UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From to
Commission file number 333-56594.
AMEREN ENERGY GENERATING COMPANY
(Exact name of registrant as specified in its charter)
Illinois 37-1395586
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Chouteau Ave., St. Louis, Missouri 63103
(Address of principal executive offices and Zip Code)
Registrant's telephone number,
including area code: (314) 554-3922
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
------- -------
Shares outstanding of each of registrant's classes of common stock as of
August 9, 2002: Common Stock, no par value, held by AmerenEnergy Development
Company (parent company of Registrant) - 2,000
AMEREN ENERGY GENERATING COMPANY
INDEX
Page
----
PART I. Financial Information
ITEM 1. Financial Statements (Unaudited)
Balance Sheet at June 30, 2002 and December 31, 2001...................................... 2
Statement of Income for the three and six months ended June 30, 2002 and 2001............. 3
Statement of Cash Flows for the six months ended June 30, 2002 and 2001................... 4
Statement of Common Stockholder's Equity for the three and six months ended
June 30, 2002 and 2001.................................................................... 5
Notes to Financial Statements............................................................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..... 13
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk................................ 19
PART II. Other Information
ITEM 1. Legal Proceedings......................................................................... 22
ITEM 5. Other Information......................................................................... 22
ITEM 6. Exhibits and Reports on Form 8-K.......................................................... 22
SIGNATURE.............................................................................................. 24
1
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMEREN ENERGY GENERATING COMPANY
BALANCE SHEET
(Unaudited, in millions, except shares)
June 30, December 31,
2002 2001
------------- ------------
ASSETS:
Property and plant, at original cost:
Electric $ 2,212 $ 2,141
Less accumulated depreciation and amortization 713 689
------------- ------------
1,499 1,452
Construction work in progress 33 60
------------- ------------
Total property and plant, net 1,532 1,512
------------- ------------
Current assets:
Cash and cash equivalents 8 2
Accounts receivable - intercompany 71 121
Accounts receivable 11 8
Notes receivable - intercompany 33 -
Materials and supplies, at average cost -
Fossil fuel 36 40
Other 22 20
Other - 2
-------------- ------------
Total current assets 181 193
-------------- ------------
Deferred income taxes 27 38
Other 32 13
-------------- ------------
Total regulatory assets 59 51
-------------- ------------
Total Assets $ 1,772 $ 1,756
============== ============
CAPITAL AND LIABILITIES:
Capitalization:
Common stock, no par value, 10,000 shares authorized -
2,000 shares outstanding $ - $ -
Other paid-in capital 150 150
Retained earnings 133 120
Accumulated other comprehensive income 3 4
------------- ------------
Total common stockholder's equity 286 274
------------- ------------
Long-term debt 698 424
------------- ------------
Total capitalization 984 698
------------- ------------
Current liabilities:
Current portion of subordinated notes payable - intercompany 50 47
Accounts and wages payable 46 63
Accounts and wages payable - intercompany 30 181
Notes payable - intercompany - 62
Current portion of income tax payable - intercompany 14 18
Taxes payable 16 12
Interest payable 7 6
Interest payable - intercompany 11 6
Other 4 3
------------- ------------
Total current liabilities 178 398
------------- ------------
Subordinated notes payable - intercompany 412 461
Accumulated deferred investment tax credits 16 17
Income tax payable - intercompany 170 177
Other deferred credits and liabilities 12 5
------------- ------------
Total Capital and Liabilities $ 1,772 $ 1,756
============= ============
See Notes to Financial Statements.
2
AMEREN ENERGY GENERATING COMPANY
STATEMENT OF INCOME
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2002 2001 2002 2001
---- ---- ---- ----
OPERATING REVENUES:
Electric - intercompany $ 157 $ 140 $ 314 $ 286
Electric 59 67 163 125
Other - intercompany 3 4 6 7
------------- ------------- ------------- -------------
Total operating revenues 219 211 483 418
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Operations
Fuel and purchased power 123 117 289 231
Other 30 26 58 50
------------- ------------- ------------- -------------
153 143 347 281
Maintenance 17 14 26 23
Depreciation and amortization 17 13 33 24
Other taxes 6 4 12 10
------------- ------------- ------------- -------------
Total operating expenses 193 174 418 338
------------- ------------- ------------- -------------
OPERATING INCOME 26 37 65 80
OTHER INCOME AND (DEDUCTIONS):
Miscellaneous, net -
Miscellaneous income - 1 - 3
Miscellaneous expense - (1) - (1)
------------- ------------- ------------- -------------
Total other income and (deductions) - - - 2
------------- ------------- ------------- -------------
INTEREST CHARGES:
Interest expense - intercompany 12 10 22 21
Interest expense 10 8 18 17
------------- ------------- ------------- -------------
Total interest charges 22 18 40 38
------------- ------------- ------------- -------------
INCOME TAXES 2 7 10 17
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 2 12 15 27
Cumulative effect of change in accounting
principle, net of income taxes - - - (2)
------------- ------------- ------------- -------------
NET INCOME $ 2 $ 12 $ 15 $ 25
============= ============= ============= =============
See Notes to Financial Statements.
3
AMEREN ENERGY GENERATING COMPANY
STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended
June 30,
------------------------
2002 2001
---- ----
Cash Flows From Operating:
Net income $ 15 $ 25
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle - 2
Depreciation and amortization 33 24
Deferred income taxes, net 11 7
Deferred investment tax credits, net (1) (1)
Other (1) (2)
Changes in assets and liabilities:
Accounts receivable (4) 42
Accounts receivable - intercompany 50 (99)
Materials and supplies 2 (21)
Accounts and wages payable (17) 14
Accounts and wages payable - intercompany (11) 136
Taxes payable 4 (1)
Income tax payable-intercompany (11) (8)
Interest payable 1 -
Interest payable - intercompany 5 (1)
Assets, other (16) (8)
Liabilities, other 8 12
-------- ---------
Net cash provided by operating activities 68 121
-------- ---------
Cash Flows From Investing:
Construction expenditures (190) (164)
Intercompany notes receivable - short-term (33) 88
-------- ---------
Net cash used in investing activities (223) (76)
-------- ---------
Cash Flows From Financing:
Dividends on paid-in capital (2) -
Debt issuance costs (3) -
Redemptions:
Intercompany notes payable - long-term (46) (44)
Intercompany notes payable - short-term (62) -
Issuances:
Long-term debt 274 -
-------- ---------
Net cash provided by (used in) financing activities 161 (44)
-------- ---------
Net change in cash and cash equivalents 6 1
Cash and cash equivalents at beginning of year 2 1
-------- ---------
Cash and cash equivalents at end of period $ 8 $ 2
======== =========
Cash paid during the periods:
Interest $ 33 $ 35
Income taxes, net 4 15
See Notes to Financial Statements.
4
AMEREN ENERGY GENERATING COMPANY
STATEMENT OF COMMON STOCKHOLDER'S EQUITY
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
---- ---- ---- ----
Common stock $ - $ - $ - $ -
Other paid-in capital
Beginning balance 150 - 150 -
Change in current period - - - -
----------- ------------ ----------- ----------
150 - 150 -
----------- ------------ ----------- ----------
Retained earnings
Beginning balance 132 57 120 44
Net income 2 12 15 25
Dividends to parent (1) - (2) -
----------- ------------ ----------- ----------
133 69 133 69
----------- ------------ ----------- ----------
Accumulated other comprehensive income
Beginning balance 2 (1) 4 -
Change in current period (see below) 1 (1) (1) (2)
----------- ------------ ----------- ----------
3 (2) 3 (2)
----------- ------------ ----------- ----------
Total common stockholder's equity $ 286 $ 67 $ 286 $ 67
=========== ============ =========== ==========
Comprehensive income, net of taxes
Net income $ 2 $ 12 $ 15 $ 25
Unrealized net gain/(loss) on derivative hedging instruments
(net of income taxes of $-, $(1), $ - and $(1), respectively) 1 (1) - (1)
Reclassification adjustments for gains/(losses) included in net income
(net of income taxes of $ -, $ -, $(1) and $1, respectively) - - (1) 2
Cumulative effect of accounting change, net of income taxes of $(2) - - - (3)
----------- ----------- ----------- ----------
Total comprehensive income, net of taxes $ 3 $ 11 $ 14 $ 23
=========== ============ =========== ==========
See Notes to Financial Statements.
5
AMEREN ENERGY GENERATING COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2002
NOTE 1 - Summary of Significant Accounting Policies
Basis of Presentation
Our financial statements reflect all adjustments (which include normal,
recurring adjustments) necessary, in our opinion, for a fair presentation of the
interim results. These statements should be read in conjunction with the
financial statements and the notes thereto included in our 2001 Annual Report on
Form 10-K.
When we refer to our, we or us, we are referring to AmerenEnergy Generating
Company and in some cases our agents, AmerenEnergy, Inc. (AmerenEnergy) and
AmerenEnergy Fuels and Services Company (Fuels Company). All dollar amounts are
in millions, unless otherwise indicated.
Accounting Changes
In January 2001, we adopted Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities."
The impact of that adoption resulted in a cumulative effect charge of $2 million
after taxes to the income statement, and a cumulative effect adjustment of $3
million after taxes to Accumulated Other Comprehensive Income (OCI), which
reduced common stockholder's equity.
On January 1, 2002 we adopted SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires business
combinations to be accounted for under the purchase method of accounting, which
requires one party in the transaction to be identified as the acquiring
enterprise and for that party to allocate the purchase price to the assets and
liabilities of the acquired enterprise based on fair market value. SFAS 142
requires goodwill and indefinite lived intangible assets recorded in the
financial statements to be tested for impairment at least annually, rather than
amortized over a fixed period, with impairment losses recorded in the income
statement. SFAS 141 and SFAS 142 did not have any effect on our financial
position, results of operations or liquidity upon adoption. See Note 6 -
"CILCORP Acquisition."
In July 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS 143 requires an entity to record a liability and corresponding
asset representing the present value of legal obligations associated with the
retirement of tangible, long-lived assets. SFAS 143 is effective for us on
January 1, 2003. At this time, we are assessing the impact of SFAS 143 on our
financial position, results of operations and liquidity upon adoption.
On January 1, 2002 we adopted SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS 144 addresses the financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." SFAS 144 retains the guidance related to calculating
and recording impairment losses, but adds guidance on the accounting for
discontinued operations, previously accounted for under Accounting Principles
Board Opinion No. 30. We evaluate long-lived assets for impairment when events
or changes in circumstances indicate that the carrying value of such assets may
not be recoverable. The determination of whether impairment has occurred is
based on an estimate of undiscounted cash flows attributable to the assets, as
compared with the carrying value of the assets. If impairment has occurred, the
amount of the impairment recognized is determined by estimating the fair value
of the assets and recording a provision for loss if the carrying value is
greater than the fair value. SFAS 144 did not have any effect on our financial
position, results of operations or liquidity upon adoption.
Historically, our accounting practice was to present all settled energy
purchase or sale contracts within our power risk management program on a gross
basis in Operating Revenues - Electric and in Operating Expenses - Operations -
Fuel and Purchased Power in our income statement. This means that revenues were
recorded for the notional amount of power sale contracts with a corresponding
charge to income for the cost of the energy that has been generated or for the
notional amount of a purchased power contract. In June 2002, the Emerging Issues
Task Force (or EITF) reached a consensus in Issue 02-03, "Accounting for
Contracts Involved in Energy Trading and Risk Management Activities," that
certain energy contracts
6
should be shown on a net basis in the income statement. The consensus on this
issue is applicable to financial statements for periods ending after July 15,
2002, with a requirement to conform prior periods to this presentation. As a
result of the EITF's accounting guidance and other factors that exist within our
industry, beginning with the period ending September 30, 2002, we will change
our accounting practice to present, on a net basis in our income statement, all
contracts within our power risk management program that have been financially
net settled. All prior periods included in our prospective financial statements
will be reclassified to reflect this change in accounting practice. We are still
in the process of evaluating the impact of this change to our income statement,
but our revenues and operating expenses will be reduced in future periods with
no impact on our earnings. See Note 4 - "Derivative Financial Instruments" for
additional information.
Interchange Revenues
Interchange revenues included in Operating Revenues - Electric -
Intercompany and Electric were $67 million for the three months ended June 30,
2002 (2001 - $73 million) and $181 million for the six months ended June 30,
2002 (2001 - $139 million).
Purchased Power
Purchased power included in Operating Expenses, Operations - Fuel and
Purchased Power was $68 million for the three months ended June 30, 2002 (2001 -
$76 million) and $183 million for the six months ended June 30, 2002 (2001 -
$151 million).
NOTE 2 - Rate and Regulatory Matters
Missouri
In order to satisfy its regulatory load requirements for 2001, our
affiliate, Union Electric Company, (known as AmerenUE), purchased, under a one
year contract, 450 megawatts of capacity and energy from another of our
affiliates, AmerenEnergy Marketing Company (Marketing Company) (the 2001
Marketing Company - AmerenUE agreement). Marketing Company acquired the power to
supply AmerenUE from us. This agreement was entered into through a competitive
bidding process and reflected market-based rates. For 2002, AmerenUE, similarly
entered into a one year contract with Marketing Company for the purchase of 200
megawatts of capacity and energy at lower prices than in 2001 (the 2002
Marketing Company - AmerenUE agreement). Marketing Company expects to acquire
the power to supply AmerenUE from us and other sources, which because of the
smaller quantity purchased and the lower prices, will result in lower revenues
to us.
In May 2001, the Missouri Public Service Commission (MoPSC) filed a
complaint with the Securities and Exchange Commission (SEC) relating to the 2001
Marketing Company - AmerenUE agreement. The complaint requested an investigation
into the contractual relationship between us, Marketing Company and AmerenUE in
the context of the 2001 Marketing Company - AmerenUE agreement and requests that
the SEC find that such relationship violates a provision of the Public Utility
Holding Company Act of 1935 (or PUHCA), which requires state utility commission
approval of power sales contracts between an electric utility company and an
affiliated electric wholesale generator, like us. We believe that the MoPSC's
approval of the power sales agreement under PUHCA is not required because we are
not a party to the agreement. As a remedy, the MoPSC proposes that the SEC
require AmerenUE to contract directly with us and submit such contract to the
MoPSC for review. On May 9, 2002, the MoPSC filed a similar complaint with the
SEC relating to the 2002 Marketing Company - AmerenUE agreement. The SEC is
investigating these matters. Also, with respect to the 2002 Marketing Company -
AmerenUE agreement, on May 31, 2002, the Federal Energy Regulatory Commission
(FERC) accepted the agreement, subject to refund, and scheduled the matter for
hearing to assess the appropriateness of the rates charged in January 2003. At
this time, management is unable to predict the outcome of these proceedings or
the ultimate impact on our future financial position, results of operations or
liquidity.
Illinois
In December 1997, the Electric Service Customer Choice and Rate Relief Law
of 1997 (the Illinois Law) was enacted providing for electric utility
restructuring in Illinois. This legislation introduced competition into the
retail supply of electric energy in Illinois. Illinois residential customers
were offered
7
choice in suppliers on May 1, 2002. Industrial and commercial customers were
previously offered this choice.
The Illinois Law contained a provision freezing retail bundled electric
rates through January 1, 2005. In 2002, legislation was passed and signed into
law that extended the rate freeze period through January 1, 2007. The offering
of choice to the industrial and commercial customers of our affiliate, Central
Illinois Public Service Company (known as AmerenCIPS), which is indirectly
supplied power by us through Marketing Co., has not had a material adverse
effect on our business and we do not expect the offering of choice to
AmerenCIPS' residential customers, or the extension of the rate freeze, to have
a material adverse effect on our business.
Federal - Regional Transmission Organizations
In December 1999, the FERC issued Order 2000 requiring all utilities,
subject to FERC jurisdiction, to state their intentions for joining a regional
transmission organization (RTO). RTOs are independent organizations that will
functionally control the transmission assets of utilities in order to improve
the wholesale power market. Since January 2001, AmerenUE and AmerenCIPS, along
with several other utilities, were seeking approval from the FERC to participate
in an RTO known as the Alliance RTO. The Ameren companies had previously been a
member of the Midwest Independent System Operator (MISO) and recorded a pretax
charge to earnings in 2000 of $25 million ($15 million after taxes) for an exit
fee and other costs when it left that organization. Ameren felt the for-profit
Alliance RTO business model was superior to the non-for-profit MISO business
model and provided it with a more equitable return on our transmission assets.
