of an aggregate of $200,000,000
principal amount of debt securities, including the Company's New Mortgage Bonds
(the "New Mortgage Bonds") or other debt securities (the "New Unsecured Debt")
in one or more series. Each series of New Mortgage Bonds would be issued
pursuant to the General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992 between the Company and Harris Trust and Savings Bank, as
Trustee, and a supplemental indenture (the "New Mortgage Supplemental
Indenture"), providing for the issuance of such series (the General Mortgage
Indenture and Deed of Trust and all indentures supplemental thereto are
collectively called the "New Mortgage"). Each series of New Unsecured Debt would
be issued pursuant to the Indenture dated as of July 15, 1986 between the
Company and The Chase Manhattan Bank, as Trustee, and a supplemental indenture
(the "Unsecured Supplemental Indenture"), or a resolution duly adopted by the
Board of Directors of the Company, providing for the issuance of such series.
As counsel for the Company, we have examined such corporate
records of the Company and have made such inquiry and further investigation as
we deemed necessary in order to enable us to render this opinion. We have
assumed the continued exemption of the contemplated transactions from the
requirements of the Public Utility Holding Company Act of 1935, as amended to
date, the genuineness of all signatures, the authenticity of all documents
submitted to us as original counterparts, and the conformity to the originals of
all documents submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation validly organized and existing
under and by virtue of the laws of the State of Illinois.
2. If the debt securities are New Mortgage Bonds, when the
Registration Statement on Form S-3 relating to the New Mortgage Bonds and New
Unsecured Debt (the "Registration Statement") has become effective and providing
no stop order shall have been issued by the Securities and Exchange Commission
relating thereto, and when the Illinois Commerce Commission shall have entered
an order
<PAGE> 2
Illinois Power Company
May 8, 1998
Page 2
authorizing the execution and delivery of a New Mortgage Supplemental Indenture
or New Mortgage Supplemental Indentures and the issuance and sale of one or more
series of New Mortgage Bonds, and said order shall remain in effect, then upon
the execution and delivery of the New Mortgage Supplemental Indenture or New
Mortgage Supplemental Indentures and the issuance and sale of one or more series
of the New Mortgage Bonds pursuant to the due authorization by the Board of
Directors of the Company, such New Mortgage Bonds will be the legal and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the due filing of the New Mortgage Supplemental Indenture or New Mortgage
Supplemental Indentures relating thereto for record in the manner prescribed
with respect to real estate mortgages and the issuance and sale of the New
Mortgage Bonds thereunder before the intervention of any lien to which the New
Mortgage is not expressly made subject, or not expressly excepted by the New
Mortgage, and subject to the reservations, encumbrances and restrictions recited
in the granting clause of, and as provided in, the New Mortgage or referred to
in the Prospectus included in the Registration Statement under the subcaption
"Security" under the caption "Description of the New Mortgage Bonds," and except
as the legality, binding effect or enforceability of the New Mortgage Bonds may
be limited or otherwise affected by (a) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting creditors'
rights generally, or (b) the application of general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
3. If the debt securities are New Unsecured Debt, when the
Registration Statement has become effective and providing no stop order shall
have been issued by the Securities and Exchange Commission relating thereto, and
when the Illinois Commerce Commission shall have entered an order authorizing
the issuance and sale of New Unsecured Debt, and said order shall remain in
effect, then upon the execution and delivery of the Unsecured Supplemental
Indenture or Unsecured Supplemental Indentures (if applicable) and the issuance
and sale of one or more series of the New Unsecured Debt pursuant to the due
authorization by the Board of Directors of the Company, such New Unsecured Debt
will be the legal and binding obligation of the Company enforceable in
accordance with its terms, except as the legality, binding effect or
enforceability of the New Unsecured Debt may be limited or otherwise affected by
(a) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
or similar laws affecting creditors' rights generally, or (b) the application of
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement to be filed with the Securities and Exchange
Commission under the Securities Act of 1933 and the reference to us under the
caption "Legal Opinions" in the Prospectus contained in the Registration
Statement.
