SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): November 10, 1995
Wisconsin Power and Light Company
(Exact name of registrant as specified in its charter)
Wisconsin 0-337 39-0714890
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices, including zip code)
(608) 252-3311
(Registrant's telephone number)
<PAGE>
Item 5. Other Events.
WPL Holdings, Inc. ("WPL"), a holding company incorporated under
the laws of the State of Wisconsin and the parent corporation of Wisconsin
Power and Light Company (the "Company"), IES Industries Inc. ("IES"), a
holding company incorporated under the laws of the State of Iowa,
Interstate Power Company ("IPC"), an operating public utility incorporated
under the laws of the State of Delaware, and AMW Acquisition, Inc.
("AMW"), a wholly owned subsidiary of WPL incorporated under the laws of
the State of Delaware, have entered into an Agreement and Plan of Merger,
dated as of November 10, 1995 (the "Merger Agreement"), providing for (a)
the merger of IES with and into WPL, which merger will result in the
combination of WPL and IES as a single holding company (the "IES Merger"),
and (b) the merger of AMW with and into IPC, which merger will result in
IPC becoming a wholly owned subsidiary of WPL (the "IPC Merger", and
together with the IES Merger, the "Merger"). The Merger has been approved
by the Board of Directors of each of the constituent companies and is
expected to close promptly after all of the conditions to the consummation
of the Merger, including obtaining shareowner approvals and all applicable
regulatory approvals, are fulfilled or waived. The regulatory approval
process is expected to take approximately 12 to 18 months.
In the Merger, WPL will change its name to Interstate Energy
Corporation ("Interstate Energy") and, following the Merger, Interstate
Energy will be the parent company of the Company, IES's present utility
subsidiary, IES Utilities Inc. ("Utilities"), and IPC, and will be
registered under the Public Utility Holding Company Act of 1935, as
amended.
The Merger Agreement contains certain covenants of the parties
pending the consummation of the Merger. Generally, the parties and their
subsidiaries, including the Company, must carry on their businesses in the
ordinary course consistent with past practice, may not increase dividends
on common stock in excess of current levels in the case of IES and IPC and
beyond a specified limit in the case of WPL, and may not issue any capital
stock beyond certain limits. The Merger Agreement also contains
restrictions on, among other things, charter and bylaw amendments,
acquisitions, capital expenditures, dispositions, incurrence of
indebtedness, certain increases in employee compensation and benefits, and
affiliate transactions.
Following the Merger, the Company's Board of Directors is expected
to consist of 15 directors, 6 of whom will be designated by WPL, 6 of whom
will be designated by IES and 3 of whom will be designated by IPC. Mr.
Erroll B. Davis, Jr., the current President and Chief Executive Officer of
WPL and the Company, will continue to serve as President and Chief
Executive Officer of Interstate Energy and the Company after the Merger
and will also become the Chief Executive Officer of Utilities and IPC.
The business of Interstate Energy will consist of utility
operations and various non-utility enterprises, and it is expected that
its utility subsidiaries will serve more than 850,000 electric customers
and 360,000 natural gas customers in Iowa, Illinois, Minnesota and
Wisconsin.
In response to the announcement of the Merger, Standard and Poor's
Corporation ("S&P") placed its ratings of the Company's "AA" rated senior
secured debt, "AA-" rated preferred stock and "A-1+" rated commercial
paper on CreditWatch with negative implications. The ratings of
Utilities' "A" rated senior secured debt, "A-" rated preferred stock and
"A-1" rated commercial paper were placed on CreditWatch with positive
implications. The ratings of IPC's "A+" rated senior secured debt, "A"
rated senior unsecured debt, "A" rated preferred stock and "A-1" rated
commercial paper were affirmed. S&P indicated that if the Merger is
completed, the likely credit ratings for the senior secured debt of the
Company, Utilities and IPC are expected to be "A+".
Moody's Investors Service ("Moody's") placed the Company's "Aa2"
rated senior secured debt, "(P)Aa2" rated senior secured debt shelf
registration, "aa3" rated preferred stock, "(P)aa3" rated preferred stock
shelf registration and "Aa3" counterparty rating under review for possible
downgrade. The ratings of Utilities' "A2" rated senior secured debt,
"(P)A2" rated senior secured debt shelf registration, "A2" rated secured
pollution control bonds, "A3" unsecured pollution control bonds, "(P)A3"
rated senior unsecured debt shelf registration, "(P)Baa1" rated junior
subordinated unsecured debt shelf registration and "A3" counterparty
rating have been placed under review for possible upgrade. In addition,
IPC's "A1" rated senior secured debt, "(P)A1" rated senior secured debt
shelf registration, "A2" rated unsecured pollution control bonds, "a2"
rated preferred stock, "(P)a2" rated preferred stock shelf registration
and "A2" counterparty rating have been placed under review for possible
downgrade. Moody's indicated that the "Prime-1" short term ratings of the
three companies are not under review.
WPL, IES and IPC recognize that, as a result of the new registered
holding company structure, the Securities and Exchange Commission (the
"SEC") may require divestiture of their existing gas operations and
certain non-utility operations, but they will seek approval from the SEC
to maintain such businesses. If divestiture is ultimately required, the
SEC has historically allowed companies sufficient time to accomplish
divestitures in a manner that protects shareowner value. The Company
cannot predict what action may be required by the SEC or the effect of any
divestiture if required. Furthermore, the Company cannot predict what
actions might be required by other federal or state regulatory authorities
as a condition to approval of the Merger.