In late 2001, the FERC issued an order that rejected the formation of the
Alliance RTO and ordered the Alliance RTO companies and the MISO to discuss how
the Alliance RTO business model could be accommodated within the Midwest ISO. On
April 25, 2002, after the Alliance RTO and MISO failed to reach an agreement,
and after a series of filings by the two parties with the FERC, the FERC issued
a declaratory order setting forth the division of responsibilities between the
MISO and National Grid (the managing member of the transmission company formed
by the Alliance companies) and approved the rate design and the revenue
distribution methodology proposed by the Alliance companies. However, the FERC
denied a request by the Alliance companies and National Grid to purchase certain
services from the MISO at incremental cost rather than MISO's full tariff rates.
The FERC also ordered the MISO to return the exit fee paid by Ameren to leave
the MISO, provided Ameren returns to the MISO and agrees to pay its proportional
share of the startup and ongoing operational expenses of the MISO. Moreover, the
FERC required the Alliance companies to select the RTO in which they will
participate within thirty days of the order.
Since the April 2002 FERC order, our affiliates, AmerenUE and AmerenCIPS
made filings with the FERC indicating that they would return to the MISO and
that membership would be through a new independent transmission company,
GridAmerica LLC, that was agreed to be formed by AmerenUE and AmerenCIPS, and
subsidiaries of FirstEnergy Corporation and NiSource Inc. Pending FERC approval
of the definitive agreements establishing GridAmerica, National Grid will serve
as the managing member of GridAmerica and will manage the transmission assets of
the three companies and participate in the MISO on behalf of GridAmerica. Other
Alliance RTO companies announced their intentions to join the Pennsylvania -
Jersey - Maryland (PJM) RTO. On July 25, 2002, the Ameren companies filed a
motion with the FERC requesting that it condition the approval of the choices of
other Illinois utilities to join the PJM RTO on MISO and PJM entering into an
agreement addressing important reliability and rate-barrier issues. On July 31,
2002, the FERC issued an order accepting the formation of GridAmerica as an
independent transmission company under the MISO subject to further compliance
filings ordered by the FERC. The FERC also issued an order accepting the
elections made by the other Illinois utilities to join the PJM RTO on the
condition PJM and MISO immediately begin a process to address the reliability
and rate-barrier issues raised by Ameren companies and other market participants
in previous filings.
We do not own transmission assets. However, we pay AmerenUE and AmerenCIPS
for the use of their transmission lines to transmit power. Until the reliability
and rate-barrier issues are resolved as ordered by the FERC, and the tariffs and
other material terms of Ameren's participation in GridAmerica, and GridAmerica's
participation in the MISO, are finalized and approved by the FERC, Ameren is
unable to predict whether the Ameren companies will in fact become a member of
GridAmerica or MISO, or the impact that on-going RTO developments will have on
the financial condition, results of operation or liquidity of it or its
subsidiaries, including us.
8
NOTE 3 - Related Party Transactions
We have transactions in the normal course of business with Ameren
Corporation, our parent company, and certain of its subsidiaries. These
transactions primarily consist of power purchases and sales, services received
or rendered, borrowings and lendings. The transactions with these affiliates are
reported as intercompany transactions.
Electric Power Supply Agreements
An electric power supply agreement was entered into between us and
Marketing Co. (Genco-Marketing Co. agreement). Marketing Co. entered into an
electric power supply agreement with AmerenCIPS (Marketing Co.-CIPS agreement)
to supply sufficient power to meet AmerenCIPS' native load requirements. A
portion of the capacity and energy supplied by us to Marketing Co. is resold to
AmerenCIPS for resale. The portion of these sales to AmerenCIPS that is used for
resale to native load customers is at rates (which approximate the historical
regulated rates for generation) specified by the Illinois Commerce Commission
(ICC). The portion of the sales to AmerenCIPS resold to those retail customers
allowed choice of an electric supplier under state law is at fixed market-based
prices. Other capacity and energy purchased by Marketing Co. from us will be
used by Marketing Co. to serve its obligations under various long-term wholesale
contracts it assumed from AmerenCIPS and other long-term wholesale and retail
contracts Marketing Co. has, or will, enter into. The Marketing Co.-CIPS
agreement expires December 31, 2004 and the Genco-Marketing Co. agreement may be
terminated upon at least one year's notice given by either party, but in no
event can it be terminated prior to December 31, 2004. As a result of the
extension through January 1, 2007 of the electric rate freeze related to the
Illinois Law, AmerenCIPS expects to seek to renew or extend the Marketing
Co.-CIPS agreement through the same period. A renewal or extension of the
Marketing Co.-CIPS agreement will depend on compliance with regulatory
requirements in effect at the time, and we cannot predict whether AmerenCIPS
will be successful in securing a renewal or extension of this agreement.
Electric revenues derived under the Genco-Marketing Co. agreement were $149
million for the three months ended June 30, 2002 (2001 - $134 million) and $296
million for the six months ended June 30, 2002 (2001 - $272 million). No other
customer represents greater than 10% of our revenues.
Joint Dispatch Agreement
We jointly dispatch generation with AmerenUE under an amended joint
dispatch agreement. Under the amended agreement, both of us are entitled to
serve our load requirements from our own least-cost generation first, and then
allow the other company access to any available excess generation. All of our
sales to Marketing Co. are considered load requirements. Sales made by us to
other customers through AmerenEnergy, as our agent, are not considered load
requirements. Electric revenues derived through sales of available generation
through AmerenEnergy were $59 million for the three months ended June 30, 2002
(2001 - $67 million) and $163 million for the six months ended June 30, 2002
(2001 - $125 million). Electric revenues derived through sales of available
generation to AmerenUE through the amended joint dispatch agreement were $8
million for the three months ended June 30, 2002 (2001 - $6 million) and $18
million for the six months ended June 30, 2002 (2001 - $14 million).
Intercompany power purchases from the amended joint dispatch agreement
between AmerenUE and us and other agreements for the three and six months ended
June 30, 2002 were $15 million and $35 million compared to $13 million and $41
million in the prior year comparable periods.
Ameren Services and AmerenEnergy Charges
Support services provided by our affiliates, Ameren Services Company and
AmerenEnergy, including wages, employee benefits, professional services and
other expenses are based on actual costs incurred. Other operating expenses
provided by Ameren Services and AmerenEnergy, for the three and six months ended
June 30, 2002, were $9 million and $18 million compared to $7 million and $17
million for the comparable prior year periods.
9
Other
Our gross margins from power supply contracts with affiliated companies
continue to be the principal source of cash from operating activities. We plan
to utilize short-term debt to support normal operations and other temporary
capital requirements. We have the ability to borrow up to $500 million from
Ameren through a non-utility money pool agreement. However, the total amount
available to us at any time is reduced by the amount of borrowings from Ameren
by our affiliates and is increased to the extent other Ameren non-regulated
companies advance surplus funds to the non-utility money pool or external
borrowing sources are used by Ameren to increase the available amounts. At June
30, 2002, $400 million was available through the non-utility money pool not
including additional funds available through invested cash balances at Ameren
Corporation and uncommitted bank lines. The non-utility money pool was
established to coordinate and provide for short-term cash and working capital
requirements of Ameren's non-regulated activities and is administered by Ameren
Services. Interest is calculated at varying rates of interest depending on the
composition of internal and external funds in the non-utility money pool. The
average interest rate for borrowings from the non-utility money pool was 8.34%
in the second quarter of 2002 (2001 - 4.44%) and 6.33% for the six months ended
June 30, 2002 (2001 - 5.20%). We incurred approximately $4 million in net
intercompany interest expense associated with outstanding borrowings from the
non-utility money pool in the second quarter of 2002 and $5 million for the six
months ended June 30, 2002. We received approximately $1 million in intercompany
interest income associated with outstanding loans to the non-utility money pool
in the second quarter of 2001 compared to $3 million for the six months ended
June 30, 2001. At June 30, 2002, we had loaned $33 million to the non-utility
money pool and had no outstanding borrowings.
NOTE 4 - Derivative Financial Instruments
Derivative Financial Instruments
We, which includes AmerenEnergy acting as agent on our behalf, utilize
derivatives principally to manage the risk of changes in market prices for fuel,
electricity and emission credits. Price fluctuations in fuel and electricity
cause:
o an unrealized appreciation or depreciation of our firm commitments to
purchase or sell when purchase or sales prices under the firm
commitment are compared with current commodity prices;
o market values of fuel or purchased power to differ from the cost of
those commodities in inventory or under the firm commitment; and
o actual cash outlays for the purchase of these commodities, in certain
circumstances, to differ from anticipated cash outlays.
The derivatives that we use to hedge these risks are dictated by risk
management policies and include forward contracts, futures contracts, options
and swaps. We continually assess our supply and delivery commitment positions
against forward market prices and internal forecasts of forward prices. We
actively manage our exposure to power price risk through our power risk
management program carried out under our risk management guidelines to modify
our exposure to market, credit and operational risk by entering into various
offsetting transactions. In general, we believe these transactions serve to
reduce our price risk.
In addition, we may purchase additional megawatts, again within risk
management guidelines, in anticipation of future price changes. Certain
derivative contracts we enter into on a regular basis as part of our power risk
management program do not qualify for hedge accounting or the normal purchase,
normal sale exception under SFAS 133. Accordingly, these contracts are recorded
at fair value with changes in the fair value charged or credited to the income
statement in the period in which the change occurred. Contracts we enter into as
part of our power risk management program may be settled by either physical
delivery or financially settled with the counterparty. See Note 1 - "Summary of
Significant Accounting Policies."
As of June 30, 2002, we have recorded the fair value of derivative
financial instrument assets of $8 million in Other Assets and the fair value of
derivative financial instrument liabilities of $8 million in Other Deferred
Credits and Liabilities.
10
Cash Flow Hedges
We routinely enter into forward purchase and sales contracts for
electricity based on forecasted levels of economic generation in excess of load
requirements. The relative balance between load and economic generation varies
throughout the year. The contracts typically cover a period of twelve months or
less. The purpose of these contracts is to hedge against possible price
fluctuations in the spot market for the period covered under the contracts. We
formally document all relationships between hedging instruments and hedged
items, as well as our risk management objective and strategy for undertaking
various hedge transactions. The mark-to-market value of cash flow hedges will
continue to fluctuate with changes in market prices up to contract expiration.
The pretax net gain or loss on power forward derivative instruments, which
represented the impact of discontinued cash flow hedges, the ineffective portion
of cash flow hedges, as well as the reversal of amounts previously recorded in
OCI due to transactions going to delivery or settlement, was approximately a $1
million loss for the three months ended June 30, 2002 and approximately a $1
million gain for the six months ended June 30, 2002. For the three and six
months ended June 30, 2001, the above related amounts were approximately a $1
million loss and a $3 million gain, respectively.
As of June 30, 2002, we had hedged a portion of the price exposure related
to the relative balance between load and economic generation for the upcoming
twelve month period. The mark-to-market value accumulated in OCI for the
effective portion of hedges of electricity price exposure is a net loss of
approximately $2 million ($1 million, net of taxes).
As of June 30, 2002, a gain of approximately $6 million ($3 million, net of
taxes) associated with interest rate swaps was included in OCI. The swaps were a
partial hedge of the interest rate on debt that was issued in June 2002. The
swaps covered the first ten years of debt that has a 30-year maturity and the
gain in OCI is being amortized over a ten-year period beginning in June 2002.
NOTE 5 - Debt
In June 2002, we issued $275 million of 7.95% Senior Notes due June 1, 2032
in a Rule 144A private placement. Interest is payable semi-annually on June 1
and December 1 of each year, beginning December 1, 2002. We received net
proceeds of $271 million, after debt discount and underwriters' fees, that were
used to reduce short-term borrowings and for general corporate purposes. The
Senior Notes limit our ability to, among other things, sell assets, create
liens, and engage in mergers, consolidations or similar transactions. In
addition, the Senior Notes include transitional covenants that limit our ability
to incur indebtedness and pay dividends or make certain other restricted
payments. We are currently in compliance with all covenants relating to this
debt as well as to other outstanding debt.
Amortization of debt issuance costs and discounts for the three and six
months ending June 30, 2002 and 2001 of less than $1 million were included in
interest expense in the income statement.
NOTE 6 - CILCORP Acquisition
On April 28, 2002, Ameren entered into an agreement with The AES
Corporation to purchase all of the outstanding stock of CILCORP Inc. CILCORP is
the parent company of Peoria-based Central Illinois Light Company, which
operates as CILCO. Ameren also agreed to acquire AES Medina Valley (No. 4),
L.L.C. which indirectly owns a 40 megawatt, gas-fired electric generation plant.
The total purchase price is approximately $1.4 billion, subject to adjustment
for changes in CILCORP's working capital, and includes the assumption of CILCORP
and AES Medina Valley debt at closing, estimated at approximately $900 million,
with the balance of the purchase price in cash. Ameren expects to finance a
significant portion of the cash component of the purchase price through the
issuance of new common equity.
The purchase will include CILCORP's regulated natural gas and electric
businesses in Illinois serving approximately 205,000 and 200,000 customers,
respectively, of which approximately 150,000 are combination electric and gas
customers. In addition, the purchase includes approximately 1,200 megawatts of
largely coal-fired generating capacity, most of which is expected to be
non-regulated by closing. Ameren currently does not plan to transfer any portion
of this non-regulated generating capacity to us.
11
Upon completion of the acquisition, expected by March 2003, CILCO will
become an Ameren subsidiary, but will remain a separate utility company,
operating as AmerenCILCO. The transaction is subject to the approval of the
Illinois Commerce Commission, the SEC, the FERC, the expiration of the waiting
period under the Hart-Scott-Rodino Act, the Federal Communication's Commission
and other customary closing conditions.
For the period ended December 31, 2001, CILCORP had revenues of $815
million, operating income of $126 million, and net income from continuing
operations of $28 million, and as of December 31, 2001 had total assets of $1.8
billion.
12
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW
AmerenEnergy Generating Company, is an indirect wholly-owned subsidiary of
Ameren Corporation that owns and operates a wholesale electric generation
business in Missouri and Illinois. Much of our business was formerly owned and
operated by our affiliate, Central Illinois Public Service Company, which
operates as AmerenCIPS. We were incorporated in the State of Illinois in March
2000. On May 1, 2000, we acquired from AmerenCIPS at net book value five
coal-fired electric generating stations which we refer to as the coal plants,
all related fuel, supply, transportation, maintenance and labor agreements,
approximately 45% of AmerenCIPS' employees, and other related rights, assets and
liabilities.
Ameren is a holding company registered under the Public Utility Holding
Company Act of 1935 (PUHCA). Its principal business is the generation,
transmission and distribution of electricity, and the distribution of natural
gas to residential, commercial, industrial and wholesale users in the central
United States. In addition to us, its primary subsidiaries are as follows:
o Union Electric Company, which operates a regulated electric
generation, transmission and distribution business, and a regulated
natural gas distribution business in Missouri and Illinois as
AmerenUE.
o AmerenCIPS, which operates a regulated electric and natural gas
distribution business in Illinois.
o AmerenEnergy Resources Company (Resources Company), which consists of
non-regulated operations. Its principal subsidiaries include us,
AmerenEnergy Marketing Company (Marketing Company) which markets power
for periods over one year, AmerenEnergy Fuels and Services Company
(Fuels Company), which procures fuel and natural gas and manages the
related risks for us and our affiliates, and AmerenEnergy Development
Company (Development Company), which, as our parent, develops and
constructs generating facilities for us.
o AmerenEnergy, Inc. (AmerenEnergy), which serves as a power marketing
and risk management agent for us and our affiliates for transactions
of less than one year.
o Ameren Services Company (Ameren Services), which provides shared
support services to us and our affiliates.
You should read the following discussion and analysis in conjunction
with:
o The financial statements and related notes included in this Quarterly
Report on Form 10-Q.
o The audited financial statements and related notes that are included
in our Annual Report on Form 10-K for the period ended December 31,
2001.
o Management's Discussion and Analysis of Financial Condition and
Results of Operations that is included in our Annual Report on Form
10-K for the period ended December 31, 2001.
When we refer to our, we or us, we are referring to AmerenEnergy Generating
Company and in some cases our agents, AmerenEnergy and Fuels Company. All dollar
amounts are in millions, unless otherwise indicated.
Our results of operations and financial position are impacted by many
factors, including both controllable and uncontrollable factors. Weather,
economic conditions, and the actions of key customers or competitors can
significantly impact the demand for our services. Our results are also impacted
by seasonal fluctuations caused by winter heating, and summer cooling, demand.
