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                                 LOAN AGREEMENT




                          Dated as of September 1, 1998


                                     between


                       STATE ENVIRONMENTAL IMPROVEMENT AND
                           ENERGY RESOURCES AUTHORITY


                                       and


                      UNION ELECTRIC COMPANY, dba AMERENUE




                            -------------------------
                                   $50,000,000
                Environmental Improvement Revenue Refunding Bonds
                        (Union Electric Company Project)
                                  Series 1998B
                            -------------------------



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                                                 ILLINOIS COMMERCE COMMISSION
                                                    Identification No. 6097

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                                 LOAN AGREEMENT

                                                                            PAGE

ARTICLE I              DEFINITIONS.............................................1


ARTICLE II             REPRESENTATIONS.........................................2

       Section 2.1.        Representations of Issuer...........................2
       Section 2.2.        Representations of Company..........................3

ARTICLE III            COMPLETION OF PROJECT...................................4

       Section 3.1.        Completion of Project...............................4
       Section 3.2.        Project Description.................................4
       Section 3.3.        Operation of Project................................4
       Section 3.4.        Company Representative..............................4
       Section 3.5.        Maintenance of Project..............................5

ARTICLE IV             ISSUANCE OF BONDS; LOAN TO COMPANY......................5

       Section 4.1.        Issuance of Bonds; Loan to Company..................5

ARTICLE V              REPAYMENT OF LOAN.......................................5

       Section 5.1.        Repayment of Loan...................................5
       Section 5.2.        Additional Payments.................................6
       Section 5.3.        Prepayments.........................................6
       Section 5.4.        Obligations of Company Unconditional................7

ARTICLE VI             OTHER COMPANY AGREEMENTS................................7

       Section 6.1.        Maintenance of Existence............................7
       Section 6.2.        Financial Reports...................................7
       Section 6.3.        Payment of Taxes....................................8
       Section 6.4.        Arbitrage...........................................8
       Section 6.5.        Company's Obligation with Respect to Exclusion
                             of Interest Paid on the Bonds.....................8
       Section 6.6.        Notices Under the Indenture.........................9
       Section 6.7.        Letter of Credit....................................9
       Section 6.8.        Credit Ratings......................................9
       Section 6.9.        Purchases of Bonds..................................9

ARTICLE VII            NO RECOURSE TO ISSUER; INDEMNIFICATION.................10

       Section 7.1.        No Recourse to Issuer..............................10
       Section 7.2.        Indemnification....................................10

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ARTICLE VIII           ASSIGNMENT.............................................10

       Section 8.1.        Assignment by Company..............................10
       Section 8.2.        Assignment by Issuer...............................10

ARTICLE IX              DEFAULTS AND REMEDIES.................................11

       Section 9.1.        Remedies on Default................................11
       Section 9.2.        Delay Not Waiver; Remedies.........................11
       Section 9.3.        Attorneys' Fees and Expenses.......................11

ARTICLE X               MISCELLANEOUS.........................................11

       Section 10.1.       Notices............................................11
       Section 10.2.       Binding Effect.....................................11
       Section 10.3.       Severability.......................................12
       Section 10.4.       Amendments.........................................12
       Section 10.5.       Right of Company To Perform Issuer's Agreements....12
       Section 10.6.       Applicable Law.....................................12
       Section 10.7.       Captions; References to Sections...................12
       Section 10.8.       Complete Agreement.................................12
       Section 10.9.       Termination........................................12
       Section 10.10.      Counterparts.......................................13

Signature.....................................................................13



<PAGE>



           LOAN AGREEMENT dated as of September 1, 1998, between STATE
           ENVIRONMENTAL IMPROVEMENT AND ENERGY RESOURCES AUTHORITY of
           the State of Missouri, a body  corporate and  politic and a
           governmental instrumentality of the  State of Missouri (the
          "Issuer"), and UNION ELECTRIC COMPANY, a Missouri corporation
           doing business as AMERENUE (the "Company").

         Section  260.005  through  Section  260.125,  inclusive,  R.S.  Mo., as
amended,  and Appendix  B(1) thereto  empowers the Issuer to issue its bonds for
any of its purposes,  including the refunding of bonds previously  issued by it.
On June 1, 1984,  the Issuer  issued its (i)  Adjustable - Fixed Rate  Pollution
Control  Revenue Bonds,  Series 1984 A (Union Electric  Company  Project) in the
aggregate   principal   amount  of  $80,000,000  (all  of  which  are  currently
outstanding)  (the  "Series  1984 A Bonds")  and (ii)  Adjustable  - Fixed  Rate
Pollution Control Revenue Bonds,  Series 1984 B (Union Electric Company Project)
in the aggregate  principal  amount of  $80,000,000  (all of which are currently
outstanding) (the "Series 1984 B Bonds") (the Series 1984 A Bonds and the Series
1984 B Bonds are referred to  collectively as the "Prior Bonds") for the purpose
of constructing,  acquiring,  and installing certain pollution control and solid
waste disposal facilities (the "Project").

         The  Issuer   proposes  to  issue  (a)(i)   $60,000,000   Environmental
Improvement  Revenue  Refunding  Bonds (Union Electric  Company  Project) Series
1998A  pursuant to the Series A Indenture (as defined in the Indenture  referred
to below) and (ii) $50,000,000 Environmental Improvement Revenue Refunding Bonds
(Union Electric Company Project) Series 1998B pursuant to the Indenture in order
to provide the funds for the  refunding  of a portion of the Series 1984 A Bonds
and (b) to loan the proceeds of the Bonds to the Company. The Company desires to
use the  proceeds  of the  Bonds to pay a  portion  of the cost of  refunding  a
portion of the Series 1984 A Bonds and a portion of the Series 1984 B Bonds, all
on the terms and conditions set forth in this Loan Agreement.

         Accordingly, the Issuer and the Company hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         For all  purposes of this Loan  Agreement,  unless the context  clearly
requires  otherwise,  all terms defined in Article I of the  Indenture  have the
same meanings in this Loan Agreement.

         "Indenture"  means the Indenture of Trust relating to the Bonds,  dated
as of the date of this Loan Agreement,  between the Issuer and State Street Bank
and Trust Company of Missouri,  N.A., as trustee, as such Indenture of Trust may
be amended or supplemented from time to time in accordance with its terms.