The Merger will not impair the lien of the Company's Indenture of
Mortgage or Deed of Trust, dated August 1, 1941 (as amended and
supplemented, the "Indenture"), securing its First Mortgage Bonds, will
not impair the rights and powers of the trustees or debtholders under the
Indenture, and will not impair or alter in any way the rights, preferences
or limitations of any shares of the Company's Preferred Stock, without par
value.
The Merger Agreement is filed as an exhibit to this Current Report
on Form 8-K and is incorporated herein by reference. The brief summary of
certain provisions of the Merger Agreement set forth above is qualified in
its entirety by reference to that agreement.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibit.
The exhibit listed in the accompanying Exhibit Index is filed
as part of this Current Report on Form 8-K.
<PAGE>
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.
WISCONSIN POWER AND LIGHT COMPANY
Date: November 22, 1995 By: /s/ William D. Harvey
William D. Harvey
Senior Vice President
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY
EXHIBIT INDEX TO FORM 8-K
Report Dated November 10, 1995
Exhibit
(2.1) Agreement and Plan of Merger, dated as
of November 10, 1995, by and among WPL
Holdings, Inc., IES Industries Inc.,
Interstate Power Company and AMW
Acquisition, Inc.*
* The schedules and exhibits to this document are not being filed
herewith. The Registrant agrees to furnish supplementally a copy of any
such schedule or exhibit to the Securities and Exchange Commission upon
request.
AGREEMENT AND PLAN OF MERGER
By and Among
WPL HOLDINGS, INC.,
IES INDUSTRIES INC.,
INTERSTATE POWER COMPANY
and
AMW ACQUISITION, INC.
Dated as of November 10, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effects of the Merger . . . . . . . . . . . . . . . . . 2
Section 1.3 Effective Time of the Merger . . . . . . . . . . . . . . 3
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock . . . . . . . . . 3
(a) Cancellation of Certain Common Stock. . . . . . . . 3
(b) Conversion of Certain Common Stock. . . . . . . . . 4
(c) No Change in Interstate Preferred Stock . . . . . . 4
(d) Conversion of AMW Common Stock . . . . . . . . . . 5
Section 2.2 Dissenting Shares . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Issuance of New Certificates . . . . . . . . . . . . . . 5
(a) Deposit with Exchange Agent . . . . . . . . . . . . 5
(b) Issuance Procedures . . . . . . . . . . . . . . . . 6
(c) Distributions with Respect to
Unsurrendered Shares . . . . . . . . . . . . . . . 6
(d) No Fractional Securities . . . . . . . . . . . . . 7
(e) Closing of Common Stock Transfer Books . . . . . . 8
(f) Termination of Exchange Agent . . . . . . . . . . . 8
ARTICLE III
THE CLOSING
Section 3.1 The Closing . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WPL
Section 4.1 Organization and Qualification . . . . . . . . . . . . . 8
Section 4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 10
Section 4.4 Authority; Noncontravention; Statutory
Approvals; Compliance . . . . . . . . . . . . . . . . . 11
(a) Authority . . . . . . . . . . . . . . . . . . . . . 11
(b) Noncontravention . . . . . . . . . . . . . . . . . 12
(c) Statutory Approvals . . . . . . . . . . . . . . . . 13
(d) Compliance . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Reports and Financial Statements . . . . . . . . . . . . 14
Section 4.6 Absence of Certain Changes or Events . . . . . . . . . . 15
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.8 Registration Statement and Proxy Statement . . . . . . . 16
Section 4.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 16
(a) Filing of Timely Tax Returns . . . . . . . . . . . 16
(b) Payment of Taxes . . . . . . . . . . . . . . . . . 16
(c) Tax Reserves . . . . . . . . . . . . . . . . . . . 16
(d) Tax Liens . . . . . . . . . . . . . . . . . . . . . 17
(e) Withholding Taxes . . . . . . . . . . . . . . . . . 17
(f) Extensions of Time for Filing Tax Returns . . . . . 17
(g) Waivers of Statute of Limitations . . . . . . . . . 17
(h) Expiration of Statute of Limitations . . . . . . . 17
(i) Audit, Administrative and Court
Proceedings . . . . . . . . . . . . . . . . . . . . 17
(j) Powers of Attorney . . . . . . . . . . . . . . . . 17
(k) Tax Rulings . . . . . . . . . . . . . . . . . . . . 17
(l) Availability of Tax Returns . . . . . . . . . . . . 17
(m) Tax Sharing Agreements . . . . . . . . . . . . . . 18
(n) Code Section 280G . . . . . . . . . . . . . . . . . 18
(o) Liability for Others . . . . . . . . . . . . . . . 18
Section 4.10 Employee Matters; ERISA . . . . . . . . . . . . . . . . 18
(a) Benefit Plans . . . . . . . . . . . . . . . . . . . 18
(b) Contributions . . . . . . . . . . . . . . . . . . . 19
(c) Qualification; Compliance . . . . . . . . . . . . . 19
(d) Liabilities . . . . . . . . . . . . . . . . . . . . 19
(e) Welfare Plans . . . . . . . . . . . . . . . . . . . 20
(f) Documents made Available . . . . . . . . . . . . . 20
(g) Payments Resulting from Merger . . . . . . . . . . 20
(h) Labor Agreements . . . . . . . . . . . . . . . . . 21
Section 4.11 Environmental Protection . . . . . . . . . . . . . . . . 21
(a) Compliance . . . . . . . . . . . . . . . . . . . . 21
(b) Environmental Permits . . . . . . . . . . . . . . . 22
(c) Environmental Claims . . . . . . . . . . . . . . . 22
(d) Releases . . . . . . . . . . . . . . . . . . . . . 22
(e) Predecessors . . . . . . . . . . . . . . . . . . . 22
(f) Disclosure . . . . . . . . . . . . . . . . . . . . 23
(i) "Environmental Claim . . . . . . . . . . . . . 23
(ii) "Environmental Laws . . . . . . . . . . . . . 23
(iii) "Hazardous Materials . . . . . . . . . . . . . 24
(iv) "Release . . . . . . . . . . . . . . . . . . . 24
Section 4.12 Regulation as a Utility . . . . . . . . . . . . . . . . 24