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ Robert J. Regan
-------------------------------
RJR: Robert J. Regan
<PAGE> 1
EXHIBIT 12
ILLINOIS POWER COMPANY
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
12 Months Ended
Year Ended December 31, Supplemental ** Dec Supplemental***
-----------------------------------------------------------------------------------------------------------
1992 1993 1993 1994 1995 1996 1997 1997
----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings Available for Fixed Charges:
Net Income (Loss) $122,088 ($56,038) ($56,038) $180,242 $182,713 $228,618 ($65,669) ($65,669)
Add:
Income Taxes:
Current 22,930 25,260 25,260 58,354 98,578 163,873 72,680 72,680
Deferred - Net 63,739 82,057 82,057 71,177 34,137 (16,028) 36,963 36,963
Allocated income taxes (6,632) (12,599) (12,599) (8,285) (8,417) (2,642) (1,446) (1,446)
Investment tax credit - deferred (519) (782) (782) (11,331) (6,894) (7,278) (7,278) (7,278)
Income tax effect of disallowed costs - (70,638) (70,638) - - - - -
Income tax effect of FAS 71 write-off - - - - - - (117,998) (117,998)
Interest on long-term debt 160,795 154,110 154,110 135,115 125,581 118,438 109,595 109,595
Amortization of debt expense and
premium-net, and other interest charges 12,195 17,007 17,007 15,826 29,558 22,325 26,260 26,260
One-third of all rentals (Estimated to be
representative of the interest components) 5,117 5,992 5,992 5,847 5,221 4,346 4,229 4,229
Interest on in-core fuel 8,278 6,174 6,174 7,185 6,716 4,757 3,842 3,842
Disallowed Clinton plant costs - - 270,956 - - - - -
FAS 71 Regulatory Write-Offs - - - - - - - 313,030
--------- --------- -------- -------- -------- --------- -------- --------
Earnings (loss) available for fixed charges $387,991 $150,543 $421,499 $454,130 $467,193 $516,409 $61,178 $374,208
========= ======== ======== ======== ======== ======== ======== ========
Fixed charges:
Interest on long-term debt $160,795 $154,110 $154,110 $135,115 $125,581 $118,438 $109,595 $109,595
Amortization of debt expense and
premium-net, and other interest charges 25,785 27,619 27,619 25,381 38,147 28,957 31,204 31,204
One-third of all rentals (Estimated to be
representative of the interest
component) 5,117 5,992 5,992 5,847 5,221 4,346 4,229 4,229
--------- --------- -------- -------- -------- --------- -------- --------
Total Fixed Charges $191,697 $187,721 $187,721 $166,343 $168,949 $151,741 $145,028 $145,028
========= ======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges 2.02 0.80* 2.25 2.73 2.77 3.40 0.42* 2.58
========= ======== ======== ======== ======== ======== ======== ========
</TABLE>
* Earnings are inadequate to cover fixed charges. Additional earnings
(thousands) for 1993 and 1997 of $63,014 and $83,850, respectively, are
required to attain a one-to-one ratio of Earnings to Fixed Charges.
** Supplemental ratio of earnings to fixed charges presented to exclude
nonrecurring item - Disallowed Clinton plant costs.
*** Supplemental ratio of earnings to fixed charges presented to exclude
write-off related to the discontinued application of SFAS 71, "Accounting
for the Effects of Certain Types of Regulation" for the generation segment
of the business.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 12, 1998, which appears on page a-10 of the 1997 Annual Report
to Shareholders of Illinois Power Company, which is incorporated by reference in
Illinois Power Company's Annual Report on Form 10-K for the year ended December
31, 1997. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
St. Louis, Missouri
May 8, 1998
<PAGE> 1
EXHIBIT 26.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Judith Bartolini, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2527 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
ILLINOIS POWER COMPANY
(Name of obligor)
Illinois 37-0344645
(State of Incorporation) (I.R.S. Employer Identification No.)
500 South 27th Street
Decatur, Illinois 62525-1805
(Address of principal executive offices)
New Mortgage Bonds
(Title of indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164
West Jackson Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of
Governors of the Federal Reserve System,Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise
corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the
Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in
effect which includes the authority of the trustee to commence
business and to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between
Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc.
which constitutes the articles of association of the Trustee as
now in effect and includes the authority of the Trustee to
commence business and to exercise corporate trust powers was filed
in connection with the Registration Statement of Louisville Gas
and Electric Company, File No. 2-44295, and is incorporated herein
by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in
connection with the Registration Statement of Commercial Federal
Corporation, File No. 333-20711, and is incorporated herein by
reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
(included as Exhibit B on page 3 of this statement)
1
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 6th day of May, 1998.