<PAGE>

                                   ARTICLE II

                                 REPRESENTATIONS

   Section 2.1.    Representations of Issuer.  The Issuer represents as follows:

                   (a) The  Issuer (1) is a body  corporate  and  politic  and a
         governmental instrumentality duly organized and existing under the laws
         of the  State,  (2) has full  power  and  authority  to enter  into the
         transactions  contemplated  by this Loan Agreement and by the Indenture
         and to carry out its  obligations  under  this Loan  Agreement  and the
         Indenture,  including  the  issuance  of the  Bonds  and (3) by  proper
         corporate action has duly authorized the execution and delivery of this
         Loan Agreement, the Bonds and the Indenture.

                   (b) Under existing statutes and decisions, no taxes on income
         or profits  are imposed on the  Issuer.  The Issuer will not  knowingly
         take or omit to take any action  reasonably  within its  control  which
         action or omission  would impair the  exclusion of interest paid on the
         Bonds from the federal gross income of the owners of the Bonds.

                   (c) Neither the  execution and delivery by the Issuer of this
         Loan Agreement nor the  consummation by the Issuer of the  transactions
         contemplated  by this Loan Agreement  conflicts  with, will result in a
         breach of or default  under or will (except with respect to the lien of
         the Indenture)  result in the imposition of any lien on any property of
         the Issuer  pursuant  to the terms,  conditions  or  provisions  of any
         statute, order, rule, regulation,  agreement or instrument to which the
         Issuer is a party or by which it is bound.

                   (d) Each of this Loan  Agreement  and the  Indenture has been
         duly  authorized,  executed  and  delivered  by  the  Issuer  and  each
         constitutes  the  legal,  valid and  binding  obligation  of the Issuer
         enforceable  against the Issuer in accordance with its terms, except to
         the extent that the enforcement thereof may be limited by laws relating
         to bankruptcy, insolvency, reorganization,  moratorium or other similar
         laws and  equitable  principles  of general  application  affecting the
         rights and remedies of creditors and secured parties.

                   (e) There is no litigation or proceeding  pending,  or to the
         knowledge  of the Issuer  after due  inquiry  threatened,  against  the
         Issuer,  or affecting it, which could adversely  affect the validity of
         this Loan  Agreement,  the Indenture or the Bonds or the ability of the
         Issuer to comply with its obligations  under this Loan  Agreement,  the
         Indenture or the Bonds.

                   (f) The Issuer is not in default under any of the  provisions
         of the laws of the State which would affect its existence or its powers
         referred to in the preceding subsection (a).

<PAGE>

                   (g) The Issuer  hereby finds and  determines  that,  based on
         representations  of the Company,  all requirements of the Act have been
         complied with and that the refinancing of the Project and the refunding
         of a portion  of the  Series  1984 A Bonds and a portion  of the Series
         1984 B Bonds  through the issuance of the Bonds will further the public
         purposes of the Act.

                   (h) No member,  director,  officer or  official of the Issuer
         has any interest (financial, employment or other) in the Company or the
         transactions contemplated by this Loan Agreement which is prohibited by
         law.

                   (i) The Issuer will apply the  proceeds  from the sale of the
         Bonds as specified in the Indenture and this Loan Agreement. So long as
         any of the Bonds remain  outstanding and except as may be authorized by
         the  Indenture,  the  Issuer  will  not  issue  or sell  any  bonds  or
         obligations,  other than the Bonds,  the  principal  of or  interest on
         which will be  payable  from the  property  described  in the  granting
         clause of the Indenture.

    Section 2.2. Representations of Company.  The Company represents as follows:

                   (a) The Company (1) is a corporation duly incorporated and in
         good  standing  in the State  and in all other  states in which it owns
         property,  (2) is duly  qualified  to transact  business and is in good
         standing in the State,  (3) is not in violation of any provision of its
         Articles of Incorporation or its By-laws,  (4) has full corporate power
         to own its  properties  and  conduct its  business,  (5) has full legal
         right,  power and  authority  to enter  into this  Loan  Agreement  and
         consummate all transactions contemplated by this Loan Agreement and (6)
         by proper  corporate  action  has duly  authorized  the  execution  and
         delivery of this Loan Agreement.

                   (b) Neither the execution and delivery by the Company of this
         Loan Agreement nor the  consummation by the Company of the transactions
         contemplated by this Loan Agreement  conflicts with or will result in a
         breach of or default under the Articles of  Incorporation or By-laws of
         the Company or the terms,  conditions  or  provisions  of any corporate
         restriction  or any  statute,  order,  rule,  regulation,  agreement or
         instrument to which the Company is a party or by which it is bound.

                   (c) This Loan  Agreement has been duly  authorized,  executed
         and  delivered  by the Company  and  constitutes  the legal,  valid and
         binding obligation of the Company in accordance with its terms,  except
         to the  extent  that the  enforcement  thereof  may be  limited by laws
         relating to bankruptcy, insolvency, reorganization, moratorium or other
         similar laws and equitable principles of general application  affecting
         the rights and remedies of creditors and secured parties.

                   (d) There is no litigation or proceeding  pending,  or to the
         knowledge  of the  Company  after due inquiry  threatened,  against the
         Company,  or affecting it, which could adversely affect the validity of
         this Loan  Agreement  or the  ability of the Company to comply with its
         obligations under this Loan Agreement.

<PAGE>

                   (e) The  information  contained in the Tax  Agreement and all
         other written  information  relating to the Project and the Prior Bonds
         provided by the Company to the Issuer and bond counsel for the Bonds is
         true and correct in all material respects.

                   (f) Neither  the Prior  Indentures  nor the Prior  Agreements
         have been supplemented or amended.

                                   ARTICLE III

                              COMPLETION OF PROJECT

             Section 3.1.  Completion of Project.  The Company has completed the
acquisition,   construction,  installation  and  equipping  of  the  Project  in
accordance with the Prior Indenture and the Prior Agreement.

             Section  3.2.  Project  Description.  The Company will not make any
material  changes in the Project  description  contained in Exhibit A unless the
Trustee and the Issuer  receive a Favorable  Opinion of Tax Counsel with respect
to such change.