Section 4.13 Vote Required . . . . . . . . . . . . . . . . . . . . . 25
Section 4.14 Accounting Matters . . . . . . . . . . . . . . . . . . . 25
Section 4.15 Applicability of Certain Provisions of Wisconsin Law,
Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.16 Opinion of Financial Advisor . . . . . . . . . . . . . . 26
Section 4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.18 Ownership of IES and Interstate Common Stock . . . . . . 26
Section 4.19 WPL Rights Agreement . . . . . . . . . . . . . . . . . . 26
Section 4.20 Operations of Nuclear Power Plant . . . . . . . . . . . 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IES
Section 5.1 Organization and Qualification . . . . . . . . . . . . . 27
Section 5.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 28
Section 5.4 Authority; Noncontravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Authority . . . . . . . . . . . . . . . . . . . . . 29
(b) Noncontravention . . . . . . . . . . . . . . . . . 29
(c) Statutory Approvals . . . . . . . . . . . . . . . . 30
(d) Compliance . . . . . . . . . . . . . . . . . . . . 30
Section 5.5 Reports and Financial Statements . . . . . . . . . . . . 31
Section 5.6 Absence of Certain Changes or Events . . . . . . . . . . 32
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.8 Registration Statement and Proxy Statement . . . . . . . 33
Section 5.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 33
(a) Filing of Timely Tax Returns . . . . . . . . . . . 33
(b) Payment of Taxes . . . . . . . . . . . . . . . . . 33
(c) Tax Reserves . . . . . . . . . . . . . . . . . . . 33
(d) Tax Liens . . . . . . . . . . . . . . . . . . . . . 34
(e) Withholding Taxes . . . . . . . . . . . . . . . . . 34
(f) Extensions of Time for Filing Tax
Returns . . . . . . . . . . . . . . . . . . . . . . 34
(g) Waivers of Statute of Limitations . . . . . . . . . 34
(h) Expiration of Statute of Limitations . . . . . . . 34
(i) Audit, Administrative and Court
Proceedings . . . . . . . . . . . . . . . . . . . . 34
(j) Powers of Attorney . . . . . . . . . . . . . . . . 34
(k) Tax Rulings . . . . . . . . . . . . . . . . . . . . 34
(l) Availability of Tax Returns . . . . . . . . . . . . 34
(m) Tax Sharing Agreements . . . . . . . . . . . . . . 35
(n) Code Section 280G . . . . . . . . . . . . . . . . . 35
(o) Liability for Others . . . . . . . . . . . . . . . 35
Section 5.10 Employee Matters; ERISA . . . . . . . . . . . . . . . . 35
(a) Benefit Plans . . . . . . . . . . . . . . . . . . . 35
(b) Contributions . . . . . . . . . . . . . . . . . . . 35
(c) Qualification; Compliance . . . . . . . . . . . . . 35
(d) Liabilities . . . . . . . . . . . . . . . . . . . . 36
(e) Welfare Plans . . . . . . . . . . . . . . . . . . . 36
(f) Documents made Available . . . . . . . . . . . . . 36
(g) Payments Resulting from Merger . . . . . . . . . . 37
(h) Labor Agreements . . . . . . . . . . . . . . . . . 37
Section 5.11 Environmental Protection . . . . . . . . . . . . . . . . 38
(a) Compliance . . . . . . . . . . . . . . . . . . . . 38
(b) Environmental Permits . . . . . . . . . . . . . . . 38
(c) Environmental Claims . . . . . . . . . . . . . . . 38
(d) Releases . . . . . . . . . . . . . . . . . . . . . 39
(e) Predecessors . . . . . . . . . . . . . . . . . . . 39
(f) Disclosure . . . . . . . . . . . . . . . . . . . . 39
Section 5.12 Regulation as a Utility . . . . . . . . . . . . . . . . 39
Section 5.13 Vote Required . . . . . . . . . . . . . . . . . . . . . 39
Section 5.14 Accounting Matters . . . . . . . . . . . . . . . . . . . 40
Section 5.15 Applicability of Certain Iowa Law . . . . . . . . . . . 40
Section 5.16 Opinion of Financial Advisor . . . . . . . . . . . . . . 40
Section 5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.18 Ownership of WPL and Interstate Common Stock . . . . . . 40
Section 5.19 IES Rights Agreement . . . . . . . . . . . . . . . . . . 40
Section 5.20 Operations of Nuclear Power Plant . . . . . . . . . . . 41
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF INTERSTATE
Section 6.1 Organization and Qualification . . . . . . . . . . . . . 41
Section 6.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 42
Section 6.4 Authority; Noncontravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . . . . . 43
(a) Authority . . . . . . . . . . . . . . . . . . . . . 43
(b) Noncontravention . . . . . . . . . . . . . . . . . 44
(c) Statutory Approvals . . . . . . . . . . . . . . . . 44
(d) Compliance . . . . . . . . . . . . . . . . . . . . 45
Section 6.5 Reports and Financial Statements . . . . . . . . . . . . 45
Section 6.6 Absence of Certain Changes or Events . . . . . . . . . . 46
Section 6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.8 Registration Statement and Proxy Statement . . . . . . . 47
Section 6.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 48
(a) Filing of Timely Tax Returns . . . . . . . . . . . 48
(b) Payment of Taxes . . . . . . . . . . . . . . . . . 48
(c) Tax Reserves . . . . . . . . . . . . . . . . . . . 48
(d) Tax Liens . . . . . . . . . . . . . . . . . . . . . 48
(e) Withholding Taxes . . . . . . . . . . . . . . . . . 48
(f) Extensions of Time for Filing Tax
Returns . . . . . . . . . . . . . . . . . . . . . . 48
(g) Waivers of Statute of Limitations . . . . . . . . . 48
(h) Expiration of Statute of Limitations . . . . . . . 48
(i) Audit, Administrative and Court
Proceedings . . . . . . . . . . . . . . . . . . . . 49
(j) Powers of Attorney . . . . . . . . . . . . . . . . 49
(k) Tax Rulings . . . . . . . . . . . . . . . . . . . . 49
(l) Availability of Tax Returns . . . . . . . . . . . . 49
(m) Tax Sharing Agreements . . . . . . . . . . . . . . 49
(n) Code Section 280G . . . . . . . . . . . . . . . . . 49
(o) Liability for Others . . . . . . . . . . . . . . . 49
Section 6.10 Employee Matters; ERISA . . . . . . . . . . . . . . . . 49