We principally utilize coal and natural gas in our operations. The prices for
these commodities can fluctuate significantly due to the world economic and
political environment, weather, production levels and many other factors. We
employ various risk management strategies in order to try to reduce our exposure
to commodity risks and other risks inherent in our business. The reliability of
our power plants, and the level of operating and administrative costs and
capital investment are key factors that we seek to control in order to optimize
our results of operations, cash flows and financial position.
RESULTS OF OPERATIONS
Summary
Our net income decreased to $2 million in the second quarter of 2002 from
$12 million in the second quarter of 2001. Net income for the six months ended
June 30, 2002 decreased to $15 million compared to the year-ago earnings of $25
million. The decrease in both periods was primarily due to increases in other
13
operation costs primarily associated with increases in workers' compensation,
pension and healthcare costs coupled with increased costs for efficiency
improvements made at our power plants (second quarter - $2 million; year to date
- - $5 million), increases in depreciation and other taxes associated with
additional combustion turbine generating units added since the second quarter of
2001 (second quarter - $4 million; year to date - $7 million), higher interest
costs associated with borrowing more funds at higher interest rates to finance
operations (second quarter - $2 million; year to date - $1 million). These cost
increases were partially offset by increases in electric margin (second quarter
- - $2 million; year to date - $5 million) due primarily to increases in sales to
new and existing wholesale customers. In the first quarter of 2001 we recorded a
charge of $2 million due to the adoption of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities."
Recent Developments
On April 28, 2002, Ameren entered into an agreement with The AES
Corporation to purchase all of the outstanding stock of CILCORP Inc. CILCORP is
the parent company of Peoria-based Central Illinois Light Company, which
operates as CILCO. Ameren also agreed to acquire AES Medina Valley (No. 4),
L.L.C. which indirectly owns a 40 megawatt, gas-fired electric generation plant.
The total purchase price is approximately $1.4 billion, subject to adjustment
for changes in CILCORP's working capital, and includes the assumption of CILCORP
and AES Medina Valley debt at closing, estimated at approximately $900 million,
with the balance of the purchase price in cash. Ameren expects to finance a
significant portion of the cash component of the purchase price through the
issuance of new common equity.
The purchase will include CILCORP's regulated natural gas and electric
businesses in Illinois serving approximately 205,000 and 200,000 customers,
respectively, of which approximately 150,000 are combination electric and gas
customers. In addition, the purchase includes approximately 1,200 megawatts of
largely coal-fired generating capacity, most of which is expected to be
non-regulated by closing. Ameren currently does not plan to transfer any portion
of this non-regulated generating capacity to us.
Upon completion of the acquisition, expected by March 2003, CILCO will
become an Ameren subsidiary, but will remain a separate utility company,
operating as AmerenCILCO. The transaction is subject to the approval of the
Illinois Commerce Commission, the Securities and Exchange Commission (SEC), the
Federal Energy Regulatory Commission (FERC), the expiration of the waiting
period under the Hart-Scott-Rodino Act, the Federal Communication's Commission
and other customary closing conditions.
For the period ended December 31, 2001, CILCORP had revenues of $815
million, operating income of $126 million, and net income from continuing
operations of $28 million, and as of December 31, 2001 had total assets of $1.8
billion.
In April 2002, as a result of AmerenUE's then pending Missouri electric
earnings complaint case and the CILCORP transaction and related assumption of
debt, credit rating agencies placed Ameren Corporation's debt under review for
possible downgrade or negative credit watch. Standard & Poor's placed the
ratings of AmerenUE and AmerenCIPS debt on negative credit watch and placed the
ratings of our debt on positive credit watch. However, Standard & Poor's stated
they expect the corporate credit ratings of Ameren and its subsidiaries to be in
the "A" rating category following completion of the acquisition. Moody's
Investor Service stated they envisioned a one notch downgrade of Ameren's
issuer, senior unsecured debt and commercial paper ratings. Ameren's corporate
credit rating is A+ at Standard & Poor's and its rating is A2 at Moody's, while
our credit rating is BBB+ at Standard and Poor's and A3 at Moody's. In July,
AmerenUE settled its electric earnings complaint case. The rating agencies have
not changed the assignment of negative watch, review for possible downgrade or
negative outlook to any of the ratings nor have the ratings themselves changed.
Any adverse change in Ameren's or its subsidiaries' ratings may reduce our
access to capital and/or increase the costs of borrowings resulting in a
negative impact on earnings.
14
Electric Operations
The following table represents the favorable (unfavorable) variation for
the three and six months ended June 30, 2002 from the comparable period in 2001:
- --------------------------------------------------------------------------------
Three Months Six Months
- --------------------------------------------------------------------------------
Electric Revenues:
Wholesale revenues..................... $ 15 $ 24
Interchange revenues................... (6) 42
- --------------------------------------------------------------------------------
9 66
Fuel and Purchased Power:
Fuel:
Generation........................... $ (13) $ (22)
Price................................ (2) (5)
Generation efficiencies and other.... 1 1
Purchased power........................ 8 (32)
- --------------------------------------------------------------------------------
(6) (58)
- --------------------------------------------------------------------------------
Change in electric margin $ 3 $ 8
- --------------------------------------------------------------------------------
Electric margins increased $3 million for the three months and $8 million
for the six months ended June 30, 2002 compared to year-ago periods, primarily
due to a net increase in new wholesale customers and an increase in sales to
existing wholesale customers due to warmer weather, an increase in volume of
interchange sales for the six months offset by lower margins on those sales due
to the deterioration of electricity prices, and an increase in the use of lower
cost generation stations due to better availability coupled with slightly higher
fuel costs. Electric revenues increased $9 million in the second quarter of 2002
and $66 million for the first six months of 2002 as we experienced a 25%
increase in electric kilowatthour sales for the second quarter and a 33%
increase year to date. The increases were primarily due to several new wholesale
electric customers added by Marketing Co. which contributed an additional $15
million of electric revenues for the quarter and $24 million year to date. For
the first six months of 2002, interchange sales and related purchased power
increased due to an increase in interchange sales by AmerenUE and AmerenEnergy.
However, we realized lower margins on these sales compared to the prior year due
to lower wholesale electricity prices. Purchased power was reduced in the second
quarter compared to the prior year comparable quarter due to fewer forced and
maintenance outages at our coal-fired power stations.
Other Operating Expenses
Other operations related to operating expenses increased $4 million in the
second quarter of 2002 and $8 million in the first six months of 2002, compared
to the year-ago periods, primarily due to higher injuries and damages costs,
costs for efficiency improvements made at the coal-fired generating stations,
increases in employee benefit costs related to the investment performance of
pension plan assets and increasing healthcare costs. These increases were
partially offset by a $2 million decrease in incentive compensation and
severance costs.
Maintenance expenses increased $3 million in the second quarter of 2002 and
$3 million in the first six months of 2002, compared to the year-ago periods,
primarily due to a fire restoration project at our Hutsonville coal-fired power
plant coupled with incremental increases associated with the new combustion
turbine generating units added during the second, third and fourth quarters of
2001, offset by fewer forced and maintenance outages at the coal-fired power
plants during the second quarter of 2002 as compared to 2001. The Hutsonville
fire damaged one of its two operating units and was restored to operational
status within seven weeks.
Depreciation and amortization expense increased $4 million in the second
quarter of 2002 and $9 million in the first six months of 2002, compared to the
year-ago periods, primarily due to an increase in depreciable property related
to the new combustion turbine generating units added during the second, third
and fourth quarters of 2001.
Other taxes expense increased $2 million in the second quarter and first
six months of 2002, compared to the year-ago periods, primarily due to increased
property taxes associated with the new combustion
15
turbine generating units added in the prior year offset by adjustments related
to property tax rates in the prior year.
Interest Expense
Interest expense increased $4 million in the second quarter of 2002 and $2
million in the first six months of 2002, compared to the year-ago periods,
primarily due to borrowing more funds from the money pool at higher interest
rates and interest associated with the issuance of $275 million of 7.95% Senior
Notes in June 2002. These increases were partially offset by a reduction in the
principal amounts outstanding on our subordinated intercompany promissory notes
to AmerenCIPS and Ameren, therefore reducing interest costs in the current year
compared to the prior year corresponding periods. Amortization of debt issuance
costs and discounts for the three and six months ending June 30, 2002 and 2001
of less than $1 million were included in interest expense in the income
statement.
LIQUIDITY AND CAPITAL RESOURCES
Operating
Our net cash flows provided by operating activities decreased $53 million
to $68 million in the first six months of 2002, compared to the year-ago period.
Net cash flows from operations decreased principally due to a decrease in
earnings ($10 million), a decrease in accounts and wages payable, including
intercompany ($178 million), and accounts receivable, including intercompany
($103 million) due to the timing of receipt of payments to and from our
affiliates and a decrease in materials and supplies ($23 million) associated
with decreased coal inventories. Materials and supplies were lower than normal
at December 31, 2000 coupled with the need to increase natural gas inventories
to fuel the new combustion turbine generating units put in service since April
2001. Materials and supplies were also higher than normal at December 31, 2001,
due to the warm winter and anticipation of a potential coal supply disruption
that did not occur.
Our gross margins from power supply contracts with affiliated companies
continue to be the principal source of cash from operating activities. We plan
to utilize short-term debt to support normal operations and other temporary
capital requirements. We have the ability to borrow up to $500 million from
Ameren through a non-utility money pool agreement. However, the total amount
available to us at any time is reduced by the amount of borrowings from Ameren
by our affiliates and is increased to the extent other Ameren non-regulated
companies advance surplus funds to the non-utility money pool or external
borrowing sources are used by Ameren to increase the available amounts. At June
30, 2002, $400 million was available through the non-utility money pool not
including additional funds available through invested cash balances at Ameren
Corporation and uncommitted bank lines. The non-utility money pool was
established to coordinate and provide for short-term cash and working capital
requirements of Ameren's non-regulated activities and is administered by Ameren
Services. Interest is calculated at varying rates of interest depending on the
composition of internal and external funds in the non-utility money pool. The
average interest rate for borrowings from the non-utility money pool was 8.34%
in the second quarter of 2002 (2001 - 4.44%) and 6.33% for the six months ended
June 30, 2002 (2001 - 5.20%). We incurred approximately $4 million in net
intercompany interest expense associated with outstanding borrowings from the
non-utility money pool in the second quarter of 2002 and $5 million for the six
months ended June 30, 2002. We received approximately $1 million in intercompany
interest income associated with outstanding loans to the non-utility money pool
in the second quarter of 2001 compared to $3 million for the six months ended
June 30, 2001. At June 30, 2002, we had loaned $33 million to the non-utility
money pool and had no outstanding borrowings.
Our financial agreements include customary default provisions that could
impact the continued availability of credit or result in the acceleration of
repayment. These events include bankruptcy, defaults in payment of other
indebtedness, certain judgments that are not paid or insured, or failure to meet
or maintain covenants. It is also an event of default under our outstanding
senior notes if one or more payments aggregating $25 million or more due to us
from Marketing Company are not made within 60 days of the date they are due. At
June 30, 2002, we were in compliance with these provisions.
16
Investing
Our cash flows used in investing activities increased $147 million to $223
million for the first six months of 2002, compared to the year-ago period,
primarily due to our contribution of excess funds generated by recent financings
to Ameren's non-utility money pool versus our need for these funds in the prior
year. In addition, we had an increase in construction expenditures for new
combustion turbine generating units and upgrades to existing coal-fired
generating plants in both periods. Of the $190 million of construction
expenditures incurred during the first six months of 2002, approximately $140
million was paid to Development Company for a combustion turbine generating unit
purchased in December 2001, but the amount was included in accounts payable at
December 31, 2001 resulting in approximately $50 million of construction
expenditures during the first six months of 2002.
Future Capacity Additions
Of the $300 million of budgeted capital expenditures for 2002, which
excludes the December 2001 purchase referenced above, $222 million relates to
the scheduled purchase from Development Company of four combustion turbine
generating units located in Elgin, Illinois. These combustion turbine generating
units, which are expected to be purchased in the third and fourth quarters of
2002, are designed to provide additional capacity of 468 megawatts. Annual
capital expenditures at our coal plants are expected to range from approximately
$225 million to $275 million in total for the period 2002 through 2006,
excluding any capital expenditures required to comply with NOx emission
standards.
Financing
Our cash flows provided by financing activities was $161 million in the
first six months of 2002, compared to cash flows used in financing activities of
$44 million in the year-ago comparable period. Our principal financing
activities for 2002 included the issuance of $275 million of 7.95% Senior Notes
due June 1, 2032. Interest is payable semi-annually on June 1 and December 1 of
each year, beginning December 1, 2002. We received net proceeds of $271 million,
after debt discount and underwriters' fees, that were used to reduce short-term
borrowings and for general corporate purposes.
In the ordinary course of business, we evaluate several strategies to
enhance our financial position, earnings, and liquidity. These strategies may
include potential acquisitions, divestitures, opportunities to reduce costs or
increase revenues, and other strategic initiatives in order to increase
shareholder value. We are unable to predict which, if any, of these initiatives
will be executed, as well as the impact these initiatives may have on our future
financial position, results of operations or liquidity.
We are considering selling up to 500 megawatts of our existing combustion
turbine generating units. Our affiliate, AmerenUE, has expressed interest in
purchasing combustion turbine generating units from us. Any such transaction
involving the sale or transfer of these assets and the use of proceeds therefrom
between our affiliate and us would be recorded at net book value and would be
subject the terms and conditions of our borrowing agreements.
Electric Industry Restructuring and Regulatory Matters
Illinois
See Note 2 - "Rate and Regulatory Matters" to our financial statements.
Federal - Regional Transmission Organizations
See Note 2 - "Rate and Regulatory Matters" to our financial statements.
17
ACCOUNTING MATTERS
Critical Accounting Policies
Preparation of the financial statements and related disclosures in
compliance with generally accepted accounting principles requires the
application of appropriate technical accounting rules and guidance, as well as
the use of estimates. Our application of these policies involves judgments
regarding many factors, which, in and of themselves, could materially impact the
financial statements and disclosures. A future change in assumptions or
judgments applied in determining the following matters, among others, could have
a material impact on future financial results. In the table below, we have
outlined those accounting policies that we believe are most difficult,
subjective or complex:
Accounting Policy Uncertainties Affecting Application
- ----------------- -----------------------------------
Environmental Costs
We accrue for all known environmental o Extent of contamination
contamination where remediation can be o Responsible party determination
reasonably estimated. However, we are o Approved methods for cleanup
contractually indemnified by AmerenCIPS for o Present and future legislation and governmental
remediation costs that we incur at the sites of regulations and standards
our coal plants relating to environmental o Results of ongoing research and development
contamination that occurred prior to the regarding environmental impacts
AmerenCIPS' transfer of the coal plants to us on
May 1, 2000.
Basis for Judgment
We determine the proper amounts to accrue for environmental contamination based
on internal and third party estimates of clean-up costs in the context of
current remediation regulation standards and available technology.
Benefit Plan Accounting
Based on actuarial calculations, we accrue costs o Future rate of return on pension and other plan assets
of providing future employee benefits in o Interest rates used in valuing benefit obligations
accordance with SFAS 87, 106 and 112. See Note o Healthcare cost trend rates
6 to our financial statements for the year ended
December 31, 2001.
Basis for Judgment
We utilize a third party consultant to assist us in evaluating and recording the
proper amount for future employee benefits. Our ultimate selection of the
discount rate, healthcare trend rate and expected rate of return on pension
assets is based on our review of available current, historical and projected
rates, as applicable.
Derivative Financial Instruments
We record all derivatives at their fair market
value in accordance with SFAS 133. The
identification and classification of a o Market conditions in the energy industry, especially
derivative, and the fair value of such the effects of price volatility on contractual
derivative must be determined. See Note 3 to commodity commitments
our financial statements for the year ended o Regulatory and political environments and
December 31, 2001 and Note 4 - "Derivative requirements
Financial Instruments" to our financial o Fair value estimations on longer term contracts
statements.
18
Basis for Judgment
We determine whether a transaction is a derivative versus a normal purchase or
sale based on historical practice and our intention at the time we enter a
transaction. We utilize actively quoted prices, prices provided by external
sources, and prices based on internal models, and other valuation methods to
determine the fair market value of derivative financial instruments.
Impact of Future Accounting Pronouncements
See Note 1 - "Summary of Significant Accounting Policies" to our financial
statements.
ITEM 3. Quantitative And Qualitative Disclosures About Market Risk.