             Section 3.3. Operation of Project.  So long as the Company operates
the  Project,  it will  operate it as  facilities  for  preventing  or  reducing
pollution  and/or the disposal of solid waste as  contemplated by the Act and as
solid waste disposal facilities and/or air or water pollution control facilities
as contemplated by Sections 103(b)(4)(E) and/or (F) of the 1954 Code.

             Section 3.4. Company  Representative.  Prior to the initial sale of
the Bonds, the Company shall appoint a Company Representative for the purpose of
acting  on  behalf  of the  Company  and  taking  all  actions  and  making  all
certificates required to be taken and made by a Company Representative under the
provisions  of  this  Loan  Agreement  and  the  Indenture,  and  shall  appoint
alternative  Company  Representatives  to take any such  action or make any such
certificate if the same is not taken or made by the Company  Representative.  In
the  event any of said  persons,  or any  successor  appointed  pursuant  to the
provisions of this Section,  should  resign or become  unavailable  or unable to
take any action or make any  certificate  provided for in this Loan Agreement or
the   Indenture,   another   Company   Representative   or   alternate   Company
Representative shall thereupon be appointed by the Company. If the Company fails
to make  such  designation  within  10 days  following  the  date  when the then
incumbent  resigns  or  becomes  unavailable  or  unable to take any of the said
actions, the Treasurer of the Company shall serve as the Company Representative.

         Whenever  under the  provisions of this Loan Agreement or the Indenture
the  approval  of the Company is required or the Issuer is required to take some
action at the request of the Company,  such  approval or such  request  shall be
made by the Company  Representative or alternate Company  Representative  unless
otherwise  specified in this Loan Agreement or the Indenture,  and the Issuer or
the Trustee shall be authorized to act on any such approval or request.

<PAGE>

             Section 3.5.  Maintenance of Project. The Company will at all times
make or cause to be made such  expenditures by means of renewals,  replacements,
repairs,  maintenance,  or otherwise as shall be necessary to maintain, preserve
and keep the  Project in good  repair,  physical  condition,  working  order and
condition and in a state of good operating  efficiency,  except that the Company
may abandon any portion of the Project if in its opinion the abandonment of such
portion is desirable in the proper  conduct of its business and in the operation
of its  properties  or is otherwise  in its best  interests,  provided  that the
Trustee receives a Favorable Opinion of Tax Counsel prior to such abandonment.

                                   ARTICLE IV

                       ISSUANCE OF BONDS; LOAN TO COMPANY

             Section 4.1. Issuance of Bonds; Loan to Company. In order to refund
a portion of the Series  1984 A Bonds and a portion of the Series  1984 B Bonds,
the Issuer  will issue,  sell and  deliver  the Bonds to the initial  purchasers
thereof and  deposit  the  proceeds of the Bonds with the Trustee as provided in
Article IV of the Indenture. Such deposit shall constitute a loan to the Company
under this Loan  Agreement.  The Issuer  authorizes  the Trustee to disburse the
proceeds of the Bonds in accordance with  Sectiona4.01 of the Indenture.  If the
proceeds of the Bonds are not  sufficient  to  accomplish  the refunding of such
portion of the Series  1984 A Bonds and such  portion of the Series 1984 B Bonds
on Decembera1,  1998, the Company shall at its own expense and without any right
of  reimbursement  in respect thereof  immediately pay all amounts  necessary to
accomplish  such  refunding.  The Company hereby  approves the Indenture and the
issuance by the Issuer of the Bonds.

                                    ARTICLE V

                                REPAYMENT OF LOAN

             Section 5.1. Repayment of Loan. (a) The Company will repay the loan
made to it under  Section 4.1 as follows:  Before 11:00 a.m.  (local time at the
principal corporate office of the Registrar) on each day on which any payment of
either principal of or interest on the Bonds, or both, shall become due (whether
at maturity, or upon redemption or acceleration or otherwise),  the Company will
pay, in immediately available funds, an amount which, together with other moneys
held by the Tender Agent or by the Trustee  under the  Indenture  and  available
therefor,  will enable the  Registrar  to make such  payment in full in a timely
manner. If such day on which any payment shall become due is not a Business Day,
then  the  payment  required  by this  Section  shall be made on or  before  the
succeeding Business Day. If the Company defaults in any payment required by this
Section,  the Company will pay  interest (to the extent  allowed by law) on such
amount until paid at the rate provided for in the Bonds.

         (b) The Company  will pay to the Tender  Agent,  on each day on which a
payment of purchase price of a Bond which has been tendered shall become due, an
amount which, together with other moneys held by the Tender Agent or the Trustee
under the Indenture

<PAGE>

and available therefor,  will enable the  Tender Agent to make  such  payment in
full in a timely manner.

         In furtherance of the foregoing,  so long as any Bonds are  outstanding
the Company will pay all amounts  required to prevent any  deficiency or default
in any  payment  of the  Bonds,  including  any  deficiency  caused by an act or
failure to act by the Trustee,  the Company,  the Issuer, the Remarketing Agent,
the Auction Agent, the Tender Agent or any other person.

         All amounts  payable  under this Section by the Company are assigned by
the Issuer to the  Trustee  pursuant  to the  Indenture  for the  benefit of the
Bondholders.  The Company consents to such assignment.  Accordingly, the Company
will pay directly to the Registrar at its principal  corporate  trust office all
payments payable by the Company  pursuant to this Section.  The Company need not
pay any amount paid to Bondholders by a draw on the Letter of Credit, if any.

        Section 5.2.    Additional  Payments.  The Company will pay the issuance
fee of the Issuer of $42,187.50 upon the issuance of the Bonds. The Company will
also pay the following within 30 days after receipt of a bill therefor:

                   (a)  The  reasonable  fees  and  expenses  of the  Issuer  in
         connection  with  this  Loan  Agreement  and the  Bonds,  such fees and
         expenses to be paid  directly to the Issuer;  provided that the Company
         Representative  shall have  approved  such expenses in writing prior to
         their incurrence.