(a) Benefit Plans . . . . . . . . . . . . . . . . . . . 49
(b) Contributions . . . . . . . . . . . . . . . . . . . 50
(c) Qualification; Compliance . . . . . . . . . . . . . 50
(d) Liabilities . . . . . . . . . . . . . . . . . . . . 50
(e) Welfare Plans . . . . . . . . . . . . . . . . . . . 50
(f) Documents made Available . . . . . . . . . . . . . 51
(g) Payments Resulting from Merger . . . . . . . . . . 51
(h) Labor Agreements . . . . . . . . . . . . . . . . . 52
Section 6.11 Environmental Protection . . . . . . . . . . . . . . . . 52
(a) Compliance . . . . . . . . . . . . . . . . . . . . 52
(b) Environmental Permits . . . . . . . . . . . . . . . 53
(c) Environmental Claims . . . . . . . . . . . . . . . 53
(d) Releases . . . . . . . . . . . . . . . . . . . . . 53
(e) Predecessors . . . . . . . . . . . . . . . . . . . 53
(f) Disclosure . . . . . . . . . . . . . . . . . . . . 54
Section 6.12 Regulation as a Utility . . . . . . . . . . . . . . . . 54
Section 6.13 Vote Required . . . . . . . . . . . . . . . . . . . . . 54
Section 6.14 Accounting Matters . . . . . . . . . . . . . . . . . . . 54
Section 6.15 Applicability of Certain Delaware Law, Etc . . . . . . . 54
Section 6.16 Opinion of Financial Advisor . . . . . . . . . . . . . . 55
Section 6.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.18 Ownership of WPL and IES Common Stock . . . . . . . . . 55
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 Covenants of the Parties . . . . . . . . . . . . . . . . 55
Section 7.2 Ordinary Course of Business . . . . . . . . . . . . . . 55
Section 7.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.4 Issuance of Securities . . . . . . . . . . . . . . . . . 58
Section 7.5 Charter Documents . . . . . . . . . . . . . . . . . . . 59
Section 7.6 No Acquisitions . . . . . . . . . . . . . . . . . . . . 59
Section 7.7 Capital Expenditures and Emission Allowances . . . . . . 60
Section 7.8 No Dispositions . . . . . . . . . . . . . . . . . . . . 60
Section 7.9 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.10 Compensation, Benefits . . . . . . . . . . . . . . . . . 61
Section 7.11 1935 Act . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.12 Transmission, Generation . . . . . . . . . . . . . . . . 62
Section 7.13 Accounting . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.14 Pooling . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.15 Taxfree Status . . . . . . . . . . . . . . . . . . . . . 62
Section 7.16 Affiliate Transactions . . . . . . . . . . . . . . . . . 62
Section 7.17 Cooperation, Notification . . . . . . . . . . . . . . . 63
Section 7.18 Thirdparty Consents . . . . . . . . . . . . . . . . . . 63
Section 7.19 No Breach . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.20 Taxexempt Status . . . . . . . . . . . . . . . . . . . . 64
Section 7.21 Transition Steering Team . . . . . . . . . . . . . . . . 64
Section 7.22 Company Actions . . . . . . . . . . . . . . . . . . . . 64
Section 7.23 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.24 Discharge of Liabilities . . . . . . . . . . . . . . . . 65
Section 7.25 Contracts . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.27 Permits . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access to Information . . . . . . . . . . . . . . . . . 66
Section 8.2 Joint Proxy Statement and Registration Statement . . . . 66
(a) Preparation and Filing . . . . . . . . . . . . . . 66
(b) Letter of WPL's Accountants . . . . . . . . . . . . 67
(c) Letter of IES's Accountants . . . . . . . . . . . . 67
(d) Letter of Interstate's Accountants . . . . . . . . 67
(e) Fairness Opinions . . . . . . . . . . . . . . . . . 68
Section 8.3 Regulatory Matters. . . . . . . . . . . . . . . . . . . 68
(a) HSR Filings . . . . . . . . . . . . . . . . . . . . 68
(b) Other Regulatory Approvals . . . . . . . . . . . . 68
Section 8.4 Shareholder Approval . . . . . . . . . . . . . . . . . . 69
(a) Approval of IES Shareholders . . . . . . . . . . . 69
(b) Approval of WPL Shareholders . . . . . . . . . . . 69
(c) Approval of Interstate Shareholders . . . . . . . . 69
(d) Meeting Date . . . . . . . . . . . . . . . . . . . 70
(e) Fairness Opinions Not Withdrawn . . . . . . . . . . 70
Section 8.5 Director and Officer Indemnification . . . . . . . . . . 70
(a) Indemnification . . . . . . . . . . . . . . . . . . 70
(b) Insurance . . . . . . . . . . . . . . . . . . . . . 71
(c) Successors . . . . . . . . . . . . . . . . . . . . 71
(d) Survival of Indemnification . . . . . . . . . . . . 72
(e) Benefit . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.6 Disclosure Schedules. . . . . . . . . . . . . . . . . . 72
Section 8.7 Public Announcements. . . . . . . . . . . . . . . . . . 73
Section 8.8 Rule 145 Affiliates . . . . . . . . . . . . . . . . . . 73
Section 8.9 Employee Agreements and Workforce Matters . . . . . . . 73
(a) Certain Employee Agreements . . . . . . . . . . . . 73
(b) Workforce Matters . . . . . . . . . . . . . . . . . 73
Section 8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . 74
Section 8.11 Stock Option and Other Stock Plans . . . . . . . . . . . 75
(a) Amendment of Stock Plans and Agreements . . . . . . 75
(b) Company Action . . . . . . . . . . . . . . . . . . 76
Section 8.12 No Solicitations . . . . . . . . . . . . . . . . . . . . 76
Section 8.13 Company Board of Directors . . . . . . . . . . . . . . . 77
Section 8.14 Company Officers . . . . . . . . . . . . . . . . . . . . 78
Section 8.15 Employment Contracts . . . . . . . . . . . . . . . . . . 80
Section 8.16 PostMerger Operations . . . . . . . . . . . . . . . . . 80
Section 8.17 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.18 Further Assurances . . . . . . . . . . . . . . . . . . . 81
Section 8.19 Charter and Bylaw Amendments. . . . . . . . . . . . . . 81
ARTICLE IX
CONDITIONS