Market risk represents the risk of changes in value of a physical asset or
a financial instrument, derivative or non-derivative, caused by fluctuations in
market variables (e.g., interest rates, etc.). The following discussion of our
risk management activities includes "forward-looking" statements that involve
risks and uncertainties. Actual results could differ materially from those
projected in the "forward-looking" statements. AmerenEnergy and Fuels Company,
on our behalf, manage our market risks in accordance with established policies,
which may include entering into various derivative transactions. In the normal
course of business, we also face risks that are either non-financial or
non-quantifiable. Such risks principally include business, legal, and
operational risk and are not represented in the following analysis.
Our risk management objective is to optimize our physical generating assets
within prudent risk parameters. Our risk management policies are set by a Risk
Management Steering Committee, which is comprised of senior-level Ameren
officers.
Interest Rate Risk
We are exposed to market risk through changes in interest rates associated
with our issuance of both variable rate and fixed rate debt. We manage our
interest rate exposure by controlling the amount of these instruments we hold
within our total capitalization portfolio and by monitoring the effects of
market changes in interest rates. At June 30, 2002, we had no variable rate
non-utility money pool borrowings outstanding.
Fuel Price Risk
100% of the required 2002 supply of coal for our coal power plants has been
acquired at fixed prices. As such, we have minimal coal price risk for 2002. In
addition, approximately 73% of our coal requirements from 2003 through 2006 are
covered by contracts.
Fair Value of Contracts
We utilize derivatives principally to manage the risk of changes in market
prices for natural gas, fuel, electricity and emission credits. Price
fluctuations in natural gas, fuel and electricity cause:
o an unrealized appreciation or depreciation of our firm commitments to
purchase or sell when purchase or sale prices under the firm commitment are
compared with current commodity prices;
o market values of fuel and natural gas inventories or purchased power to
differ from the cost of those commodities in inventory and under firm
commitment; and
o actual cash outlays for the purchase of these commodities to differ from
anticipated cash outlays.
The derivatives that we use to hedge these risks are dictated by risk
management policies and include forward contracts, futures contracts, options
and swaps. We continually assess our supply and delivery commitment positions
against forward market prices and internally forecast forward prices and modify
our exposure to market, credit and operational risk by entering into various
offsetting transactions. In general, we believe these transactions serve to
reduce our price risk. See Note 4 - "Derivative Financial Instruments" for more
information.
19
The following summarizes changes in the fair value of all contracts marked
to market during the three and six months ended June 30, 2002:
- ------------------------------------------------------------------------------------------------------------------
Three Six
months months
- ------------------------------------------------------------------------------------------------------------------
Fair value of contracts at beginning of period, net $ (1) $ 2
Contracts which were realized or otherwise settled during the three and six months
ended June 30, 2002 (2) (2)
Changes in fair values attributable to changes in valuation techniques and assumptions - -
Fair value of new contracts entered into during the three and six months ended
June 30, 2002 - (a)
Other changes in fair value 3 (a)
- ------------------------------------------------------------------------------------------------------------------
Fair value of contracts outstanding at June 30, 2002, net $ (a) $ (a)
- ------------------------------------------------------------------------------------------------------------------
(a) Less than $1 million.
Maturities of contracts as of June 30, 2002 were as follows:
- ------------------------------------------------------------------------------------------------------------------
Maturity Maturity
less than Maturity Maturity in excess Total fair
Sources of fair value (In Millions) 1 year 1-3 years 4-5 years of 5 years value (a)
- ------------------------------------------------------------------------------------------------------------------
Prices actively quoted $ -- $ -- $ -- $ -- $ --
Prices provided by other external sources
(b) (d) -- -- -- (d)
Prices based on models and other valuation
methods (c) (d) -- -- -- (d)
- -------------------------------------------------------------------------------------------------------------------
Total $ (d) $ -- $ -- $ -- $ (d)
- -------------------------------------------------------------------------------------------------------------------
(a) Contracts valued at less than $1 million were with both investment grade and noninvestment-grade
rated counterparties.
(b) Principally power forward hedges valued based on NYMEX prices for over-the-counter contracts.
(c) Principally power forwards valued based on information from external sources and our estimates.
(d) Less than $1 million.
SAFE HARBOR STATEMENT
Statements made in this report which are not based on historical facts, are
"forward-looking" and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
"forward-looking" statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions and
financial performance. In connection with the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we are providing this
cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. The following factors, in
addition to those discussed elsewhere in this report and in the 2001 Annual
Report on Form 10-K for the year ended December 31, 2001, and in subsequent
securities filings, could cause results to differ materially from management
expectations as suggested by such "forward-looking" statements:
o the effects of AmerenUE's excess earnings complaint case and other
regulatory actions, including changes in regulatory policy;
o changes in laws and other governmental actions, including monetary and
fiscal policies;
o the impact on us of current regulations related to the opportunity for
customers to choose alternative energy suppliers in Illinois;
o the effects of increased competition in the future;
o the effects of Ameren's participation in a FERC approved Regional
Transmission Organization (RTO), including activities associated with
the Midwest Independent System Operator;
o availability and future market prices for fuel and purchased power,
electricity, and natural gas, including the use of financial and
derivative instruments and volatility of changes in market prices;
o wholesale and retail pricing for electricity in the Midwest;
20
o business and economic conditions;
o the impact of the adoption of new accounting standards;
o interest rates and the availability of capital;
o actions of rating agencies and the effects of such actions;
o weather conditions;
o generation plant construction, installation, and performance;
o the effects of strategic initiatives, including acquisitions and
divestitures;
o the impact of current environmental regulations on generating
companies and the expectation that more stringent requirements will be
introduced over time, which could potentially have a negative
financial effect;
o future wages and employee benefits costs;
o disruptions of the capital markets or other events making Ameren's and
our access to necessary capital more difficult or costly;
o competition from other generating facilities including new facilities
that may be developed in the future;
o cost and availability of transmission capacity for the energy
generated by our generating facilities or required to satisfy energy
sales made on our behalf; and
o legal and administrative proceedings.
21
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
On April 26, 2002, we received a notice of violation from the Illinois
Environmental Protection Agency (IEPA) concerning the alleged improper disposal
of bottom ash and slag materials originally from our Coffeen Power Plant and
sold to an off-site facility. We sold the material to an independent third party
who in turn resold the material to U.S. Minerals for use in the manufacture of
building materials and industrial abrasives. We believe that the notice of
violation is without merit and that our sale and/or use of coal combustion
by-products is specifically authorized under the Illinois Environmental
Protection Act. IEPA also issued a notice of violation to U.S. Minerals alleging
the improper handling, storage and disposal of the coal combustion materials. We
believe that the final disposition of this matter will not have a material
adverse effect on our financial position, results of operation or liquidity.
On July 30, 2002, the Illinois Attorney General's Office advised us that it
would be commencing an enforcement action concerning an inactive waste disposal
site near Coffeen, Illinois, which is the location of a disposal facility
permitted by the IEPA to receive fly ash from our Coffeen power plant. The
Illinois Attorney General also notified the disposal facility's current and
former owners as to the proposed enforcement action. The Attorney General
advised that it may initiate an action under CERCLA to recover past costs
incurred at the site ($322,000) and to obtain a declaratory judgment as to
liability for future costs. Neither us, the current owner of the Coffeen power
plant, nor AmerenCIPS, the prior owner of the Coffeen power plant, owned or
operated the disposal facility. We believe that this matter will not have a
material adverse effect on our financial position, results of operations or
liquidity.
ITEM 5. Other Information
The Audit Committee of the Board of Directors of Ameren has approved our
independent accountants, PriceWaterhouseCoopers, to perform the following audit
and non-audit services:
o Audits required by the federal, state or local government rules
o Audits of employee pension and benefits plans
o Income tax accounting and consulting projects
o Comfort letters and consents required to complete SEC filings and
issue securities
o Consultation on responses to accounting inquiries by regulatory or
other bodies
o Audit of AmerenEnergy earnings before interest and taxes statement
o Review of stock transfer agent and registrar internal controls
o Review of risk management internal controls
o Consultation on the accounting for corporate events and transactions
o Assistance with preparation of testimony for regulatory filings
ITEM 6. Exhibits and Reports on Form 8-K
(a)(i) Exhibits.
4.1 - Third Supplemental Indenture dated as of June 1, 2002
to Indenture dated as of November 1, 2001 from Ameren
Energy Generating Company to The Bank of New York, as
Trustee relating to Ameren Energy Generating Company's
7.95% Senior Notes, Series E due 2032 (including as
exhibit the form of Note).
4.2 - Registration Rights Agreement, dated June 6, 2002,
among Ameren Energy Generating Company and the Initial
Purchasers relating to Ameren Energy Generating
Company's 7.95% Senior Notes, Series E due 2032.
99.1 - Certificate of Chief Executive Officer required by
Section 906 of the Sarbanes-Oxley Act of 2002 (not
filed as a part of this Report on Form 10Q.)
99.2 - Certificate of Chief Financial Officer required by
Section 906 of the Sarbanes-Oxley Act of 2002 (not
filed as a part of this Report on Form 10Q.)
(a)(ii) Exhibits Incorporated by Reference.
10.1 - Memorandum of Understanding dated May 24, 2002 between
Ameren Services Company, as agent for AmerenUE and
AmerenCIPS, and the Midwest Indepen-
22
dent Transmission System Operator, Inc. (MISO) (June 30,
2002 Ameren Corporation Form 10-Q, Exhibit 10.2).
10.2 - Participation Agreement dated as of July 3, 2002 by and
among MISO, Ameren Services Company as agent for
AmerenUE and AmerenCIPS, FirstEnergy Corporation on
behalf of American Transmission Systems, Incorporated,
Northern Indiana Public Service Company and National
Grid USA (June 30, 2002 Ameren Corporation Form 10-Q,
Exhibit 10.2).
(b) Reports on Form 8-K. None.
Note: Reports of Ameren Corporation on Forms 8-K, 10-Q and 10-K are
on file with the SEC under File Number 1-14756.
Reports of Central Illinois Public Service Company on Forms
8-K, 10-Q and 10-K are on file with the SEC under File Number
1-3672.
Reports of Union Electric Company on Forms 8-K, 10-Q and 10-K
are on file with the SEC under the File Number 1-2967.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMEREN ENERGY GENERATING COMPANY
(Registrant)
By /s/ Martin J. Lyons
----------------------------------
Martin J. Lyons
Controller
(Principal Accounting Officer)
Date: August 14, 2002
24
Exhibit 4.1
================================================================================
THIRD SUPPLEMENTAL INDENTURE
dated as of June 1, 2002
to
INDENTURE
dated as of November 1, 2000
AMEREN ENERGY GENERATING COMPANY
to
THE BANK OF NEW YORK, as Trustee
================================================================================
$275,000,000 7.95% Senior Notes, Series E Due 2032
THIRD SUPPLEMENTAL INDENTURE (the "Third Supplemental Indenture"), dated as
of June 1, 2002, to the Indenture, dated as of November 1, 2000 (the "Original
Indenture"), from AMEREN ENERGY GENERATING COMPANY, an Illinois corporation
(together with its successors and assigns, the "Issuer"), its principal office
and mailing address being at One Ameren Plaza, 1901 Chouteau Avenue, P.O. Box
66149, St. Louis, Missouri 63166-6149, to THE BANK OF NEW YORK, as trustee (the
"Trustee"), its office and mailing address being at 101 Barclay Street, New
York, New York 10286.
W I T N E S S E T H:
WHEREAS, the Issuer and the Trustee have heretofore executed and delivered
the Original Indenture to provide for the issuance from time to time of the
Issuer's Securities (as defined in the Original Indenture) to be issued in one
or more series;
WHEREAS, Sections 2.1 and 7.1 of the Original Indenture provide, among
other things, that the Issuer and the Trustee may enter into indentures
supplemental to the Original Indenture for, among other things, the purpose of
establishing the designation, form, terms and provisions of Securities of any
series as permitted by Sections 2.1 and 7.1 of the Original Indenture;
WHEREAS, the Issuer (i) desires the issuance of a series of Securities to
be designated as hereinafter provided and (ii) has requested the Trustee to
enter into this Third Supplemental Indenture for the purpose of establishing the
designation, form, terms and provisions of the Securities of such series;
WHEREAS, all action on the part of the Issuer necessary to authorize the
issuance of said Securities under the Original Indenture and this Third
Supplemental Indenture (the Original Indenture, as supplemented by this Third
Supplemental Indenture, being hereinafter called the "Indenture") has been duly
taken; and
WHEREAS, all acts and things necessary to make said Securities, when
executed by the Issuer and authenticated and delivered by the Trustee as
provided in the Original Indenture, the legal, valid and binding obligations of
the Issuer, and to constitute these presents a valid and binding supplemental
indenture according to its terms, have been done and performed, and the
execution of this Third Supplemental Indenture and the creation and issuance
under the Indenture of said Securities have in all respects been duly
authorized, and the Issuer, in the exercise of the legal right and power vested
in it, executes this Third Supplemental Indenture and proposes to create,
execute, issue and deliver said Securities;
NOW, THEREFORE, in order to establish the designation, form, terms and
provisions of, and to authorize the authentication and delivery of, said
Securities, and in consideration of the acceptance of said Securities by the
holders thereof and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
-----------
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Original Indenture.
ARTICLE II
THE TERMS OF THE NOTES
----------------------
Section 2.1 Terms of 7.95% Senior Notes, Series E due 2032.
----------------------------------------------
(a) There is hereby created one (1) series of Securities designated:
7.95% Senior Notes, Series E due 2032, in the aggregate principal amount
of $275,000,000 (the "Series E Senior Notes"). Upon delivery of a written order
to the Trustee in accordance with the provisions of Section 2.1 of the Original
Indenture, the Trustee shall authenticate and deliver the Series E Senior Notes.
Such written order shall specify the amount of the Series E Senior Notes to be
authenticated and the date on which such Series E Senior Notes are to be
authenticated.
(b) The Series E Senior Notes shall be substantially in the form of
Exhibit A hereto.
Section 2.2 Terms of Series E Senior Notes Issued Hereunder in Global Form.
--------------------------------------------------------------
(a) So long as DTC or its nominee is the registered owner or Holder of
a Global Security, DTC or its nominee, as the case may be, will be considered
the sole owner or Holder of the Series E Senior Notes represented by such Global
Security for all purposes under the Original Indenture and under the Series E
Senior Notes. No beneficial owner of an interest in a Global Security will be
able to transfer that interest except in accordance with DTC's applicable
procedures unless the Issuer shall issue certificates for the Series E Senior
Notes in definitive registered form.
(b) All payments of the principal of, and interest and additional
amounts and premium, if any, on, a Global Security will be made to DTC or its
nominees, as the registered owners thereof.
(c) Transfers between participants in DTC will be effected in the
ordinary way in accordance with DTC rules and will be settled in same-day funds.
(d) Certificated definitive Series E Senior Notes may be in
denominations of less than $100,000 to the extent any redemption has reduced
such Holder's aggregate holding of such Series E Senior Notes to less than
$100,000.
(e) If any redemption affecting the Series E Senior Notes would result
in the amount to be paid to a Holder of such affected Senior Note in respect of
such redemption not to equal $1,000 or an integral multiple thereof, the Issuer
shall instruct the Trustee to round the amount to be paid to such Holder to the
nearest $1,000 so that the amount to be paid to such Holder equals $1,000 or an
integral multiple thereof.
2
(f) Beneficial interests in a Global Security (and any Securities issued
in exchange therefor) will be subject to certain restrictions on transfer set
forth therein and in the Original Indenture and as set forth on the form of
such Global Security. Exhibit B, as referred to in Section 2.4 of the Original
Indenture and Exhibits C, D, E and F, as referred to in Section 2.6 of the
Original Indenture are attached hereto as Exhibits B, C, D, E and F,
respectively.
(g) Except in the limited circumstances described under Section 2.2(h)
below, beneficial interest in a Global Security will only be recorded by
book-entry and owners of beneficial interest in a Global Security will not be
entitled to receive physical delivery of certificates representing Securities.
(h) If (i) the Issuer notifies the Trustee in writing that DTC or any
successor depository is unwilling or unable to continue as a depository for a
Global Security or ceases to be a "clearing agency" registered under the
Exchange Act and a successor depository is not appointed by the Issuer within 90
days of such notice, (ii) the Issuer, at its option, notifies the Trustee in
writing that it elects to cause the issuance of the Securities issued hereunder
to be in certificated form or (iii) during an Event of Default, a holder of a
beneficial interest in a Global Security requests the issuance of certificated
Securities representing such holder's interest, then the Issuer shall issue
certificates for the Securities in definitive registered form substantially in
the form attached hereto in exchange for the Global Security outstanding.