                   (b) (i) The fees and expenses of the Trustee, the Remarketing
         Agent,  the Tender Agent,  the Auction Agent,  the Broker Dealers,  the
         Securities  Depository  and all other  fiduciaries  and agents  serving
         under the  Indenture  (including  any expenses in  connection  with any
         redemption  of the Bonds),  and (ii) all fees and  expenses,  including
         attorneys' fees, of the Trustee for any extraordinary services rendered
         by it under the  Indenture;  provided  that the  Company  may,  without
         creating an Event of Default,  delay  making any payment  under  clause
         (ii) while it contests in good faith the necessity for,  reasonableness
         of, or  reasonableness  of amount of, such  extraordinary  services and
         expenses.  All such fees and  expenses  are to be paid  directly to the
         Trustee,  the Remarketing  Agent,  the Tender Agent, the Auction Agent,
         the  Securities  Depository  or other  fiduciary  or agent  for its own
         account as and when such fees and expenses become due and payable.

                   (c) All  other  reasonable  fees  and  expenses  incurred  in
         connection with the issuance of the Bonds, including but not limited to
         all costs  associated  with any  discontinuance  of the book-entry only
         system.

             Section 5.3. Prepayments. The Company may at any time prepay to the
Registrar all or any part of the amounts payable under Section 5.1. A prepayment
will not relieve the Company of its obligations  under this Loan Agreement until
all the Bonds have been paid or  provision  for the payment of all the Bonds has
been made in  accordance  with  the  Indenture.

<PAGE>

In the event of a mandatory redemption of the Bonds, the Company will prepay all
amounts necessary for such redemption.

             Section  5.4.  Obligations  of Company  Unconditional.  The Company
agrees  that the  obligations  of the Company to make the  payments  required by
Sections 5.1 and 5.3 and to perform its other agreements  contained in this Loan
Agreement  shall be  absolute  and  unconditional.  Until the  principal  of and
interest on the Bonds shall have been fully paid or provision for the payment of
the Bonds  made in  accordance  with the  Indenture,  the  Company  (a) will not
suspend or  discontinue  any  payments  provided  for in Section  5.1,  (b) will
perform  all its  other  agreements  in this  Loan  Agreement  and (c)  will not
terminate this Loan Agreement for any cause including any acts or  circumstances
that may constitute  failure of  consideration,  destruction of or damage to the
Project, commercial frustration of purpose, any change in the laws of the United
States or of the State or any political  subdivision of either or any failure of
the Issuer to perform any of its agreements,  whether express or implied, or any
duty,  liability  or  obligation  arising  from  or  connected  with  this  Loan
Agreement.

                                   ARTICLE VI

                            OTHER COMPANY AGREEMENTS

             Section 6.1.  Maintenance  of  Existence.  The Company  agrees that
during the term of this Loan  Agreement and so long as any Bond is  outstanding,
it will maintain its corporate  existence,  will continue to be a corporation in
good  standing  under the laws of the  State,  will not  dissolve  or  otherwise
dispose of all or substantially  all of its assets and will not consolidate with
or merge into another  legal  entity or permit one or more other legal  entities
(other than one or more  subsidiaries  of the  Company) to  consolidate  with or
merge into it, or sell or  otherwise  transfer  to another  legal  entity all or
substantially all its assets as an entirety and dissolve, unless (a) in the case
of any merger or  consolidation,  the Company is the surviving  corporation,  or
(b)(i) the  surviving,  resulting or  transferee  legal entity is organized  and
existing under the laws of the United States, a state thereof or the District of
Columbia, and (if not the Company) assumes in writing all the obligations of the
Company under this Loan Agreement and (ii) no event which constitutes,  or which
with the giving of notice or the lapse of time or both would constitute an Event
of Default shall have occurred and be continuing  immediately after such merger,
consolidation or transfer.

             Section  6.2.  Financial  Reports.  The  Company  agrees to have an
annual audit made by its regular  independent  certified public accountants and,
upon  request,  to furnish  the  Trustee  (within  90 days after  receipt by the
Company) with a balance  sheet,  statement of income and statement of cash flows
showing  the   financial   condition   of  the  Company  and  its   consolidated
subsidiaries,  if any,  at the  close  of  each  fiscal  year,  the  results  of
operations and the cash flows of the Company and its consolidated  subsidiaries,
if any, for each fiscal year,  accompanied  by the opinion of said  accountants.
The  Trustee  will hold such  reports  solely  for the  purpose  of making  them
available  at its  principal  corporate  trust  office  for  examination  by the
Bondholders,  and is not required to notify the  Bondholders  of the contents of
any such report.  The Company may fulfill its  obligation  under this Section by

<PAGE>

furnishing  the Trustee a copy of its Annual  Report on Form 10-K, as filed with
the Securities and Exchange  Commission,  if such report shall contain the above
described financial statements.

             Section 6.3.  Payment of Taxes.  The Company will pay and discharge
promptly all lawful taxes,  assessments and other governmental charges or levies
imposed upon the Project, or upon any part thereof, as well as all claims of any
kind  (including  claims for labor,  materials and supplies)  which,  if unpaid,
might by law become a lien or charge upon the Project; provided that the Company
shall not be required to pay any such tax, assessment, charge, levy or claim (i)
if the amount, applicability or validity thereof shall currently be contested in
good  faith  by  appropriate   proceedings  promptly  initiated  and  diligently
conducted;  (ii) if the  Company  shall  have set  aside on its  books  reserves
(segregated to the extent required by generally accepted accounting  principles)
with respect  thereto  deemed  adequate by the Company;  and (iii) if failure to
make such payment will not impair the use of the Project by the Company.

             Section 6.4.  Arbitrage.  The Company covenants with the Issuer and
for and on behalf of the  purchasers  and  owners of the Bonds from time to time
outstanding  that so long as any of the  Bonds  remain  outstanding,  moneys  on
deposit in any fund in  connection  with the Bonds,  whether or not such  moneys
were  derived  from  the  proceeds  of the sale of the  Bonds or from any  other
sources,  will  not be used  in a  manner  which  will  cause  the  Bonds  to be
"arbitrage  bonds" within the meaning of Sectiona148 of the Code, and any lawful
regulations promulgated thereunder,  as the same exist on this date, or may from
time to time  hereafter be amended,  supplemented  or revised.  The Company also
covenants  for  the  benefit  of  the  Bondholders  to  comply  with  all of the
provisions of the Tax Agreement.  The Company  reserves the right,  however,  to
make any  investment  of such  moneys as may be  permitted  by State law at such
time,  if,  when  and  to  the  extent  that  said  Sectiona148  or  regulations
promulgated  thereunder  shall be  repealed  or relaxed or shall be held void by
final judgment of a court of competent jurisdiction,  but only if any investment
made by virtue of such repeal,  relaxation or decision would not, in the written
Opinion of Tax Counsel, result in making the interest on the Bonds includible in
the federal gross income of the owners of the Bonds.