HARRIS TRUST AND SAVINGS BANK
By: /s/ J. Bartolini
-----------------------
J. Bartolini
Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ J. Bartolini
------------------------
J. Bartolini
Vice President
2
<PAGE> 4
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of December 31, 1997, as published in accordance with
a call made by the State Banking Authority and by the Federal Reserve Bank of
the Seventh Reserve District.
[GRAPHIC] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on December 31, 1997, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the Commissioner of
Banks and Trust Companies of the State of Illinois and by the Federal Reserve
Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin ................ $ 1,252,381
Interest bearing balances .......................................... $ 598,062
Securities:
a. Held-to-maturity securities .................................................. $ 0
b. Available-for-sale securities ................................................ $ 3,879,399
Federal funds sold and securities purchased under agreements to resell ........... $ 71,725
Loans and lease financing receivables:
Loans and leases, net of unearned income ........................... $ 8,813,821
LESS: Allowance for loan and lease losses ......................... $ 99,678
-----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b) ............................................... $ 8,714,143
Assets held in trading accounts .................................................. $ 136,538
Premises and fixed assets (including capitalized leases) ......................... $ 221,312
Other real estate owned .......................................................... $ 642
Investments in unconsolidated subsidiaries and associated companies .............. $ 103
Customer's liability to this bank on acceptances outstanding ..................... $ 46,480
Intangible assets ................................................................ $ 279,897
Other assets ..................................................................... $ 653,101
-----------
TOTAL ASSETS ..................................................................... $15,853,783
===========
3
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................................................. $8,926,635
Non-interest bearing....................................................... $3,692,891
Interest bearing........................................................... $5,233,744
In foreign offices, Edge and Agreement subsidiaries, and IBF's...................... $1,763,669
Non-interest bearing....................................................... $22,211
Interest bearing........................................................... $1,741,458
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
Federal funds purchased and securities sold under agreements to repurchase.............. $2,693,600
Trading Liabilities
Other borrowed money:.....................................................................
a. With remaining maturity of one year or less $601,799
b. With remaining maturity of more than one year $0
Bank's liability on acceptances executed and outstanding $46,480
Subordinated notes and debentures......................................................... $325,000
Other liabilities......................................................................... $134,309
-----------
TOTAL LIABILITIES
$14,574,353
===========
EQUITY CAPITAL
Common stock ............................................................................ $100,000
Surplus.................................................................................. $601,026
a. Undivided profits and capital reserves............................................... $573,416
b. Net unrealized holding gains (losses) on available-for-sale securities $4,988
-----------
TOTAL EQUITY CAPITAL $1,279,430
===========
Total liabilities, limited-life preferred stock, and equity capital .............................. $15,853,783
===========
</TABLE>
I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
1/30/98
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD E. TERRY
Directors.
4
<PAGE> 1
EXHIBIT 26.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
ILLINOIS POWER COMPANY
(Exact name of obligor as specified in its charter)
ILLINOIS 37-0344645
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62525
(Address of principal executive offices) (Zip Code)
UNSECURED DEBT SECURITIES
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 29TH DAY of APRIL, 1998.
THE CHASE MANHATTAN BANK
BY /s/ Gregory P. Shea
----------------------------
GREGORY P. SHEA
SENIOR TRUST OFFICER
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................................... $ 12,428
Interest-bearing balances ........................................... 3,428
Securities: .............................................................
Held to maturity
securities................................................................ 2,561
Available for sale securities............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................ 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
-------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized leases).................. 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
TOTAL ASSETS ............................................................. $297,061
=======
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ........................................................ $ 94,524
Noninterest-bearing ........................................................ $ 39,487
Interest-bearing ........................................................... 55,037
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ..................................................... 71,162
Noninterest-bearing .......................................................... $ 3,205
Interest-bearing ........................................................... 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase .......................................................... 43,181
Demand notes issued to the U.S. Treasury ..................................... 1,000
Trading liabilities .......................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .............................. 3,599
With a remaining maturity of more than one year
through three years ........................................................ 253
With a remaining maturity of more than three years ......................... 132
Bank's liability on acceptances executed and outstanding ..................... 1,698
Subordinated notes and debentures ............................................ 5,715
Other liabilities ............................................................ 9,896
TOTAL LIABILITIES ............................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ................................ 0
Common stock ................................................................. 1,211
Surplus (exclude all surplus related to preferred stock) .................... 10,291
Undivided profits and capital reserves ....................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ............................................. ) (22
Cumulative foreign currency translation adjustments .......................... 16
TOTAL EQUITY CAPITAL ......................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ......................................... $ 297,061
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