(i) The holder of a certificated definitive registered Security may
transfer such Security in whole or in part by surrendering it at the Corporate
Trust Office of the Trustee in accordance with the terms of the Indenture and
such Security. Upon the transfer, exchange or replacement of definitive
Securities, the Issuer will deliver only definitive Securities that bear a
restrictive legend unless there is delivered to the Issuer such satisfactory
evidence, which may include an opinion of counsel, as may reasonably be required
by the Issuer, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure compliance with the provisions of the
Securities Act.
Section 2.3 Interest, Principal, Maturity Date and Regular Record Date.
----------------------------------------------------------
The Series E Senior Notes shall bear interest on the unpaid principal
amount thereof from time to time outstanding from the date of authentication
thereof until such amount is paid in full at the rate of interest set forth in
the form of such Senior Note attached hereto. The principal amount of the Series
E Senior Notes shall be due and payable at maturity as set forth in the form of
Senior Note attached hereto.
Payment of principal of, premium, if any, and interest on the Series E
Senior Notes shall be made as provided in Sections 2.4, 2.10, 3.2 and 3.4 of the
Original Indenture except that the final payment of principal of the Series E
Senior Notes shall be made on the due date therefor to the account of the Holder
as such account shall appear in the Security Register, which amount shall be
payable upon presentation and surrender of such Senior Note at the office of the
Issuer.
The Series E Senior Notes shall mature on the date and in the amounts set
forth thereon.
The record date applicable to the Series E Senior Notes issued hereunder
shall be as set forth in the form of Senior Note attached hereto.
3
All payments of principal and interest with respect to certificated Series
E Senior Notes will be made by bank check mailed on the interest payment date to
the address of such Holder on the Security Register or, for Holders of at least
U.S. $1,000,000 in aggregate principal amount of Series E Senior Notes, by wire
transfer on the interest payment date to a dollar account maintained by the
payee with a bank in The City of New York; provided, that a written request from
such Holder to such effect designating such account is received by the Trustee
and the Issuer or the paying agent no later than the record date immediately
preceding such Interest Payment Date. Unless such designation is revoked, any
such designation made by such person with respect to such certificated Series E
Senior Notes will remain in effect with respect to any future payments with
respect to such certificated Senior Note payable to such person.
Section 2.4 Redemption, Optional Redemption.
-------------------------------
The Series E Senior Notes issued hereunder are subject to optional
redemption, in whole or in part, at any time at the option of the Issuer at a
redemption price equal to the outstanding principal amount of the Series E
Senior Notes being so redeemed plus accrued and unpaid interest thereon to the
date fixed for redemption together with the Applicable Premium applicable
thereto.
Section 2.5 Applicable Premium.
------------------
As used herein, "Applicable Premium" means an amount calculated as of the
date (the "Determination Date") fixed for the redemption of the Series E Senior
Notes as follows:
(i) the average life of the remaining scheduled payments of principal
in respect of Outstanding Series E Senior Notes (the "Remaining Average
Life") shall be calculated as of the Determination Date;
(ii) the yield to maturity calculated as of a date not more than five
days prior to the Determination Date for the United States Treasury
security having an average life equal to the Remaining Average Life of
such series and trading in the secondary market at the price closest to
the principal amount thereof (the "Primary Issue"); provided, however,
that if no United States Treasury security has an average life equal to
the Remaining Average Life of such series, the yields (the "Other
Yields") for the two maturities of United States treasury securities
having average lives most closely corresponding to such Remaining
Average Life and trading in the secondary market at the price closest to
the principal amount thereof shall be calculated, and the yield to
maturity for the Primary Issue shall be the yield interpolated or
extrapolated from such Other Yields on a straight line basis, rounding
in each of such relevant periods to the nearest month;
(iii) the discounted present value of the then remaining scheduled
payments of principal and interest (but excluding that portion of any
scheduled payment of interest that is actually due and paid on the
Determination Date) in respect of the Outstanding Series E Senior Notes
shall be calculated as of the Determination Date using a discount factor
equal to the sum of (x) the yield to maturity for the Primary Issue,
plus (y) 37.5 basis points; and
(iv) the amount of Applicable Premium in respect of the Series E Senior
Notes to be redeemed shall be an amount equal to (x) the discounted
present value of
4
such Series E Senior Notes to be redeemed determined in accordance with
clause (iii) above, minus (y) the unpaid principal amount of such Series
E Senior Notes; provided, however, that the Applicable Premium shall not
be less than zero; and
(v) such calculation shall be made by an Investment Banker.
Section 2.6 Amendment for Benefit of Series E Senior Notes.
----------------------------------------------
The Indenture is hereby amended, pursuant to Section 7.1(d) of the
Indenture for the benefit of the holders of the Series E Senior Notes and for so
long as the Series E Senior Notes are outstanding, as follows:
(a) Section 1.1 of the Indenture is amended by adding to the definitions
the following: "'Existing Generating Assets' means the coal plants and gas-fired
units owned by the Issuer as of the date of issuance of the $275,000,000 7.95%
Senior Notes, Series E due 2032."
(b) Section 3.9 of the Indenture is amended to delete the words "Initial
Generation Assets" and insert in lieu thereof the words "Initial Generating
Assets or Existing Generating Assets."
ARTICLE III
MISCELLANEOUS
-------------
Section 3.1 Execution of Supplemental Indenture.
-----------------------------------
This Third Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Original Indenture and, as provided in the
Original Indenture, this Third Supplemental Indenture forms a part thereof.
Section 3.2 Concerning the Trustee.
----------------------
The Trustee shall not be responsible in any manner for or with respect
to the validity or sufficiency of this Third Supplemental Indenture, or the due
execution hereof by the Issuer, or for or with respect to the recitals and
statements contained herein, all of which recitals and statements are made
solely by the Issuer.
Section 3.3 Counterparts.
------------
This Third Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but all such counterparts shall together constitute but one and the same
instrument.
Section 3.4 GOVERNING LAW.
-------------
THIS THIRD SUPPLEMENTAL INDENTURE AND THE SERIES E SENIOR NOTES ISSUED
HEREUNDER SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE
CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-1401).
5
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed as of June 1, 2002.
AMEREN ENERGY GENERATING
COMPANY, as Issuer
By: /s/ Jerre E. Birdsong
-------------------------------------
Name: Jerre E. Birdsong
Title: Vice President and Treasurer
THE BANK OF NEW YORK, as Trustee
By: s/ Albert Lundy
--------------------------------------
Name: Albert Lundy
Title: As Agent for
EXHIBIT A
FORM OF SECURITY
[INCLUDE IF SECURITY IS A GLOBAL SECURITY DEPOSITED WITH THE U.S.
DEPOSITARY -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN THE DEPOSITORY
TRUST COMPANY OR A NOMINEE THEREOF IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.6 OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM AND IN ANY EVENT MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE IN NEW YORK.
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. EACH HOLDER OF THIS NOTE REPRESENTS TO AMEREN
ENERGY GENERATING COMPANY THAT (a) SUCH HOLDER WILL NOT SELL, PLEDGE OR
OTHERWISE TRANSFER THIS NOTE (WITHOUT THE CONSENT OF AMEREN ENERGY GENERATING
COMPANY) OTHER THAN (i) TO A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
COMPLYING WITH RULE 144A UNDER THE SECURITIES ACT, (ii) IN ACCORDANCE WITH RULE
144 UNDER THE SECURITIES ACT, (iii) OUTSIDE THE UNITED STATES IN A TRANSACTION
MEETING THE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (iv) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT,
SUBJECT, IN THE CASE OF
CLAUSES (ii), (iii) OR (iv), TO THE RECEIPT BY AMEREN ENERGY GENERATING COMPANY
OF AN OPINION OF COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO AMEREN ENERGY
GENERATING COMPANY THAT SUCH RESALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (v) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND THAT (b) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS
REFERRED TO HEREIN AND DELIVER TO THE TRANSFEREE (OTHER THAN A QUALIFIED
INSTITUTIONAL BUYER) PRIOR TO THE SALE A COPY OF THE TRANSFER RESTRICTIONS
APPLICABLE HERETO (COPIES OF WHICH MAY BE OBTAINED FROM THE TRUSTEE).
[FORM OF FACE OF SENIOR NOTE]
CUSIP [ ][ ][ ]
[Common Code]
[ISIN][ ]
No.
$
AMEREN ENERGY GENERATING COMPANY
7.95% Senior Notes Due 2032
Ameren Energy Generating Company (the "Issuer"), for value received hereby
promises to pay to ___________________ or registered assigns the principal sum
of ____________ Dollars at the Issuer's office or agency for said purpose as
provided in the Indenture referred to herein, on June 1, 2032 in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
semi-annually in arrears on June 1 and December 1 of each year, commencing
December 1, 2002, on said principal sum in like coin or currency at the rate per
annum set forth above at said offices or agencies from the date of original
issuance or the most recent interest payment date to which interest on the
Series E Senior Notes has been paid or duly provided for. Notwithstanding the
foregoing, if the date hereof is after May 15 or November 15, as the case may
be, and before the following June 1 or December 1, this Senior Note shall bear
interest from such June 1 or December 1; provided, that if the Issuer shall
default in the payment of interest due on such June 1 or December 1, then this
Senior Note shall bear interest from the next preceding June 1 or December 1 to
which interest on the Series E Senior Notes has been paid or duly provided for
and provided further that interest due on December 1, 2002 on this Senior Note
shall accrue from the date of original issuance. The interest so payable on any
June 1 or December 1 will, except as otherwise provided in the Indenture
referred to on the reverse hereof, be paid to the Person in whose name this
Senior Note is registered at the close of business on the 15th day of May or the
15th day of November preceding such June 1 or December 1, whether or not such
day is a Business Day; provided, that principal, premium, if any, and interest
shall be paid by mailing on the interest payment date a check for such to or
upon the written order of the registered Holders of Series E Senior Notes
entitled thereto at their last address as it appears on the Series E Senior
2
Notes Register or, upon written application to the Trustee by a Holder of
$1,000,000 or more in aggregate principal amount of Series E Senior Notes, by
wire transfer on the interest payment date of immediately available funds to an
account maintained by such Holder with a bank or other financial institution.
Interest on this Senior Note shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. Additional Interest shall accrue on this
Senior Note under the circumstances provided for in the Registration Rights
Agreement.
Interest on overdue principal and (to the extent permitted by applicable
law) on overdue installments of interest (including without limitation during
the 5-day period referred to in Section 4.1(b) of the Indenture) shall accrue at
the rate per annum set forth above.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
3
This Senior Note shall not be entitled to any benefit under the Indenture,
or be valid or obligatory, until the certificate of authentication hereon shall
have been duly signed by the Trustee acting under the Indenture.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
AMEREN ENERGY GENERATING COMPANY
By:
---------------------------------
Name:
Title:
(SEAL)
Attested:
By:
-----------------------------
Name:
Title:
4
[FORM OF REVERSE OF SENIOR NOTE]
AMEREN ENERGY GENERATING COMPANY
7.95% Senior Notes Due 2032
This Senior Note is one of a duly authorized issue of debt securities of
the Issuer, limited to the aggregate principal amount of $275,000,000 (except as
otherwise provided in the Indenture mentioned below), issued or to be issued
pursuant to an Indenture dated as of November 1, 2000 as supplemented by the
Third Supplemental Indenture dated as of June 1, 2002 (as so supplemented, the
"Indenture"), duly executed and delivered by the Issuer to the Trustee.
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Issuer and the Holders (the
words "Holders" or "Holder" meaning the registered holders or registered holder)
of the Series E Senior Notes. Capitalized terms used herein, but not otherwise
defined herein, shall have the meanings assigned to them in the Indenture.
In case an Event of Default shall have occurred and be continuing, the
principal of all the Securities may be declared due and payable, in the manner
and with the effect, and subject to the conditions, provided in the Indenture.
The Indenture provides that in certain events such declaration and its
consequences may be waived by the Holders of a majority in aggregate principal
amount of the Securities then Outstanding and that, prior to any such
declaration, such Holders may waive any past default under the Indenture and its
consequences except a default in the payment of principal of or premium, if any,
or interest on any of the Securities and as otherwise provided in the Indenture.
Any such consent or waiver by the Holder of this Senior Note (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Senior Note and any Security which
may be issued in exchange or substitution hereof, whether or not any notation
thereof is made upon this Senior Note or such other Security.
The Indenture permits the Issuer and the Trustee, with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities of all series at the time Outstanding considered as one class,
evidenced as in the Indenture provided, to modify the Indenture or any
supplemental indentures or the rights of the Holders of the Series E Senior
Notes; provided that no such modification shall (a) change the Stated Maturity
of the principal of, or any installment of principal of or interest on, any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or impair or affect the right of any Holder of the Security
to institute suit for the payment thereof without the consent of the Holder of
each Security so affected; or (b)(i) reduce the aforesaid percentage of
Securities, the consent of the Holders of which is required for any such
modification or the percentage of Securities, the consent of Holders of which is
required for any waiver provided for in the Indenture; (ii) change any
obligation of the Issuer to maintain an office or agency for payment of and
transfer and exchange of the Securities; or (iii) make certain changes to
provisions relating to waiver or to the provision for supplementing the
Indenture; in each case without the consent of the Holders of all Securities
then Outstanding.
5
No reference herein to the Indenture and no provision of this Senior Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Senior Note at the place, times, and rate, and in the currency,
herein prescribed.
The Series E Senior Notes are issuable only as registered Series E Senior
Notes without coupons in denominations of $100,000 and any integral multiple of
$1,000 in excess thereof.
At the office or agency of the Issuer referred to on the face hereof and in
the manner and subject to the limitations provided in the Indenture, Series E
Senior Notes may be presented for exchange for a like aggregate principal amount
of Series E Senior Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Senior Note at
the above-mentioned office or agency of the Issuer, a new Series E Senior Note
or Series E Senior Notes of authorized denominations, for a like aggregate
principal amount, will be issued to the transferee as provided in the Indenture.
No service charge shall be made for any such transfer, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
The Series E Senior Notes may be redeemed in whole or in part (if in part,
by lot or by such other method as the Trustee shall deem fair or appropriate)
prior to Stated Maturity at the option of the Issuer, upon mailing a notice of
such redemption not less than 30 nor more than 60 days prior to the date fixed
for redemption to the Holders of Series E Senior Notes, all as provided in the
Indenture, at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of redemption, plus the
Applicable Premium.
Subject to payment by the Issuer of a sum sufficient to pay the amount due
on redemption, interest on this Senior Note shall cease to accrue upon the date
duly fixed for redemption of this Senior Note.
The Issuer, the Trustee, and any authorized agent of the Issuer or the
Trustee, may deem and treat the registered Holder hereof as the absolute owner
of this Senior Note (whether or not this Senior Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Issuer or the Trustee or any authorized agent of the Issuer or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Issuer nor
the Trustee nor any authorized agent of the Issuer or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or premium,
if any, or the interest on this Senior Note, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or
6
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
7
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Series E Senior Notes referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
---------------------------------
Authorized Signatory
8
[FORM OF ASSIGNMENT]
I or we assign and transfer this Security to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------
- --------------------------------------------------
Agent to transfer this Security on the books of the Issuer. The Agent may
substitute another to act for him.
Date: Your Signature:
--------------------- -----------------------------
--------------------------------
(Sign exactly as your name
appears on the other side of
this Security)
*Signature Guarantee:________________________
*Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934.
9
EXHIBIT B
FORM OF RESTRICTED PERIOD CERTIFICATE
AMEREN ENERGY GENERATING COMPANY
[DATE]
The Depository Trust Company
[Address]
The Bank of New York,
as Trustee
[Attn: Corporate Trust
101 Barclay Street
New York, New York 10286]
Re: Ameren Energy Generating Company 7.95% Senior Notes Due 2032
------------------------------------------------------------
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of November 1, 2000 (the
"Indenture") from Ameren Energy Generating Company, to The Bank of New York, as
Trustee. Capitalized terms used and not defined herein shall have the meanings
given them in the Indenture.
This letter is related to U.S. $______________ principal amount of Series E
Senior Notes represented by the Restricted Regulation S Global Security, held by
the Trustee pursuant to Section 2.4 of the Indenture. We hereby certify that the
offering of the Series E Senior Notes has closed and that the restricted period
(as defined in Regulation S) with respect to the offer and sale of the Series E
Senior Notes has terminated.