             Section  6.5.  Company's  Obligation  with  Respect to Exclusion of
Interest Paid on the Bonds.  Notwithstanding  any other  provision  hereof,  the
Company  covenants  and agrees that it will not  knowingly  take or authorize or
permit,  to the extent  such action is within the  control of the  Company,  any
action to be taken  with  respect  to the  Project  or the Prior  Bonds,  or the
proceeds of the Bonds  (including  investment  earnings  thereon),  or any other
proceeds  derived  directly or indirectly in connection  with the Project or the
Prior Bonds,  which will result in the loss of the  exclusion of interest on the
Bonds from the federal gross income of the owners of the Bonds under Sectiona103
of the Code to the extent that such  interest on the Bonds was  excludable  when
such Bonds were issued  (except  for any Bond  during any period  while any such
Bond is held by a person  referred to in Section  103(b)(13)  of the 1954 Code);
and the  Company  also will not  knowingly  omit to take any action in its power
which, if omitted, would cause the above result. This provision

<PAGE>

shall control in  case of conflict or ambiguity with any other provision of this
Loan Agreement.

         The Company  covenants  and agrees to notify the Trustee and the Issuer
of the  occurrence  of any event of which the Company has notice and which event
would  require  the Company to prepay the  amounts  due  hereunder  because of a
redemption upon a determination of taxability.

             Section 6.6.  Notices Under the  Indenture.  The Company shall give
timely written  notice to the persons noted in Section  2.02(b) of the Indenture
as required by such  section,  prior to any change in the method of  determining
interest on the Bonds.  Notwithstanding the foregoing, the Company shall use its
best  efforts  to notify  the Issuer as early as  possible  prior to  electing a
Long-Term  Interest Rate Period of three years or longer duration.  In addition,
if the Company shall elect to change the method of  determining  interest on the
Bonds,  the Company shall deliver to the persons noted in Section 2.02(b) of the
Indenture  concurrently  with the giving of notice with respect thereto,  and no
such change shall be effective without,  a Favorable Opinion of Tax Counsel,  if
required by the Indenture. The Company shall use its best efforts to provide the
Tender Agent and the Auction Agent with notice of any change in the maximum rate
permitted by law on the Auction Rate Bonds.

         If the  Company  determines  that a Payment  Default has  occurred  the
Company shall promptly notify the Tender Agent thereof.

             Section 6.7.  Letter of Credit.  Any Letter of Credit  delivered by
the Company  pursuant to the  Indenture  must comply with the  provisions of the
Indenture, including but not limited to, Article V thereof.

             Section 6.8. Credit Ratings.  The Company shall take all reasonable
action necessary to enable at least one nationally recognized statistical rating
organization (as that term is used in the rules and regulations of the SEC under
the  Securities  Exchange  Act) to provide  credit  ratings for the Auction Rate
Bonds.

             Section 6.9.    Purchases of Bonds.  (a)  The  Company  shall   not
purchase or otherwise  acquire  Auction Rate Bonds unless the Company redeems or
cancels such Auction Rate Bonds on the day of any purchase.

           (b) So long as a Letter of Credit is in effect, the Company will not,
and will not permit any  "insider"  (as defined in the  Bankruptcy  Code) of the
Company, to purchase,  directly or indirectly,  any Bonds with any funds that do
not constitute moneys described in clauses first, second, third or fourth in the
second paragraph of Section 4.02 of the Indenture, except as required by Section
5.2(b).

<PAGE>

                                   ARTICLE VII

                     NO RECOURSE TO ISSUER; INDEMNIFICATION

             Section  7.1.  No  Recourse  to  Issuer.  The  Issuer  will  not be
obligated  to pay the  Bonds  or any fees or  expenses  incurred  in  connection
therewith  except from  revenues  provided by the  Company.  The issuance of the
Bonds will not directly or indirectly or contingently obligate the Issuer or the
State  to  levy  or  pledge  any  form  of  taxation  whatever  or to  make  any
appropriation  for their payment.  Neither the Issuer nor any member,  director,
employee,  agent or officer of the  Issuer  nor any person  executing  the Bonds
shall be liable personally for the Bonds or be subject to any personal liability
or accountability by reason of the issuance of the Bonds.

             Section 7.2.  Indemnification.  The Company during the term of this
Loan Agreement releases the Issuer, its members, officers, directors,  employees
and agents from and covenants and agrees that the Issuer, its members, officers,
directors, employees and agents shall not be liable for, and agrees to indemnify
and hold the Issuer,  its members,  directors,  officers,  employees  and agents
harmless  against,  any loss or damage to  property or any injury to or death of
any person  occurring on or about or  resulting  from any defect in the Project,
provided that the indemnity  shall not be effective for damages that result from
the  negligence  or  intentional  acts on the part of the Issuer,  its  members,
officers,  directors,  employees or agents.  The Company will also indemnify and
save harmless the Issuer, its members, officers, directors,  employees or agents
from and against any and all losses,  costs,  charges,  expenses,  judgments and
liabilities  imposed  upon or  asserted  against it or them with  respect to the
Project  on  account  of any  failure  on the part of the  Company to perform or
comply with any of the provisions of this Loan Agreement.

                                  ARTICLE VIII

                                   ASSIGNMENT

             Section  8.1.  Assignment  by  Company.  The Company may assign its
rights and obligations  under this Loan Agreement with the prior written consent
of the Issuer, but no assignment will relieve the Company from primary liability
for any obligations under this Loan Agreement.

             Section  8.2.  Assignment  by Issuer.  The Issuer  will  assign its
rights  under and  interest in this Loan  Agreement  (except for the  Unassigned
Rights) to the Trustee  pursuant to the Indenture as security for the payment of
the Bonds,  and the Company assents to this  assignment.  Otherwise,  the Issuer
will not sell,  assign or  otherwise  dispose of its rights under or interest in
this Loan Agreement nor create or permit to exist any lien, encumbrance or other
security interest in or on such rights or interest.