Section 9.1 Conditions to each Party's Obligation to Effect the
Merger. . . . . . . . . . . . . . . . . . . . . . . . . 82
(a) Shareholder Approvals . . . . . . . . . . . . . . . 82
(b) No Injunction . . . . . . . . . . . . . . . . . . . 82
(c) Registration Statement . . . . . . . . . . . . . . 82
(d) Listing of Shares . . . . . . . . . . . . . . . . . 82
(e) Statutory Approvals . . . . . . . . . . . . . . . . 82
(f) Pooling . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.2 Further Conditions to Obligation of IES to Effect the
IES Merger . . . . . . . . . . . . . . . . . . . . . . . 83
(a) Performance of Obligations . . . . . . . . . . . . 83
(b) Representations and Warranties . . . . . . . . . . 83
(c) Closing Certificates . . . . . . . . . . . . . . . 83
(d) Material Adverse Effect . . . . . . . . . . . . . . 83
(e) Tax Opinions . . . . . . . . . . . . . . . . . . . 84
(f) Required Consents . . . . . . . . . . . . . . . . . 84
(g) Affiliate Agreements . . . . . . . . . . . . . . . 84
Section 9.3 Further Conditions to Obligation of Interstate to
Effect the Interstate Merger . . . . . . . . . . . . . . 84
(a) Performance of Obligations . . . . . . . . . . . . 84
(b) Representations and Warranties . . . . . . . . . . 84
(c) Closing Certificates . . . . . . . . . . . . . . . 85
(d) Material Adverse Effect . . . . . . . . . . . . . . 85
(e) Tax Opinions . . . . . . . . . . . . . . . . . . . 85
(f) Required Consents . . . . . . . . . . . . . . . . . 85
(g) Affiliate Agreements . . . . . . . . . . . . . . . 85
Section 9.4 Further Conditions to Obligation of WPL to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 86
(a) Performance of Obligations . . . . . . . . . . . . 86
(b) Representations and Warranties . . . . . . . . . . 86
(c) Closing Certificates . . . . . . . . . . . . . . . 86
(d) Material Adverse Effect . . . . . . . . . . . . . . 86
(e) Tax Opinions . . . . . . . . . . . . . . . . . . . 86
(f) Required Consents . . . . . . . . . . . . . . . . . 87
(g) Affiliate Agreements . . . . . . . . . . . . . . . 87
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.2 Effect of Termination . . . . . . . . . . . . . . . . . 92
Section 10.3 Termination Fee; Expenses . . . . . . . . . . . . . . . 92
(a) Termination Fee Upon Breach or
Withdrawal of Approval . . . . . . . . . . . . . . 92
(b) Additional Termination Fee . . . . . . . . . . . . 93
(c) Second Termination Fee . . . . . . . . . . . . . . 94
(d) Expenses . . . . . . . . . . . . . . . . . . . . . 95
(e) Limitation on Termination Fees . . . . . . . . . . 95
(f) Certain Definitions. . . . . . . . . . . . . . . 96
(i) Participation Percentage . . . . . . . . . . . 96
(ii) Target Party . . . . . . . . . . . . . . . . . 96
Section 10.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . 96
Section 10.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Nonsurvival; Effect of Representations and Warranties . 97
Section 11.2 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 11.4 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 99
Section 11.5 Interpretation. . . . . . . . . . . . . . . . . . . . 100
Section 11.6 Counterparts; Effect. . . . . . . . . . . . . . . . . 100
Section 11.7 Parties in Interest . . . . . . . . . . . . . . . . . 100
Section 11.8 Binding Effect; Benefits . . . . . . . . . . . . . . . 101
Section 11.9 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. . . . . . . 101
Section 11.10 Enforcement . . . . . . . . . . . . . . . . . . . . . 101
EXHIBITS
Exhibit A - WPL/IES Stock Option Agreement
Exhibit B - WPL/Interstate Stock Option Agreement
Exhibit C - IES/WPL Stock Option Agreement
Exhibit D - IES/Interstate Stock Option Agreement
Exhibit E - Interstate/WPL Stock Option Agreement
Exhibit F - Interstate/IES Stock Option Agreement
Exhibit 1.3 - Plan of Merger
Exhibit 8.8(a) - Affiliate Agreement of WPL
Exhibit 8.8(b) - Affiliate Agreement of IES and Interstate
Exhibit 8.15.1 - WPL Employment Contract with Mr. Liu
Exhibit 8.15.2 - WPL Employment Contract with Mr. Davis
Exhibit 8.15.3 - WPL Employment Contract with
Mr. Stoppelmoor
Exhibit 8.15.4 - WPL Employment Contract with Mr. Chase
Exhibit 8.15.5 - WPL Employment Contract with Mr. Fisher
<PAGE>
INDEX OF DEFINED TERMS
TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE #
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Affiliate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 73
Affiliated Employees . . . . . . . . . . . . . . . . . . . . . . . . 74
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AMW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AMW Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Atomic Energy Act . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . 88
Business Combination Proposal . . . . . . . . . . . . . . . . . . . . 77
Canceled Common Shares . . . . . . . . . . . . . . . . . . . . . . . 6
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Class II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Class III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Closing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . 66
DAEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . 72
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . 22
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . 13
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . 24
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
IBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . 70
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . 70
IES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
IES Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 35
IES Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IES Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . 27
IES Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