THE BANK OF NEW YORK, as Trustee
By:
------------------------------------
Authorized Signatory
cc: [Euroclear]
[CLEARSTREAM]
EXHIBIT C
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER OR EXCHANGE FROM RULE 144A GLOBAL SECURITY
OR IAI GLOBAL SECURITY TO RESTRICTED REGULATION S GLOBAL SECURITY
(Transfers or exchanges pursuant to
Section 2.6(b)(ii) of the Indenture)
The Bank of New York,
as Trustee
[Attn: Corporate Trust
101 Barclay Street
New York, New York 10286]
Re: Ameren Energy Generating Company 7.95% Senior Notes
Due 2032 (the "Series E Senior Notes")
---------------------------------------------------
Reference is hereby made to the Indenture dated as of November 1, 2000 (the
"Indenture") from Ameren Energy Generating Company to The Bank of New York, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to U.S.$______________ principal amount of Series E
Senior Notes which are held in the form of the [Rule 144A] [IAI] Global Security
(CUSIP No.[ ][ ]) with the U.S. Depositary in the name of
[insert name of transferor] (the "Transferor"). The Transferor has requested a
transfer or exchange of such beneficial interest for an interest in the
Restricted Regulation S Global Security (CUSIP No. ) to be held with
[Euroclear] [Clearstream] (Common Code ________) through the U.S. Depositary.
In connection with such request and in respect of such Series E Senior
Notes, the Transferor does hereby certify that such transfer or exchange has
been effected in accordance with the transfer restrictions set forth in the
Indenture and the Series E Senior Notes and pursuant to and in accordance with
Regulation S under the Securities Act, and accordingly the Transferor does
hereby certify that:
(1) the offer of the Series E Senior Notes was not made to a person in the
United States;
[(2) at the time the buy order was originated, the transferee was outside
the United States or the Transferor and any person acting on its
behalf reasonably believed that the transferee was outside the United
States,]*
[(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor
any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States,]*
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable,
and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
---------------------
cc: Ameren Energy Generating Company
- -------------------------
* Insert one of these two provisions, which come from the definition of
"offshore transactions" in Regulation S.
2
EXHIBIT D
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER OR EXCHANGE FROM RULE 144A GLOBAL SECURITY
OR IAI GLOBAL SECURITY TO UNRESTRICTED REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.6(b)(iii)of the Indenture)
The Bank of New York,
as Trustee
[Attn: Corporate Trust
101 Barclay Street
New York, New York 10286]
Re: Ameren Energy Generating Company 7.95% Senior Notes
Due 2032 (the "Series E Senior Notes")
--------------------------------------------------------
Reference is hereby made to the Indenture dated as of November 1, 2000 (the
"Indenture") from Ameren Energy Generating Company to The Bank of New York, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to U.S.$______________ principal amount of Series E
Senior Notes which are held in the form of the [Rule 144A] [IAI] Global Security
(CUSIP No. [ I ]) with the U.S. Depositary in the name of [insert name
of transferor] (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the Series E Senior Notes for an
interest in the Unrestricted Regulation S Global Security (CUSIP No. ).
In connection with such request and in respect of such Series E Senior
Notes, the Transferor does hereby certify that such exchange or transfer has
been effected in accordance with the transfer restrictions set forth in the
Indenture and the Series E Senior Notes and,
(i) with respect to transfers made in reliance on Regulation S under the
Securities Act, the Transferor does hereby certify that:
(1) the offer of the Series E Senior Notes was not made to a person in the
United States;
[(2) at the time the buy order was originated, the transferee was outside
the United States or the Transferor and any person acting on its behalf
reasonably believed that the transferee was outside the United States,]*
[(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any person
acting on its behalf knows that the transaction was pre-arranged with a buyer in
the United States,]*
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable, and
(4) the transaction is pursuant to and in accordance with Regulation S
and is not part of a plan or scheme to evade the registration requirements of
the United States Securities Act of 1933, as amended (the "Securities Act");
(ii) with respect to transfers made in reliance on Rule 144 under the
Securities Act, the transferor does hereby certify that the Series E Senior
Notes are being transferred in a transaction permitted by Rule 144 under the
Securities Act,
(iii) with respect to transfers made in reliance on another exemption from
the Securities Act (including without limitation Rule 144A), the transferor does
hereby certify that the following is the basis for the exemption: _____________,
or
(iv) with respect to an exchange, the transferor does hereby certify that
either (x) the Security being exchanged is not a "restricted security" as
defined in Rule 144 under the Securities Act or (y) the exchange is being made
to facilitate a contemporaneous transfer that complies with Section 2.6(b)(iii)
of the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
---------------------
cc: Ameren Energy Generating Company
- -----------------------
* Insert one of these two provisions, which come from the definition of
"offshore transactions" in Regulation S.
2
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR EXCHANGE
FROM RESTRICTED REGULATION S GLOBAL SECURITY, UNRESTRICTED
REGULATION S GLOBAL SECURITY OR
IAI GLOBAL SECURITY TO RULE 144A GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.6(b)(iv) of the Indenture)
The Bank of New York,
as Trustee
[Attn: Corporate Trust
101 Barclay Street
New York, New York 10286]
Re: Ameren Energy Generating Company 7.95% Senior Notes
Due 2032 (the "Series E Senior Notes")
--------------------------------------------------------
Reference is hereby made to the Indenture dated as of November 1, 2000 (the
"Indenture") from Ameren Energy Generating Company to The Bank of New York, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to U.S. $______________ principal amount of Series E
Senior Notes which are held in the form of the [[Restricted][Unrestricted]
Regulation S Global Security (CUSIP No. ) with [Euroclear]
[Clearstream].* (Common Code _______)] [IAI Global Security (CUSIP No.
)] through the U.S. Depositary in the name of [insert name of
transferor] (the "Transferor"). The Transferor has requested a transfer or
exchange of such beneficial interest in the Series E Senior Notes for an
interest in the Rule 144A Global Security.
In connection with such request, and in respect of such Series E Senior
Notes, the Transferor does hereby certify that such Series E Senior Notes are
being transferred or exchanged in accordance with (i) the transfer restrictions
set forth in the Series E Senior Notes and (ii) Rule 144A under the Securities
Act to a transferee that the Transferor reasonably believes is purchasing the
Series E Senior Notes for its own account or an account with respect to which
the transferee exercises sole investment discretion and the transferee and any
such account is a "qualified institutional buyer" within the meaning of Rule
144A, in each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
or any other jurisdiction.
- -----------------------
* Select appropriate depositary.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By:
---------------------------------------
Name:
Title:
Dated:
---------------------
cc: Ameren Energy Generating Company
EXHIBIT F
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OR EXCHANGE FROM RULE 144A GLOBAL SECURITY, RESTRICTED REGULATION
GLOBAL SECURITY OR UNRESTRICTED REGULATION S GLOBAL SECURITY
TO IAI GLOBAL SECURITY
(Exchanges or transfers Pursuant to
Section 2.6(b)(v) of the Indenture)
The Bank of New York,
as Trustee
[Attn: Corporate Trust
101 Barclay Street
New York, New York 10286]
Re: Ameren Energy Generating Company 7.95% Senior Notes
Due 2032 (the "Series E Senior Notes")
---------------------------------------------------
Reference is hereby made to the Indenture dated as of November 1, 2000 (the
"Indenture") from Ameren Energy Generating Company to The Bank of New York, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to U.S.$______________ principal amount of Series E
Senior Notes which are held in the form of the [Rule 144A Global Security (CUSIP
No. ) with the U.S. Depositary] [[Restricted][Unrestricted] Regulation
S Global Security (CUSIP No. ) with [Euroclear] [Clearstream]]* in the
name of [insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Global Security for an interest in the
IAI Global Security (CUSIP No. ).
In connection with such request with respect to a transfer or exchange for
an interest in the IAI Global Security, the Transferor does hereby certify that
such exchange or transfer has been effected in accordance with the transfer
restrictions set forth in the Rule 144A Global Security, the Restricted
Regulation S Global Security and the Unrestricted Regulation S Global Security
(as the case may be) and, with respect to transfers made in reliance on Rule 144
under the Securities Act, certify that the Securities are being transferred in a
transaction permitted by Rule 144 under the Securities Act.
- --------------------
* Select appropriate depositary.
In connection with such request with respect to a transfer or exchange for
an interest in the IAI Global Security, and in respect of such Rule 144A Global
Security, Restricted Regulations S Global Security and Unrestricted Regulation S
Global Security (as the case may be), the Transferor does hereby certify that
such Global Security is being transferred or exchanged in accordance with (i)
the transfer restrictions set forth in the Global Securities and (ii) in
accordance with the Securities Act to a transferee that the Transferor
reasonably believes is purchasing the IAI Global Securities for its own account
or an account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is an institution that is an
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, in each case purchasing IAI Global Securities in a
transaction exempt from the Securities Act and in accordance with any applicable
securities laws of any state of the United States or any other jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By:
--------------------------------------
Name:
Title:
Dated:
---------------------
cc: Ameren Energy Generating Company
Exhibit 4.2
AMEREN ENERGY GENERATING COMPANY
REGISTRATION RIGHTS AGREEMENT
June 6, 2002
Lehman Brothers Inc.
Banc One Capital Markets, Inc.
BNY Capital Markets, Inc.
Credit Suisse First Boston Corporation
Westdeutsche Landesbank Girozentrale, London Branch
c/o Lehman Brothers Inc.
745 7th Avenue
New York, New York 10019
Ladies and Gentlemen:
Ameren Energy Generating Company, an Illinois corporation (the "Company"),
proposes to issue and sell severally and not jointly to Lehman Brothers Inc.,
Banc One Capital Markets, Inc., BNY Capital Markets, Inc., Credit Suisse First
Boston Corporation and Westdeutsche Landesbank Girozentrale, London Branch
(collectively, the "Initial Purchasers"), on the terms set forth in a note
purchase agreement dated June 3, 2002 (the "Purchase Agreement"), $275,000,000
aggregate principal amount of 7.95% Senior Notes, Series E due 2032 (the "Series
E Notes" or the "Notes"). The Series E Notes will be issued pursuant to an
Indenture, dated as of November 1, 2000 and a Third Supplemental Indenture,
dated as of June 1, 2002 (collectively, the "Indenture") between the Company and
The Bank of New York, as Trustee (the "Trustee").
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the Initial Purchasers'
obligations thereunder, the Company agrees with the Initial Purchasers, for the
benefit of the holders of the Notes (including, without limitation, the Initial
Purchasers) and the Exchange Notes (as defined below) (collectively, the
"Holders"), as follows:
Section 1. Registered Exchange Offer. The Company shall prepare and file
with the U.S. Securities and Exchange Commission (the "SEC") a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to an offer (the "Registered Exchange Offer") to the Holders of Transfer
Restricted Notes (as defined in Section 6(d) hereof), who are not prohibited by
any law or policy of the SEC from participating in the Registered Exchange
Offer, to issue and deliver to such Holders, in exchange for the Notes, a like
aggregate principal amount of notes (the "Exchange Notes") of the Company issued
under the Indenture and identical in all material respects to the Notes that
will be registered under the Securities Act, except that (a) interest thereon
shall accrue from the last date on which interest has been paid on the Notes or,
if no such interest has been paid, from the date of original issue of the Notes
and (b) they will not contain terms with respect to transfer restrictions under
the Securities Act. The Company shall use its reasonable best efforts to cause
the Exchange Offer Registration Statement to become
effective under the Securities Act on or prior to 220 days after the date of
original issue of the Notes and shall keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date on which notice of the Registered Exchange Offer
is mailed to the Holders (that period being called the "Exchange Offer
Registration Period").
If the Company effects the Registered Exchange Offer, the Company will be
entitled to close the Registered Exchange Offer at the close of business on the
30th day after the commencement thereof if the Company has accepted all the
Notes validly tendered by such 30th day in accordance with the terms of the
Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of the Registered Exchange Offer to
enable each Holder of Transfer Restricted Notes electing to exchange those
Transfer Restricted Notes for Exchange Notes (assuming that such Holder is not
an affiliate of the Company within the meaning of the Securities Act, acquires
the Exchange Notes in the ordinary course of that Holder's business and has no
arrangement with any person to participate in the distribution of the Exchange
Notes, and is not prohibited by any law or policy of the SEC from participating
in the Registered Exchange Offer) to trade those Exchange Notes from and after
their receipt without any limitations or restrictions under the Securities Act
and without material restrictions under the securities laws of the several
states of the United States. In connection with the Registered Exchange Offer,
the Company shall use its reasonable best efforts to consummate the Registered
Exchange Offer and shall comply with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other
applicable laws and regulations in connection with the Registered Exchange
Offer.
The Company acknowledges that, pursuant to current interpretations by the
SEC's staff of Section 5 of the Securities Act, in the absence of an applicable
exemption therefrom, (a) each Holder that is a broker-dealer electing to
exchange Notes, acquired for its own account as a result of market-making
activities or other trading activities, for Exchange Notes (an "Exchanging
Dealer"), is required to deliver a prospectus containing the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, and in
Annex C hereto in the "Plan of Distribution" section, in connection with a sale
of any such Exchange Notes received by that Exchanging Dealer pursuant to the
Registered Exchange Offer, and (b) if the Initial Purchasers are permitted under
applicable law and applicable policies of the SEC to and elect to sell Exchange
Notes acquired in exchange for Notes constituting any portion of an unsold
allotment, they are required to deliver a prospectus containing the information
required by Item 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in connection with that sale.
The Company shall include in the prospectus contained in the Exchange Offer
Registration Statement a section titled "Plan of Distribution," reasonably
acceptable to the Initial Purchasers, that contains a summary statement of the
positions taken or policies made by the staff of the SEC with respect to the
potential "underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by
that broker-dealer in the Registered Exchange Offer (a "Participating
Broker-Dealer"),
2
whether those positions or policies have been publicly disseminated by the staff
of the SEC or, in the reasonable judgment of the Initial Purchasers based on
advice of counsel (which may be in-house counsel), represent the prevailing
views of the staff of the SEC.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and shall amend and supplement the
prospectus contained therein, in order to permit that prospectus to be lawfully
delivered by the Initial Purchasers and all Exchanging Dealers subject to the
prospectus delivery requirements of the Securities Act, and shall make that
prospectus available to the Initial Purchasers and those Exchanging Dealers for
such period of time after the consummation of the Registered Exchange Offer as
those persons must comply with those requirements in order to resell the
Exchange Notes.
The Company shall make available for a period of 270 days after the
consummation of the Registered Exchange Offer a copy of the prospectus, and any
amendment or supplement thereto, forming part of the Exchange Offer Registration
Statement, to any broker-dealer for use in connection with any resale of any
Exchange Notes. The Notes and the Exchange Notes are herein collectively called
the "Securities."
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date notice thereof is
mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York,
which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last business day on which the
Registered Exchange Offer remains open; and
(e) otherwise comply in all material respects with all applicable laws
in effecting the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all the Notes validly tendered and not
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all the Notes so accepted for exchange; and
3
(iii) issue, and cause the Trustee to authenticate and deliver
promptly to each Holder of the Notes, Exchange Notes, equal in principal
amount to the Notes held by that Holder so accepted for exchange.
The Exchange Notes will not be subject to the restrictive legend set
forth on the Transfer Restricted Notes or the transfer restrictions (other
than in respect of minimum denominations) or bear Additional Interest other
than as provided in Section 6(a)(iii) herein. The Indenture will provide
that the Notes and the Exchange Notes will vote and consent together on all
matters as one class and not as separate classes on any matter.
Interest on each Exchange Note issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on those Notes, from the date of original issue of
those Notes.
The Registered Exchange Offer shall not be subject to any conditions,
other than that the Registered Exchange Offer shall not violate applicable
law or any applicable interpretation of the staff of the SEC and as
provided in the next sentence. Each Holder participating in the Registered
Exchange Offer will be required to represent to the Company at the time of
the consummation of the Registered Exchange Offer:
(a) that any Exchange Note received by that Holder will be
acquired in the ordinary course of business;
(b) that the Holder will have no arrangement or understanding
with any person to participate in the distribution of the Notes or the
Exchange Notes within the meaning of the Securities Act;
(c) that the Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or, if it is an affiliate, that
Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable;
(d) if that Holder is not a broker-dealer, that it is not engaged
in, and does not intend to engage in, any distribution of the Exchange
Notes; and
(e) if that Holder is a broker-dealer, that it will receive
Exchange Notes for its own account in exchange for Notes that were
acquired as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with
any resale of those Exchange Notes.