<PAGE>

                                   ARTICLE IX

                              DEFAULTS AND REMEDIES

             Section  9.1.  Remedies on Default.  Whenever  any Event of Default
under the  Indenture  has  occurred  and is  continuing,  the  Trustee  may take
whatever  action may appear  necessary or desirable to collect the payments then
due and to become due or to enforce  performance of any agreement of the Company
in this Loan Agreement.

         In addition,  if an Event of Default is continuing  with respect to any
of the  Unassigned  Rights,  the  Issuer  may take  whatever  action  may appear
necessary  or  desirable  to it to enforce  performance  by the  Company of such
Unassigned Rights.

         Any  amounts  collected  pursuant to action  taken  under this  Section
(except for amounts  payable  directly to the Issuer or the Trustee  pursuant to
Sections 5.2, 7.2 and 9.3) shall be applied in accordance with the Indenture.

         Nothing in this Loan Agreement shall be construed to permit the Issuer,
the Trustee,  any Bondholder or any receiver in any proceeding brought under the
Indenture to take  possession  of or exclude the Company from  possession of the
Project by reason of the occurrence of an Event of Default.

             Section 9.2. Delay Not Waiver; Remedies. A delay or omission by the
Issuer or the Trustee in exercising  any right or remedy  accruing upon an Event
of Default  shall not impair  the right or remedy or  constitute  a waiver of or
acquiescence  in the  Event of  Default.  No remedy  is  exclusive  of any other
remedy. All available remedies are cumulative.

             Section 9.3.  Attorneys'  Fees and Expenses.  If the Company should
default under any provision of this Loan  Agreement and the Issuer should employ
attorneys or incur other  expenses for the  collection of the payments due under
this Loan Agreement, the Company will on demand pay to the Issuer the reasonable
fees of such  attorneys  and such other  reasonable  expenses so incurred by the
Issuer.

                                    ARTICLE X

                                  MISCELLANEOUS

            Section 10.1.    Notices.    All  notices  or  other  communications
hereunder shall be  sufficiently  given and shall be deemed given when delivered
or mailed as provided in the Indenture.

            Section 10.2. Binding Effect. This Loan Agreement shall inure to the
benefit  of and  shall be  binding  upon  the  Issuer,  the  Company  and  their
respective  successors  and  assigns,   subject,  however,  to  the  limitations
contained in Section 6.1.

<PAGE>

            Section 10.3.  Severability. If any provision of this Loan Agreement
shall be determined to be  unenforceable  at any time, that shall not affect any
other provision of this Loan Agreement or the enforceability  of that  provision
at any other time

            Section 10.4. Amendments. After the issuance of the Bonds, this Loan
Agreement  may not be  effectively  amended or  terminated  without  the written
consent  of the  Trustee  and  the  Tender  Agent  and in  accordance  with  the
provisions of the Indenture.

            Section 10.5. Right of Company To Perform Issuer's  Agreements.  The
Issuer  irrevocably  authorizes  and empowers the Company to perform in the name
and on  behalf  of the  Issuer  any  agreement  made by the  Issuer in this Loan
Agreement  or in the  Indenture  which the  Issuer  fails to perform in a timely
fashion if the  continuance of such failure could result in an Event of Default.
This  Section  will not  require the  Company to perform  any  agreement  of the
Issuer.

            Section 10.6. Applicable Law. This Loan  Agreement shall be governed
by and construed in accordance with the laws of the State.

            Section 10.7. Captions; References to Sections. The captions in this
Loan Agreement are for convenience  only and do not define or limit the scope or
intent of any  provisions  or Sections  of this Loan  Agreement.  References  to
Articles and  Sections are to the Articles and Sections of this Loan  Agreement,
unless the context otherwise requires.

            Section 10.8.  Complete  Agreement.  This Loan Agreement  represents
the  entire  agreement  between  the Issuer and  the Company with respect to its
subject matter.

            Section 10.9.  Termination.  When no Bonds are Outstanding under the
Indenture,  the  Company and the Issuer  shall not have any further  obligations
under this Loan Agreement; provided that the Company's covenants in Sections 6.4
and 6.5, and the provisions of Section 5.3 with respect to mandatory  redemption
of the Bonds, shall survive so long as any Bond remains unpaid.

<PAGE>



         Section 10.10.    Counterparts.  This Loan  Agreement  may be signed in
several  counterparts.  Each  will be  an  original, but  all of  them  together
constitute the same instrument.



                                      STATE ENVIRONMENTAL IMPROVEMENT AND
                                           ENERGY RESOURCES AUTHORITY



                                     By           /S/ Avis Parman
                                           ---------------------------------
                                                      Chairman


[SEAL]

Attest:

By    /S/ Charles D. Banks
   --------------------------
            Secretary

                                      UNION ELECTRIC COMPANY, dba AMERENUE



                                      By    /S/ Donald E. Brandt
                                         -----------------------------
                                            Senior Vice President

<PAGE>




                                    EXHIBIT A

                                   THE PROJECT

         The  Project  consists  of  the  portion  of the  following  facilities
previously  financed  by the Issuer with the Prior  Bonds.  The  facilities  are
located at Union Electric  Company's  Callaway Nuclear Plant in Callaway County,
Missouri.

A.  WATER POLLUTION CONTROL FACILITIES:

            1. Oily Waste Treatment  System.  The oily waste treatment system is
designed to remove oily waste from  contaminated  water in  compliance  with the
Federal  Clean  Water  Act.  The  oily  waste  treatment  system  collects,  for
processing  and  disposal,  nonradioactive  waste  from  areas  where oil may be
present,  and waste that may contain  oil and/or  trace  amounts of  radioactive
contaminants.  Areas  where oily waste is  collected  by the system  include the
turbine building,  control building,  communications corridor,  diesel generator
building, and the auxiliary feedwater pump room.

            2.  Steam  Generator  Blowdown  System.  The  function  of the steam
generator  blowdown  system is to treat blowdown to the extent  required to meet
chemical composition limits for release to the environment. This system consists
of heat exchangers, mixed bed demineralizers, filters and associated hardware.