IES Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . 5
IES Financial Statements . . . . . . . . . . . . . . . . . . . . . . 32
IES/Interstate Stock Option Agreement . . . . . . . . . . . . . . . . 1
IES Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . 28
IES Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 27
IES Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IES Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 28
IES Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
IES Required Consents . . . . . . . . . . . . . . . . . . . . . . . . 30
IES Required Statutory Approvals . . . . . . . . . . . . . . . . . . 30
IES Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 41
IES SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
IES Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 68
IES Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . 75
IES Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . 75
IES Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . 39
IES Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
IES/WPL Stock Option Agreement . . . . . . . . . . . . . . . . . . . 1
Initial Termination Date . . . . . . . . . . . . . . . . . . . . . . 87
Interstate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Interstate Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 49
Interstate Common Stock . . . . . . . . . . . . . . . . . . . . . . . 4
Interstate Directors . . . . . . . . . . . . . . . . . . . . . . . 78
Interstate Disclosure Schedule . . . . . . . . . . . . . . . . . . 41
Interstate Dissenting Shares . . . . . . . . . . . . . . . . . . . . 5
Interstate Financial Statements . . . . . . . . . . . . . . . . . . . 46
Interstate/IES Stock Option Agreement . . . . . . . . . . . . . . . . 1
Interstate Joint Venture . . . . . . . . . . . . . . . . . . . . . . 42
Interstate Material Adverse Effect . . . . . . . . . . . . . . . . . 41
Interstate Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Interstate Preferred Stock . . . . . . . . . . . . . . . . . . . . . 4
Interstate Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interstate Required Consents . . . . . . . . . . . . . . . . . . . . 44
Interstate Required Statutory Approval . . . . . . . . . . . . . . . 44
Interstate SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 46
Interstate Shareholders' Approval . . . . . . . . . . . . . . . . . . 54
Interstate Special Meeting . . . . . . . . . . . . . . . . . . . . . 69
Interstate Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 42
Interstate/WPL Stock Option Agreement . . . . . . . . . . . . . . . . 1
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Joint Proxy/Registration Statement . . . . . . . . . . . . . . . . . 66
Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Kewaunee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merrill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Morgan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Nonregulated Company . . . . . . . . . . . . . . . . . . . . . . . . 80
Non-Target Party . . . . . . . . . . . . . . . . . . . . . . . . . . 94
NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Participation Percentage . . . . . . . . . . . . . . . . . . . . . . 95
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Power Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . 16
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Salomon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Second Target Party . . . . . . . . . . . . . . . . . . . . . . . . . 94
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Stock Option Agreements . . . . . . . . . . . . . . . . . . . . . . . 1
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Target Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Three-Year Period . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Transition Team . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Utilities Common Stock . . . . . . . . . . . . . . . . . . . . . . . 28
Utilities Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 28
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
WBCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
WP&LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
WP&LC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 10
WP&LC Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 10
WPL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
WPL Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 19
WPL Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 4
WPL Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
WPL Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . 8
WPL Financial Statements . . . . . . . . . . . . . . . . . . . . . . 15
WPL/IES Stock Option Agreement . . . . . . . . . . . . . . . . . . . 1
WPL/Interstate Stock Option Agreement . . . . . . . . . . . . . . . . 1
WPL Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . 10
WPL Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 9
WPL Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
WPL Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
WPL Required Consents . . . . . . . . . . . . . . . . . . . . . . . . 12
WPL Required Statutory Approvals . . . . . . . . . . . . . . . . . . 13
WPL SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
WPL Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . 25
WPL Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . 69
WPL Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
WPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
<PAGE>
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 10, 1995
(this "Agreement"), by and among WPL Holdings, Inc., a holding company
incorporated under the laws of the State of Wisconsin ("WPL"), IES
Industries Inc., a holding company incorporated under the laws of the
State of Iowa ("IES"), Interstate Power Company, an operating public