Notwithstanding any other provision hereof, the Company will ensure
that (a) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (b) any Exchange Offer Registration Statement and
any amendment thereto will not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (c) any prospectus forming part of any Exchange Offer
4
Registration Statement, and any supplement to that prospectus, at the time of
issuance will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that with respect to clauses (b) and
(c), the Company will not be liable to any Holder or Initial Purchaser for
written information relating to such Holder or Initial Purchaser furnished to
the Company by or on behalf of such Holder or Initial Purchaser specifically for
inclusion therein.
Section 2. Shelf Registration. If (a) the Company determines that a
Registered Exchange Offer, as contemplated by Section 1 hereof, is not available
or may not be consummated as soon as practicable after the last date the
Registered Exchange Offer is open because it would violate applicable law or the
applicable interpretations of the staff of the SEC, (b) the Exchange Offer
Registration Statement is not effective on or prior to 220 days after the date
of original issue of the Transfer Restricted Notes, (c) the Registered Exchange
Offer is not consummated on or prior to 270 days after the date of original
issue of the Transfer Restricted Notes, (d) the Initial Purchasers of the
Transfer Restricted Notes so request with respect to the Transfer Restricted
Notes not eligible to be exchanged for Exchange Notes in the Registered Exchange
Offer and held by them following consummation of the Registered Exchange Offer,
or (e) any Holder (other than an Exchanging Dealer) is not eligible to
participate in the Registered Exchange Offer under applicable law or applicable
policies of the SEC, or any Holder (other than an Exchanging Dealer) that
participates in the Registered Exchange Offer does not receive freely tradeable
Exchange Notes on the date of the exchange for validly tendered (and not
withdrawn) Transfer Restricted Notes:
(i) The Company shall use its reasonable best efforts to prepare and
file, as promptly as practicable, with the SEC and thereafter to cause to
be declared effective a registration statement (the "Shelf Registration
Statement" and, together with the Exchange Offer Registration Statement, a
"Registration Statement") on an appropriate form under the Securities Act
relating to the offer and sale of the Transfer Restricted Notes by the
Holders thereof from time to time in accordance with the methods of
distribution set forth in the Shelf Registration Statement and Rule 415
under the Securities Act (hereinafter, the "Shelf Registration"), but no
Holder (other than the Initial Purchasers) is entitled to have any Transfer
Restricted Notes held by it covered by that Shelf Registration Statement
unless that Holder agrees in writing to be bound by all the provisions of
this Agreement applicable to that Holder; and provided, however, that with
respect to Exchange Notes which are attributable to Notes constituting any
portion of an unsold allotment held by an Initial Purchaser, the Company
may, if permitted by current interpretations of the SEC's staff and, in the
opinion of the Company's counsel, sufficient to cause the Exchange Notes to
be freely tradeable by such Initial Purchaser, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Items 507 and 508 of Regulation S-K, as applicable,
in satisfaction of its obligations under this subsection with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.
(ii) The Company shall use all reasonable efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included
5
therein to be lawfully delivered by the Holders of the relevant Securities,
until the earlier of (A) the end of the period referred to in Rule 144(k)
under the Securities Act after the original issue date of the Notes expires
(or the end of such longer period as may result from an extension pursuant
to Section 3(j) below), provided that, if this clause (A) is relied upon,
counsel to the Company shall have delivered to Lehman Brothers Inc., an
opinion to the effect that the Notes included in such Shelf Registration
Statement will thereafter be freely tradeable by the Holders thereof
without restriction, and (B) the date on which all the Securities covered
by the Shelf Registration Statement have been sold pursuant thereto. Such
period is hereinafter referred to as the "Shelf Registration Period."
(iii) Notwithstanding any provision of this Agreement to the contrary,
the Company shall cause the Shelf Registration Statement and the related
prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (A) to
comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the SEC, (B) not to contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that with respect to clause (B),
the Company will not be liable to any Holder or Initial Purchaser for
written information relating to such Holder or Initial Purchaser furnished
to the Company by or on behalf of such Holder or Initial Purchaser
specifically for inclusion therein and (C) not to relate to any securities
other than the Transfer Restricted Notes.
Section 3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company shall (i) furnish to the Initial Purchasers, prior to
the filing thereof with the SEC, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus
included therein and shall not file any such Registration Statement or
amendment thereto or any prospectus or any supplement thereto (including
any document that, upon filing, would be incorporated or deemed to be
incorporated by reference therein and any amendment to any such document
other than documents required to be filed pursuant to the Exchange Act) to
which the Initial Purchasers shall reasonably object in writing, except for
any Registration Statement or amendment thereto or prospectus or supplement
thereto (a copy of which has been previously furnished to the Initial
Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel)) which counsel to the Company has
advised the Company in writing is required to be filed, notwithstanding any
such objection, in order to comply with applicable law, (ii) include
information substantially to the effect set forth (A) in Annex A hereto on
the cover of the prospectus forming a part of the Exchange Offer
Registration Statement, (B) in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section of such
prospectus, (C) in Annex C hereto in the "Plan of Distribution" section of
such prospectus, (iii) include the information set forth in Annex D hereto
in the Letter of Transmittal delivered in connection with the Registered
Exchange Offer, (iv) to the extent required by law or interpretation of the
staff of the SEC, if requested by the Initial Purchasers, include the
information required by Item 507 or 508 of Regulation S-K under the
Securities Act, as
6
applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement, and (v) to the extent required by law or
interpretation of the staff of the SEC, in the case of a Shelf Registration
Statement, include the names of the Holders who propose to sell Securities
pursuant to the Shelf Registration Statement as selling securityholders.
(b) The Company shall notify promptly the Initial Purchasers, the
Holders and any Participating Broker-Dealer from whom the Company has
received prior written notice stating that it will be a Participating
Broker-Dealer in the Registered Exchange Offer (which notice pursuant to
clauses (ii) through (v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until any requisite changes have been
made) and, if requested by the Initial Purchasers, the Holders or any such
Participating Broker-Dealer, confirm such notice in writing:
(i) when the Registration Statement or any amendment thereto has
been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for an amendment or supplement to
the Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceeding for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose;
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in order
that the Registration Statement or the prospectus does not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and
(vi) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate.
(c) The Company shall make every reasonable effort to prevent the
issuance, and if issued to obtain the withdrawal at the earliest possible
time, of any order suspending the effectiveness of the Registration
Statement and shall provide prompt written notice to the Initial Purchasers
and each Holder of the withdrawal of any such order.
(d) The Company shall furnish to each Holder of Securities included in
the Shelf Registration, without charge, at least one conformed copy of the
Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules (without documents
incorporated therein by reference or exhibits thereto, unless a Holder so
requests in writing).
7
(e) The Company shall deliver to the Initial Purchasers, and to any
other Holder that so requests, without charge, at least one conformed copy
of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference or exhibits thereto, unless any
such Holder or the Initial Purchasers so request in writing).
(f) The Company shall deliver to each Holder of Securities included in
the Shelf Registration, without charge, as many copies of the prospectus
(including each preliminary prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as that Holder may
reasonably request during the Shelf Registration Period. The Company
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling
Holders of the Securities in connection with the offering and sale of the
Securities covered by, and as contemplated by, the prospectus, or any
amendment or supplement thereto, included in the Shelf Registration
Statement.
(g) The Company shall deliver to each Initial Purchaser, any
Participating Broker-Dealer and any Exchanging Dealer, without charge, as
many copies of the final prospectus included in the Exchange Offer
Registration Statement and any amendment or supplement thereto as that
person or entity may reasonably request. The Company consents, subject to
the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by the Initial Purchasers, if necessary,
any Participating Broker-Dealer and any Exchanging Dealer and such other
persons as may be required to deliver a prospectus following the Registered
Exchange Offer in connection with the offering and sale of the Exchange
Notes covered by the prospectus, or any amendment or supplement thereto,
included in the Exchange Offer Registration Statement, but no such person
or entity is authorized by the Company to deliver and no such person or
entity shall deliver any such prospectus more than 270 days following the
consummation of the Registered Exchange Offer, in connection with any
resale contemplated by this paragraph.
(h) Prior to any public offering of Securities pursuant to any
Registration Statement, the Company shall use all reasonable efforts to
register or qualify or cooperate with the Holders of the Securities
included therein and their respective counsel in connection with the
registration or qualification of the Securities for offer and sale under
the securities or Blue Sky laws of such states of the United States as any
Holder of the Securities reasonably requests in writing and shall do any
and all other acts or things necessary or advisable to enable that Holder
to offer and sell in such jurisdictions the Securities covered by that
Registration Statement owned by that Holder, but the Company is not
required to (i) qualify generally or as a foreign corporation to do
business in any jurisdiction where it is not then so qualified or (ii) take
any action which would subject it to general service of process or to
taxation in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing
the Securities to be sold pursuant to any Shelf Registration Statement free
of any restrictive legend and in such denominations (consistent with the
provisions of the Indenture and as described in the prospectus) and
registered
8
in such names as the Holders may request at least two business days prior
to closing of any sale of the Securities pursuant to such Shelf
Registration Statement.
(j) If any event contemplated by paragraphs (ii) through (vi) of
Section 3(b) above occurs during the period in which the Company is
required to maintain an effective Registration Statement, the Company shall
promptly prepare and file a post-effective amendment to the Registration
Statement or a supplement to the related prospectus and any other required
document so that, as thereafter delivered to Holders of the Notes or
purchasers of Securities, the prospectus will not contain 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 light of
the circumstances under which they were made, not misleading. If the
Company notifies the Initial Purchasers, the Holders of the Securities and
any known Participating Broker-Dealer in accordance with paragraphs (ii)
through (vi) of Section 3(b) above to suspend the use of the prospectus
until any requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealer shall suspend use of that prospectus until the
Company has amended or supplemented the prospectus to correct any
misstatement or omission, and the period of effectiveness of the Shelf
Registration Statement provided for in Section 2(b) above shall be extended
by the number of days from and including the date of the giving of that
notice to and including the date when the Initial Purchasers, the Holders
of the Securities and any known Participating Broker-Dealer shall have
received that amended or supplemented prospectus pursuant to this Section
3(j). Each Initial Purchaser, Holder and Participating Broker-Dealer agrees
that on receipt of any such notice from the Company it will not distribute
copies of the prospectus that are the subject of that notice and will
retain those copies in its files.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will obtain a CUSIP number for the Transfer
Restricted Notes or the Exchange Notes, as the case may be, and provide the
Trustee with printed certificates for the Notes or the Exchange Notes, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all rules and regulations of the SEC
to the extent and so long as they are applicable to the Registered Exchange
Offer or the Shelf Registration and will make generally available to its
security holders (or otherwise provide in accordance with Section 11(a) of
the Securities Act) an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act, no later than 45 days after the end of
the 12-month period (or 90 days, if that period is a fiscal year) that
begins with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement, which
statement will cover that 12-month period.
(m) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and to contain
any changes that are necessary for that qualification. If that
qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to
the applicable provisions thereof.
9
(n) The Company will require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding that Holder and the distribution of the Securities as
the Company may from time to time reasonably request for inclusion in the
Shelf Registration Statement, and to provide comments on the Shelf
Registration Statement, and the Company may exclude from that registration
the Securities of any Holder that unreasonably fails to furnish that
information and those comments within a reasonable time after receiving
that request.
(o) In the case of any Shelf Registration, the Company shall enter
into such customary agreements (including, if requested, an underwriting
agreement in customary form) and take all such other action, if any, as the
Holders of a majority of the Securities being sold shall reasonably request
in order to facilitate the disposition of the Securities pursuant to that
Shelf Registration; provided that the Company shall have no obligation to
pay fees and expenses of counsel to the underwriters and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale
or disposition of Securities by a Holder.
(p) In the case of any Shelf Registration, the Company shall make
available for inspection by a single representative of the Holders of
Securities being sold, one firm of legal counsel and an accountant or a
single accounting firm retained by those Holders, in a manner designed to
permit underwriters to satisfy their due diligence investigation under the
Securities Act, all financial and other records, pertinent corporate
documents and properties of the Company customarily inspected by
underwriters in primary underwritten offerings and shall cause the
officers, directors and employees of the Company and its subsidiaries to
supply all information reasonably requested by, and customarily supplied in
connection with primary underwritten offerings to, any such representative,
attorney or accountant in connection with that registration, but any
records, information or documents that are designated by the Company as
confidential at the time of delivery thereof shall be kept confidential by
those persons, unless (i) those records, information or documents are in
the public domain or otherwise publicly available, (ii) disclosure of those
records, information or documents is required by a court or administrative
order or (iii) disclosure of those records, information or documents, in
the written opinion of counsel to those persons, is otherwise required by
law (including, without limitation, pursuant to the Securities Act).
(q) In the case of any Shelf Registration, the Company, if requested
by any Holder of Securities covered thereby, shall: (i) cause its counsel
to deliver an opinion and updates thereof relating to the Securities in
customary form addressed to the selling Holder and the managing
underwriters, if any, covering matters customarily covered in opinions
requested in underwritten offerings; (ii) cause its officers to execute and
deliver such documents and certificates and updates thereof as may be
reasonably requested by any underwriter of the Securities, and which are
customarily delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of the Company made pursuant
to, and to evidence compliance with any customary conditions contained in,
an underwriting agreement and to provide indemnification and contribution
on terms no less favorable than those set forth in Section 5 hereof with
respect to all parties to be indemnified (including, without limitation,
selling Holders and underwriters); and (iii) cause its independent public
accountants to provide to the selling Holders of the Securities (and any
underwriter therefor) a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in
10
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.
(r) (i) Upon consummation of a Registered Exchange Offer, the Company
shall, if requested by the Trustee, obtain an opinion of counsel to the
Company addressed to the Trustee for the benefit of all Holders
participating in the Registered Exchange Offer and which includes an
opinion that (A) the Company has duly authorized, executed and delivered
the Exchange Notes and (B) each of the Exchange Notes constitutes a legal,
valid and binding obligation of the Company, enforceable in accordance with
its terms (with customary exceptions); and
(ii) In the case of any Exchange Offer Registration Statement,
the Company shall deliver to the Initial Purchasers or to another
representative of the Participating Broker-Dealers, if requested by
any such Initial Purchasers or such other representative of the
Participating Broker-Dealers, on behalf of the Participating
Broker-Dealers, upon consummation of the Exchange Offer (A) an opinion
of counsel in form and substance reasonably satisfactory to the
Initial Purchasers or such other representative of the Participating
Broker-Dealers, covering matters customarily covered in opinions
requested in connection with Exchange Offer Registration Statements
and such other matters as may be reasonably requested, (B) an
officer's certificate containing certifications and updates thereof
substantially similar to those set forth in certificates delivered
pursuant to Section 7 of the Note Purchase Agreement and such
additional certifications as are customarily delivered in primary
underwritten offerings, and (C) a comfort letter, in customary form
and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to
receipt of appropriate documentation as contemplated, and only if
permitted, by Statement on Auditing Standards No. 72.
(s) If a Registered Exchange Offer is to be consummated, upon delivery
of the Notes by Holders to the Company (or to any other Person designated
by the Company) in exchange for the Exchange Notes, the Company shall mark,
or caused to be marked, on the Notes so exchanged that those Notes are
being canceled in exchange for the Exchange Notes, and in no event shall
the Notes be marked as paid or otherwise satisfied.
(t) If any broker-dealer registered under the Exchange Act underwrites
any Securities or participates as a member of an underwriting syndicate or
selling group or "assists in the distribution" (within the meaning of the
Conduct Rules of the National Association of Securities Dealers, Inc.
("NASD")) thereof, whether as a Holder of those Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in
complying with the requirements of those Rules and By-Laws, including by
(i) if those Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating to
those Securities, to exercise usual standards of due diligence in respect
thereto and, if any portion of the offering contemplated by that
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities, (ii)
indemnifying any such qualified independent underwriter to the extent of
the indemnification of underwriters provided in Section 5 hereof, and
11
(iii) providing such information to that broker-dealer as may be required
in order for that broker-dealer to comply with the requirements of the
Conduct Rules of the NASD.
(u) The Company will be deemed not to have used its best efforts to
cause the Exchange Offer Registration Statement or a required Shelf
Registration, as the case may be, to become, or to remain, effective at the
requisite date or during the requisite period if the Company voluntarily
takes any action that would result in such Registration Statement not being
declared effective or in the Holders not being able to exchange or offer
and sell their securities during that period, unless such action by the
Company is required by law.