            3 Liquid Radwaste System. The function of the liquid radwaste system
is to collect,  segregate and treat both the reactor grade and nonreactor  grade
liquid  wastes  during  plant  power,  refueling  and  maintenance   operations.
Specifically,  it handles  potentially  radioactive  floor and equipment drains,
laundry,  and chemical  waste.  After  processing to remove  low-level and other
pollutants,  a  substantial  amount  of the  treated  liquid is  expected  to be
recycled for use in the plant,  while the  remainder  will be piped to the river
for release  there.  The liquid  radwaste  system  consists of several tanks and
pumps,  an  evaporator,  heat  exchanger,  demineralizers,  charcoal  adsorbers,
filters, and a reverse osmosis unit.

            4. Boron Recycle  System.  In order to keep the reactor  functioning
properly,  the  percentage  of boron in the  reactor  coolant is adjusted by the
addition of reactor makeup water,  blending  boric acid as needed.  As discussed
below,  this operation occurs as part of the function of the chemical and volume
control system ("CVCS").

         Waste streams from the CVCS are let down from time to time to the boron
recycle system ("BRS").  Waste streams  containing  boron and other minerals are
treated  in the  BRS by  demineralization,  filtration  and  evaporation.  After
treatment,  some of the liquid waste will be discharged to the Missouri River in
compliance  with discharge  limits imposed by the Clean Water Act.  Liquid waste
meeting the chemical requirements for reactor makeup water will be pumped to the
makeup water storage tank for reuse in the reactor  coolant  water  system.  The
system  evaporator  that treats the waste streams  concentrates  boric acid to 4
percent  weight.  The  concentrated  solution is then  pumped to the  evaporator
bottoms tank (primary) for  processing and disposal or, if reusable,  is sent to
the boric acid tanks. Absent

<PAGE>

pollution control requirements, these wastes would have been discharged directly
to the environment.

            5.  Secondary  Liquid Waste.  The function of the  secondary  liquid
waste system is to treat waste liquids  collected in the turbine  building floor
and equipment  drains.  The turbine  building  drains are segregated into drains
where  turbine  cycle  leakage is likely.  This system  also  treats  condensate
polisher regeneration wastes. This treatment is to achieve compliance within the
discharge  limits  imposed by the Clean  Water  Act.  Absent  pollution  control
requirements,   these  wastes  would  have  been  discharged   directly  to  the
environment.  The system consists of several tanks and pumps,  an evaporator,  a
demineralizer,  a charcoal bed, an oil interceptor,  and three filters.  It also
includes associated piping, valves, electrical and control equipment.

            6. Facilities For Discharge of Wastes. After treatment in the liquid
radwaste system, boron recovery,  steam generator blowdown, and secondary liquid
waste systems,  the liquids that will be discharged to the river are transferred
to either of two discharge holdup tanks and then pumped through about five miles
of buried piping to the Missouri River.  The discharge holdup tanks will provide
further holding, monitoring and treatment of liquids before they are released to
the river. The tanks are sized to provide holdup for primary liquid radwaste and
secondary  liquid  waste  that  will  eventually  be  discharged.  The tanks are
necessary  to  provide  the  sampling  required  in  order  to  ensure  that all
discharges are within pollution  control limits.  Each tank holds  approximately
100,000 gallons and will have related equipment to provide necessary adjustments
to  obtain  the  required  pH  levels.   Piping  is  installed  to  provide  for
reprocessing  the tank  contents if  monitoring  shows that the contents fail to
meet the environmental requirements for discharge.

            7. Chemical Waste  Treatment  System.  The chemical waste  treatment
system collects waste chemicals and detergent wastes for treatment and disposal.
Waste is collected from the chemical and volume control system sample room sink,
the hot laboratory sample sinks, the recycle  evaporator and recycle  evaporator
reagent tank,  the waste  evaporator  and waste  evaporator  reagent  tank,  the
secondary liquid waste evaporator and secondary liquid waste evaporator  reagent
tank, the radwaste  building sample  laboratory  sink,  evaporator  bottoms tank
overflow (primary and secondary),  decontamination tanks in hot machine shop and
turbine  building  sample  laboratory  sinks.  Except as  described  below,  all
effluents  in this system flow by gravity  directly to the  chemical  drain tank
located  in the  basement  of the  radwaste  building.  The  effluents  from hot
laboratory  sample  sinks flow by gravity to the chemical  equipment  drain sump
located in the  basement  of the  control  building.  This sump is vented to the
access control exhaust system to prevent  diffusion of vapors to the atmosphere.
The same is true of the vent for the detergent drain tank,  which collects waste
from the  laundry,  hot  laboratory,  and the men's and  women's  disrobe  areas
located in the control  building.  The turbine building sample  laboratory sinks
are tied to a common drain line. This line can be routed through  demineralizers
and discharged to the oil waste system or discharged  into a portable  container
outside the laboratory.

            8. Floor and Equipment Drain System.  One of three subsystems within
the floor and equipment  drains is designed to collect  liquid waste and pump it
to the floor drain tank.

<PAGE>

The pollution  control  equipment  processes  effluent  originating  in  the hot
machine shop decontamination area prior to releasing it to the floor drain tank.

         9-10. Sewage Collection and Treatment System.  The power block drainage
system  collects wastes from service  facilities,  pantry  facilities,  electric
water coolers, clean shower,  plumbing fixtures and toilet drains in the control
building,  and from electric  water coolers,  electric  water heaters,  plumbing
fixtures and toilet room floor drains in the turbine building.

         The  collection  facilities  drain to a lift station and the wastes are
then  pumped to the  sewage  treatment  plant.  After  treatment  the wastes are
discharged  to the  river.  (The  qualifying  facilities  do not  include  field
facilities used during construction.)

         This system is not in regular  operation at substantially  the level of
treatment  for which it was  intended.  The Company will  therefore  improve its
maintenance  and inspection  program and make  necessary  changes to the system.
When this is  completed,  the system  will be  capable  of meeting or  exceeding
applicable  federal,  state  and local  requirements  for the  control  of water
pollution.