utility incorporated under the laws of the State of Delaware
("Interstate") and AMW Acquisition, Inc., a wholly-owned subsidiary of WPL
incorporated under the laws of the State of Delaware ("AMW", and together
with WPL, IES and Interstate, after the Effective Time (as hereinafter
defined), the "Company"),
W I T N E S S E T H:
WHEREAS, WPL, IES and Interstate have determined that it would
be in their respective best interests and in the interests of their
respective shareholders to effect the transactions contemplated by this
Agreement;
WHEREAS, in furtherance thereof, the respective Boards of
Directors of WPL, IES, Interstate and AMW have approved this Agreement and
the Merger (as defined in Section 1.1 below) on the terms and conditions
set forth in this Agreement;
WHEREAS, the Board of Directors of WPL has approved and WPL has
executed agreements with IES in the form of Exhibit A (the "WPL/IES Stock
Option Agreement"), and Interstate in the form of Exhibit B (the
"WPL/Interstate Stock Option Agreement"), the Board of Directors of IES
has approved and IES has executed agreements with WPL in the form of
Exhibit C (the "IES/WPL Stock Option Agreement"), and Interstate in the
form of Exhibit D (the "IES/Interstate Stock Option Agreement"), and the
Board of Directors of Interstate has approved and Interstate has executed
agreements with WPL in the form of Exhibit E (the "Interstate/WPL Stock
Option Agreement") and IES in the form of Exhibit F (the "Interstate/IES
Stock Option Agreement") (collectively, the "Stock Option Agreements")
whereby each of WPL, IES and Interstate, respectively, has granted to the
others an option to purchase shares of its common stock on the terms and
conditions provided in such agreements;
WHEREAS, for Federal income tax purposes, it is intended that
the transactions contemplated herein will be reorganizations described in
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder, and that the parties hereto and
their respective shareholders will recognize no gain or loss for Federal
income tax purposes as a result of the consummation of the Merger;
WHEREAS, for accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests in accordance with
generally accepted accounting principles applied on a consistent basis
("GAAP") and applicable regulations of the Securities and Exchange
Commission (the "SEC");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein,
the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement:
(a) at the Effective Time:
(i) IES shall be merged with and into WPL (the "IES
Merger") in accordance with the laws of the States of Wisconsin and
Iowa;
(ii) AMW shall be merged with and into Interstate (the
"Interstate Merger") in accordance with the laws of the State of
Delaware;
(iii) The IES Merger, together with the Interstate Merger,
are collectively referred to herein as the "Merger."
(b) WPL shall be the surviving corporation of the IES Merger,
and Interstate shall be the surviving corporation of the Interstate
Merger, and each shall continue its respective corporate existence under
the laws of the States of Wisconsin and Delaware, respectively; and
(c) the effects and the consequences of the Merger shall be as
set forth in Section 1.2.
Section 1.2 Effects of the Merger. At the Effective Time,
(a) the surviving corporation of the IES Merger shall change
its name to Interstate Energy Corporation,
(b) the Restated Articles of Incorporation of WPL, as in effect
immediately prior to the Effective Time, except as set forth in Section
1.2(a) above, shall be the Restated Articles of Incorporation of WPL as
the surviving corporation in the IES Merger until thereafter amended,
(c) the By-laws of WPL, as in effect immediately prior to the
Effective Time, shall be the By-laws of WPL as the surviving corporation
in the IES Merger until thereafter amended,
(d) the Restated Certificate of Incorporation of Interstate, as
in effect immediately prior to the Effective Time, shall be the Restated
Certificate of Incorporation of Interstate as the surviving corporation in
the Interstate Merger until thereafter amended, and
(e) the By-laws of Interstate, as in effect immediately prior
to the Effective Time, shall be the By-laws of Interstate as the surviving
corporation in the Interstate Merger until thereafter amended.
Subject to the foregoing, the additional effects of the Merger shall be as
provided in the applicable provisions of the Wisconsin Business
Corporation Law (the "WBCL"), the Iowa Business Corporation Act (the
"IBCA") and the Delaware General Corporation Law (the "DGCL").
Section 1.3 Effective Time of the Merger. On the Closing Date
(as hereinafter defined), articles and certificates of merger together, in
the case of the IES Merger, with a Plan of Merger in substantially the
form attached hereto as Exhibit 1.3, which Plan of Merger is incorporated
by reference herein and deemed a part hereof (the "Plan of Merger"),
complying with the requirements of the WBCL, the IBCA and the DGCL, shall
be executed by WPL, IES, Interstate and AMW and shall be filed by WPL and
Interstate, as appropriate, with the Secretary of State of the State of
Wisconsin pursuant to the WBCL and the Secretary of State of the State of
Iowa pursuant to the IBCA, in the case of the IES Merger, and the
Secretary of State of the State of Delaware pursuant to the DGCL, in the
case of the Interstate Merger. The Merger shall become effective on the
later of the times (the "Effective Time") specified in the appropriate
articles and certificates of merger filed with respect to the IES Merger
and the Interstate Merger, respectively.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on the part
of any holder of any capital stock of WPL, IES, Interstate or AMW:
(a) Cancellation of Certain Common Stock.