Section 4. Registration Expenses. The Company shall pay all fees and
expenses incident to the performance of or compliance with this Agreement by the
Company including, without limitation: (a) all SEC, stock exchange or NASD
registration and filing fees; (b) all fees and expenses incurred in connection
with compliance with state securities or Blue Sky laws (including reasonable
fees and disbursements of Pillsbury Winthrop LLP as counsel for any underwriters
or Holders in connection with Blue Sky qualification of any of the Securities);
(c) all out of pocket expenses of any persons retained by the Company in
connection with preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any prospectus, any amendment or
supplement to either thereof, any underwriting agreement, securities sales
agreement or other document relating to the performance of and compliance with
this Agreement; (d) all rating agency fees; (e) the fees and disbursements of
counsel for the Company and, in the event of a Shelf Registration, the
reasonable fees and disbursements of Pillsbury Winthrop LLP as counsel for the
Holders and of the independent public accountants of the Company, including the
expense of any special audit or "cold comfort" letter required by or incident to
that performance and compliance, but excluding fees and expenses of counsel to
the underwriters and underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of Securities by a Holder and; (f)
the fees and expenses of the Trustee, and any paying agent, exchange agent or
custodian.
Section 5. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder of Securities, any Participating Broker-Dealer, and each
person, if any, who controls that Holder or Participating Broker-Dealer within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, or is controlled by, that Holder
or Participating Broker-Dealer, from and against any and all losses, claims,
damages, liabilities or expenses, as and when incurred, (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or the related prospectus (as amended or supplemented if
the Company shall have furnished any amendment or supplement thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
on information relating to that Holder or Participating Broker-Dealer furnished
to the Company in writing by that Holder or Participating Broker-Dealer
expressly for use therein, but the foregoing indemnity in respect of any
prospectus will not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities, or any person
12
controlling or affiliated with that Holder or Participating Broker-Dealer, if a
copy of an amendment or supplement to the prospectus (furnished by the Company
on a timely basis) was not sent or given by or on behalf of that Holder or
Participating Broker-Dealer to that person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Securities
to that person, and if such amendment or supplement would have cured the defect
giving rise to that loss, claim, damage or liability.
(b) Each Participating Broker-Dealer and Holder of Securities, severally
and not jointly, agrees to indemnify and hold harmless the Company, other
selling Holders and Participating Broker-Dealers, directors of the Company, the
officers of the Company who sign a Registration Statement and each person, if
any, who controls the Company or any selling Holder or Participating
Broker-Dealer, within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to that Holder or Participating Broker-Dealer, but only with
reference to information relating to that Holder or Participating Broker-Dealer
furnished to the Company in writing by that Holder or Participating
Broker-Dealer expressly for use in a Registration Statement, any preliminary
prospectus, prospectus or any amendment or supplement to any thereof.
(c) If any proceeding (including any governmental investigation) is
instituted involving any person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) above, that person (the "indemnified
party") shall promptly notify the person against whom that indemnity may be
sought (the "indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in that proceeding and shall pay the fees and
expenses of that counsel related to that proceeding; but the omission so to
notify the indemnifying party shall not relieve the indemnifying party from any
liability which it may have to any indemnified party on account of this
indemnity (except to the extent that the indemnifying party is materially
prejudiced by such failure) or otherwise. In any such proceeding, any
indemnified party may retain its own counsel, but the fees and expenses of that
counsel will be at the expense of that indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of that counsel, (ii) the indemnifying party does not assume the
defense of such proceeding in a timely manner or (iii) the named parties to any
such proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and the indemnified party reasonably objects to
such assumption on the ground that there may be legal defenses available to it
that are different from or in addition to those available to the indemnifying
party or another indemnifying party. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. If an indemnified party
includes (x) the Initial Purchasers or such controlling persons of the Initial
Purchasers, that firm will be designated in writing by Lehman Brothers Inc.; or
(y) Holders of Securities (other than the Initial Purchasers) or controlling
persons of those Holders, that firm will be designated in writing by the Holders
of a majority in aggregate principal amount of those Securities. In all other
cases, the Company will designate that firm. The indemnifying party will not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with that consent or if there be a
13
final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of that
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party has requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
will be liable for any settlement of any proceeding effected without its written
consent if (i) that settlement is entered into more than 45 days after receipt
by the indemnifying party of the aforesaid request and (ii) the indemnifying
party shall not have reimbursed the indemnified party in accordance with that
request prior to the date of that settlement. No indemnifying party may, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of a judgment with respect to, any
pending or threatened proceeding in respect of which indemnity could have been
sought hereunder by that indemnified party, unless that settlement, compromise
or judgment (i) includes an unconditional release of that indemnified party from
all liability on claims that are the subject matter of that proceeding and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a) or (b)
of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and each Participating Broker-Dealer and Holder on the other from the
offering of the Notes. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and each
Participating Broker-Dealer and Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and each Participating Broker-Dealer and Holder on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the total fees
received by each Participating Broker-Dealer and Holder in connection with the
offering of the Notes bear to the total price of the Notes as set forth on the
cover page of the Offering Circular. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or each
Participating Broker-Dealer and Holder on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' and Participating Broker-Dealers'
respective obligations to contribute pursuant to this Section 5 are several in
proportion to the respective amount of Notes they have purchased, not joint.
(e) The Company, each Participating Broker-Dealer and each Holder agree
that it would not be just or equitable if contribution pursuant to this Section
5 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable
14
considerations referred to in subsection (d) of this Section 5. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in subsection (d) above is deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by that indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder of Securities is required to contribute any amount in
excess of the amount by which the total price at which the Securities sold by
that Holder pursuant to a Registration Statement were sold exceeds the amount of
any damages that Holder has otherwise been required to pay by reason of that
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) is entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution provisions contained in this Section 5
will remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or Participating Broker-Dealer or any person controlling that Holder
or Participating Broker-Dealer or by or on behalf of the Company, their
respective officers or directors or any person controlling the Company, and
(iii) the sale of the Securities. The remedies provided for in this Section 5
are not exclusive and do not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
Section 6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Securities will be
assessed as follows if any of the following events occurs (each event identified
in clause (i), (ii), (iii), (iv) or (v) below, an "Additional Interest Event"):
(i) If the Exchange Offer Registration Period is not closed and all
Transfer Restricted Notes properly tendered to the Company have not been
exchanged for Exchange Notes on or prior to 270 days after the original
issue date of the Notes; or
(ii) If, after the Exchange Offer Registration Statement is declared
effective, such Exchange Offer Registration Statement thereafter ceases to
be effective at any time during the required period specified within this
Agreement; or
(iii)If the Company ceases to maintain its status as a reporting
company under the Exchange Act whether or not the SEC rules and regulations
require the Company to maintain that status (unless the SEC will not accept
the filing of the applicable reports); or
(iv) Whether or not the Registered Exchange Offer is consummated, any
required Shelf Registration Statement is not filed as promptly as
practicable, and in any event within 45 days, following the event giving
rise to the requirement to file a Shelf Registration Statement in
accordance with this Agreement; or
(v) If, after any Shelf Registration Statement is declared effective,
(A) such Shelf Registration Statement thereafter ceases to be effective
during the Shelf Registration Period; or (B) such Shelf Registration
Statement or the related prospectus ceases to be usable in connection with
resales of Transfer Restricted Notes during the
15
Shelf Registration Period (except as permitted in paragraph (b) of this
Section 6) because either (1) any event occurs as a result of which the
related prospectus forming part of such Shelf Registration Statement would
include any 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 (2) it shall be
necessary to amend such Shelf Registration Statement, or supplement the
related prospectus, to comply with the Securities Act or the Exchange Act
or the respective rules thereunder.
Additional Interest shall accrue on the Transfer Restricted Notes over
and above the interest set forth in the title of the Notes from and
including the date on which any such Additional Interest Event shall occur
to, but excluding, the date on which all such Additional Interest Events
have been cured or terminated, at a rate of 0.50% per annum and such
Additional Interest shall be payable in accordance with Section 6(c). In
the event that more than one of the aforementioned Additional Interest
Events occurs at the same time, the maximum increase in the interest rate
applicable to the Notes shall be 0.50% per annum.
(b) An Additional Interest Event referred to in Section 6(a)(v) is
deemed not to be continuing in relation to a Shelf Registration Statement
or the related prospectus if (i) that Additional Interest Event has
occurred solely as a result of (x) the filing of a post-effective amendment
to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company, when such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) the occurrence of other
material events or developments with respect to the Company or its
Affiliates that would need to be described in such Shelf Registration
Statement or the related prospectus, and (ii) in the case of clause (y),
the Company is proceeding promptly and in good faith to amend or supplement
such Shelf Registration Statement and related prospectus to describe those
events or, in the case of material developments that the Company determines
in good faith must remain confidential for business reasons, the Company is
proceeding promptly and in good faith to take such steps as are necessary
so that those developments need no longer remain confidential, but in any
case, if any Additional Interest Event (including any referred to in clause
(x) or (y), above) continues for a period in excess of 45 days, Additional
Interest will be payable in accordance with the above paragraph from the
day following the last day of that 45-day period until the date on which
that Additional Interest Event is cured.
(c) Any Additional Interest payable will be payable on the regular
interest payment dates with respect to the Notes, in the same manner as the
manner in which regular interest is payable. The amount of Additional
Interest for any period will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Notes, multiplied
by a fraction, the numerator of which is the number of days that Additional
Interest rate was applicable during that period (determined on the basis of
a 360-day year comprised of twelve 30-day months), and the denominator of
which is 360.
(d) "Transfer Restricted Note" means each Note until: (i) the date on
which that Note has been exchanged by a person other than a broker-dealer
for a freely transferable Exchange Note in the Registered Exchange Offer;
(ii) following the exchange by a broker-dealer in the Registered Exchange
Offer of a Transfer Restricted Note for an Exchange Note, the date
16
on which that Exchange Note is sold to a purchaser who receives from that
broker-dealer on or prior to the date of that sale a copy of the prospectus
constituting part of the Exchange Offer Registration Statement; (iii) the
date on which that Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement; or (iv) the date on which that Note is distributed to the public
pursuant to Rule 144 under the Securities Act or becomes freely tradeable
pursuant to Rule 144(k) under the Securities Act.
Section 7. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner. If at any time the Company is not required to
file those reports, it will, upon the request of any Holder of Transfer
Restricted Notes, make publicly available other information so long as is
necessary to permit sales of Securities pursuant to Rules 144 and 144A and
otherwise as required by the Indenture. The Company covenants that it will take
such further action as any Holder of Transfer Restricted Notes may reasonably
request, all to the extent required from time to time to enable that Holder to
sell Transfer Restricted Notes without registration under the Securities Act
within the limitation of the exemptions provided by Rules 144 and 144A
(including the requirements of Rule 144A(d)(4)). Upon request by an Initial
Purchaser, the Company will provide a copy of this Agreement to prospective
purchasers of Notes identified in writing to the Company by that Initial
Purchaser. Upon the request of any Holder of Transfer Restricted Notes, the
Company shall deliver to that Holder a written statement as to whether it has
complied with those requirements. Notwithstanding the foregoing, nothing in this
Section 7 requires the Company to register any of its securities under the
Exchange Act.
Section 8. Underwritten Registrations. If any of the Transfer Restricted
Notes covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Notes included in that offering, but the Managing Underwriters must
be reasonably satisfactory to the Company.
No person may participate in any underwritten registration hereunder unless
that person (a) agrees to sell that person's Transfer Restricted Notes on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve those arrangements, and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of those
underwriting arrangements.
17
Section 9. Miscellaneous.(a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority in principal amount of the
Securities affected thereby; provided that no amendment, modification or
supplement with respect to Section 6 hereof shall be effective as against any
Holder unless such amendment, modification or supplement either (i) shall have
no adverse effect on the Holder or (ii) such Holder shall have consented to such
amendment, modification or supplement.
(b) Notices. All statements, requests, notices and agreements
hereunder shall be made in writing, and:
(i) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., 745 7th
Avenue, New York, New York 10019, Attention: Debt Capital Markets,
Power Group (Fax: (212) 526-0943), with a copy to Pillsbury Winthrop
LLP, One Battery Park Plaza, New York, New York 10004-1490, Attention:
David P. Falck, Esq. (Fax: 212-858-1500); and (ii) if to the Company,
shall be delivered or sent by mail, telex or facsimile transmission to
Ameren Energy Generating Company, One Ameren Plaza, 1901 Chouteau
Avenue, P.O. Box 66149, MC 1300, St. Louis, Missouri 63166-6149,
Attention: General Counsel (Fax: 314-554-4014), with a copy to Jones,
Day, Reavis & Pogue, 77 W. Wacker Drive, Chicago, Illinois 60601,
Attention: William J. Harmon. (Fax: 312-782-8585).
All such notices and communications will be deemed to have been duly given: (A)
at the time delivered by hand, if personally delivered; (B) three business days
after being deposited in the mail, postage prepaid, if mailed; (C) when receipt
is acknowledged by the recipient's facsimile machine operator, if sent by
facsimile transmission; or (D) on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor will it, on or after the date hereof, enter into,
any agreement with respect to the Securities that is inconsistent with the
rights granted to the Holders herein or that otherwise conflicts with this
Agreement.
(d) Successors and Assigns. This Agreement is binding on the Company
and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed will constitute an original and all of which taken
together will constitute one and the same agreement.
(f) Governing Law. This Agreement is governed by, and is to be
construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of law.
18
(g) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein is not affected or impaired thereby.
(h) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates will
not be counted in determining whether that consent or approval was given by
the Holders of that required percentage.
(i) Specific Performance. Without limiting the remedies available to
the Holders, the Company acknowledges that any failure by it to comply with
their obligations under Section 1 or Section 2 hereof may result in
material irreparable injury to the Holder for which there is no adequate
remedy at law, that it would not be possible to measure damages for such
failure precisely and that, in the event of any such failure, any Holder
may obtain such relief as is necessary to enforce specifically the
obligations of the Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
AMEREN ENERGY GENERATING COMPANY
By: /s/ Jerre E. Birdsong
---------------------------------
Name: Jerre E. Birdsong
Title: Vice President and Treasurer
Accepted as of the date hereof
Lehman Brothers Inc.
Banc One Capital Markets, Inc.
BNY Capital Markets, Inc.
Credit Suisse First Boston Corporation
Westdeutsche Landesbank Girozentrale, London Branch
By: LEHMAN BROTHERS INC.
By: /s/ John Veech
---------------------------------
Name: John Veech
Title: Managing Director
20
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Existing Notes where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 270 days after the consummation of the Exchange Offer, it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution".
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Existing Notes, that were acquired by that broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of those
Exchange Notes. See "Plan of Distribution."
ANNEX C
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of those Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes when those Notes were acquired as a result of market making
activities or other trading activities. The Company has agreed that, for a
period of 270 days after the consummation of the Exchange Offer, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _____________, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by any broker-dealer for its own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of those
methods of resale, at market prices prevailing at the time of resale or at
prices related to those prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of those Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such person may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 270 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus, and any amendment or
supplement to this Prospectus, to any broker-dealer that requests those
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions of
any broker or dealer and transfer taxes, if any, and will indemnify the Holders
of the Securities (including any broker-dealer) against certain liabilities,
including liabilities under the Securities Act.
- ------------------------
In addition, the legend required by Item 502(b) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
ANNEX D
----- CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENT OR SUPPLEMENT THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
Exhibit 99.1
CERTIFICATE
furnished under
Section 906 of the Sarbanes-Oxley Act of 2002.
I, Daniel F. Cole, chief executive officer of Ameren Energy Generating
Company, hereby certify that to the best of my knowledge, the accompanying
Report of Ameren Energy Generating Company on Form 10-Q for the quarter ended
June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that information contained in such
Report fairly presents, in all material respects, the financial condition and
results of operations of Ameren Energy Generating Company.
/s/ Daniel F. Cole
--------------------------------
Daniel F. Cole
Chief Executive Officer
Date: August 14, 2002
Exhibit 99.2
CERTIFICATE
furnished under
Section 906 of the Sarbanes-Oxley Act of 2002.
I, Warner L. Baxter, chief financial officer of Ameren Energy Generating
Company, hereby certify that to the best of my knowledge, the accompanying
Report of Ameren Energy Generating Company on Form 10-Q for the quarter ended
June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that information contained in such
Report fairly presents, in all material respects, the financial condition and
results of operations of Ameren Energy Generating Company.
/s/ Warner L. Baxter
------------------------------
Warner L. Baxter
Chief Financial Officer
Date: August 14, 2002