           11.  Chemical and Volume  Control  Letdown  Waste  Processing  System
(CVCS).  During plant  operation,  this  maintains  the reactor  coolant  system
equilibrium  fission and corrosion  product  activities within specified limits.
The letdown waste  effluent from the system is processed and treated.  Mixed-bed
demineralizers  are  provided  in the letdown  system to provide  cleanup of the
letdown  flow.  The  demineralizers  remove ionic  corrosion  products,  certain
fission products, and act as filters. One demineralizer is usually in continuous
service for normal letdown flow and can be  supplemented  intermittently  by the
cation bed demineralizer for additional purification as required.

B.  AIR POLLUTION CONTROL FACILITIES:

            1. Gaseous Radwaste System. The function of this system is to remove
polluting  gases produced by the fission process from the reactor coolant system
and to collect other gaseous waste  pollutants  from sources having  appreciable
amounts of fission  product gases and hydrogen.  The system has the capacity for
achieving decay of such waste gases through  long-term  storage,  thus complying
with air pollution  control  requirements  by  eliminating  regularly  scheduled
discharges  of  radioactive  gases into the  atmosphere.  This  system  consists
principally  of the  hydrogen  recombiner  and a series of eight waste gas decay
tanks. The hydrogen  recombiner  provides a means of drawing off the waste gases
through combination with hydrogen. The hydrogen is then catalytically recombined
to form water,  and the remaining  waste gases are then processed and allowed to
decay in waste gas decay tanks.

            2. Control Building  Ventilation  Exhaust System. The access control
exhaust  system takes  suction from the  potentially  contaminated  areas of the
access control floor and the basement beneath. This system filters exhaust prior
to discharge to the environment.

<PAGE>

            3. Auxiliary  Building  Ventilation  Exhaust System. All exhaust air
from the auxiliary  building is processed  through the  auxiliary/fuel  building
normal exhaust system filter train for cleanup prior to radiation monitoring and
discharge to the environment.

            4.  Condenser Air Removal  System.  The condenser air removal system
exhausts  potentially  radioactive  gases and other gases from the condenser and
processes  them  through a  charcoal  adsorber  unit prior to  discharge  to the
environment.

            5.   Containment   Atmospheric   Control  System.   The  containment
atmospheric control system has two functions-to reduce the containment  airborne
concentrations of radioiodine and particulates to acceptable levels prior to and
during  occupancy  of the  containment  and to reduce  the  amount  of  airborne
radioiodine and  particulates  released to the environment  prior to containment
purges. The system operates,  as needed,  prior to and during purging to provide
internal cleanup of the containment atmosphere by recirculation through charcoal
adsorbers and particulate filters.

            6.  Containment  Purge System.  During  operation of the containment
shutdown purge supply system,  the containment  shutdown purge exhaust fan takes
suction from the containment  through the  containment  purge exhaust system and
containment purge filtration unit and discharges it to the environment.

            7. Radiation  Monitoring  System  (primarily  air pollution  control
related).  A portion of the process and effluent radiation  monitoring system is
necessary  to monitor,  record,  and control the release to the  environment  of
radioactive materials that may be generated under normal conditions. The process
and  effluent   radioactivity   monitors   operate   continuously   during  both
intermittent  and  continuous   discharges  of  potentially   radioactive  plant
effluents.

C.  SOLID WASTE DISPOSAL FACILITIES:

            1.  Solid Radwaste  Processing System.(*)     The   solid   radwaste
processing  system  includes  facilities  for  solidification,  compaction,  and
temporary storage of solid wastes. It collects spent resins, evaporator bottoms,
spent charcoal and miscellaneous dry wastes.  The system is designed to  provide
adequate handling,  processing and  drumming up of the wastes,  and  temporarily
storing them until shipment offsite for disposal at a licensed  burial site. The
wastes  are  generated  during  normal plant  operation  and during  anticipated
operational occurrences, such as refueling and high maintenance periods.

<PAGE>

         Filter Handling System.  The filter handling system provides a means of
         removing  and  transferring  spent  filter  cartridges  from the filter
         vessels for processing and disposal.

         Resin Sluicing  System.  The resin sluicing system provides a means for
         transferring  spent resins from the  demineralizers  to the spent resin
         storage tank.  From there these resins are processed for disposal.  The
         system is  designed to minimize  the amount of waste  liquid  generated
         during sluicing.

            2. Temporary Storage.(**) A consulting engineering firm was retained
to determine  a  location  for  storage of  solidified  secondary  radwaste. The
consultants  determined that it would be best to store this low-level waste on a
temporary basis pending  disposal in what is now called the fabrication shop (or
similar structure).

D.  MISCELLANEOUS:

            1. Radwaste Building and Radwaste Pipe Tunnel. The radwaste building
contains  only  facilities   performing  a  solid  waste  disposal  function  or
facilities  performing a pollution  control  function.  As discussed  below, the
radwaste  building  and the  radwaste  pipe tunnel are  necessary  to the proper
functioning of those systems described above which are located in the building.

         Radwaste Building. The radwaste building is a rectangular,  multistory,
         structural  steel  and  reinforced   concrete  structure  which  houses
         facilities  for treatment and disposal of radioactive  liquid,  gaseous
         and solid wastes.

         Radwaste  Pipe  Tunnel.  The  radwaste  pipe  tunnel is a  below-grade,
         reinforced concrete structure connecting the auxiliary building and the
         radwaste  building.  The tunnel provides access and carries  electrical
         cable trays and piping between the auxiliary  building and the radwaste
         building.  It functions  only in support of the  radwaste  building and
         equipment therein.



----------
(*)      Certain portions of the Solid Radwaste  Processing System are no longer
         in use. Since the plant became  operational,  the equipment  associated
         with solidifying  radioactive  resins and bottoms has been retired.  In
         addition,  the equipment  processing  contaminated  laundry  wastewater
         (reverse  osmosis)  has been  retired.  Equipment  associated  with the
         solidification  of  radwastes  is being  replaced  with a new  Radwaste
         Volume  Reduction  system.  The total  estimated  costs of the  retired
         equipment  is  $14,283,360,  a portion of which was  financed  with the
         Prior Bonds.

(**)     The  temporary  storage  facilities  were  not  constructed.  The total
         estimated  cost of  the temporary  storage facilities  which was  to be
         financed with the Prior Bonds was $198,681.