(i) Each share of Common Stock, no par value, of IES (the
"IES Common Stock") that is owned by IES, WPL or Interstate or any of
their respective Subsidiaries (as hereinafter defined) shall be
canceled and shall cease to exist, and
(ii) each share of Common Stock, par value $3.50 per share,
of Interstate (the "Interstate Common Stock") that is owned by IES,
WPL or Interstate or any of their respective Subsidiaries shall be
canceled and shall cease to exist.
(b) Conversion of Certain Common Stock.
(i) Each issued and outstanding share of IES Common Stock
(other than shares canceled pursuant to Section 2.1(a)(i) and IES
Dissenting Shares (as hereinafter defined)) shall be converted into
the right to receive 0.98 (the "IES Ratio") duly authorized, validly
issued, fully paid and nonassessable (except as otherwise provided in
Section 180.0622(2)(b) of the WBCL) shares of Common Stock, par value
$.01 per share, of WPL ("WPL Common Stock"), including, if
applicable, associated rights (the "WPL Rights") to purchase shares
of WPL Common Stock pursuant to the terms of that certain Rights
Agreement between WPL and Morgan Shareholder Services Trust Company,
as Rights Agent thereunder, dated as of February 22, 1989 (the "WPL
Rights Agreement"). Until the Distribution Date (as defined in the
WPL Rights Agreement) all references in this Agreement to the WPL
Common Stock shall be deemed to include the associated WPL Rights.
(ii) Each issued and outstanding share of Interstate Common
Stock (other than shares canceled pursuant to Section 2.1(a)(ii))
shall be converted into the right to receive 1.11 (the "Interstate
Ratio") duly authorized, validly issued, fully paid and nonassessable
(except as otherwise provided in Section 180.0622(2)(b) of the WBCL)
shares of WPL Common Stock.
(iii) Upon such conversions and except as otherwise provided
in Section 2.2, all such shares of IES Common Stock and Interstate
Common Stock shall be canceled and cease to exist, and each holder of
a certificate formerly representing any such shares of IES Common
Stock or Interstate Common Stock shall cease to have rights with
respect thereto, except the right to receive the shares of WPL Common
Stock to be issued in consideration therefor upon the surrender of
such certificate in accordance with Section 2.3 and any cash in lieu
of fractional shares of WPL Common Stock.
(c) No Change in Interstate Preferred Stock. Each issued and
outstanding share of Preferred Stock, $50 par value, of Interstate (the
"Interstate Preferred Stock") shall be unchanged as a result of the
Interstate Merger and shall remain outstanding thereafter.
(d) Conversion of AMW Common Stock. All of the shares of
Common Stock, par value $0.01 per share, of AMW (the "AMW Common Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into that number of shares of Interstate Common Stock (as the
surviving corporation in the Interstate Merger) which shall be equivalent
to the aggregate number of shares of Interstate Common Stock (exclusive of
the shares canceled pursuant to Section 2.1(a)(ii)) issued and outstanding
immediately prior to the Effective Time. From and after the Effective
Time, each outstanding certificate theretofore representing shares of AMW
Common Stock shall be deemed for all purposes to evidence ownership of and
to represent the number of shares of Interstate Common Stock into which
such shares of AMW Common Stock shall have been converted.
Section 2.2 Dissenting Shares.
(a) Shares of IES Common Stock held by any holder entitled to
relief as a dissenting shareholder under Section 490.1302 of the IBCA (the
"IES Dissenting Shares") shall not be converted into the right to receive
WPL Common Stock in the IES Merger, but shall be canceled and converted
into such consideration as may be due with respect to such shares pursuant
to the applicable provisions of Sections 490.1320 through 490.1330 of the
IBCA, unless and until the right of such holder to receive fair cash value
for such Dissenting Shares (as hereinafter defined) terminates in
accordance with Sections 490.1320 through 490.1330 of the IBCA. If such
right is terminated otherwise than by the purchase of such shares by WPL,
then such shares shall cease to be Dissenting Shares and shall represent
the right to receive WPL Common Stock, as provided in Section 2.1(b)(i).
(b) Shares of Interstate Preferred Stock held by any holder
entitled to relief as a dissenting shareholder under Section 262 of the
DGCL (the "Interstate Dissenting Shares," and, collectively with the IES
Dissenting Shares, the "Dissenting Shares") shall be canceled and
converted into such consideration as may be due with respect to such
shares pursuant to the applicable provisions of Section 262 of the DGCL.
If such right is terminated otherwise than by the purchase of such shares
by WPL, then such shares shall cease to be Dissenting Shares and shall
remain outstanding.
Section 2.3 Issuance of New Certificates.
(a) Deposit with Exchange Agent. As soon as practicable after
the Effective Time, WPL shall deposit with such bank, trust company or
other appropriate entity mutually agreeable to WPL, IES and Interstate
(the "Exchange Agent"), certificates representing shares of WPL Common
Stock required to effect the issuances referred to in Section 2.1,
together with cash payable in respect of fractional shares pursuant to
Section 2.3(d).
(b) Issuance Procedures.
(i) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of IES Common Stock or
Interstate Common Stock, as the case may be (collectively, the
"Canceled Common Shares"), that were canceled and became instead the
right to receive shares of WPL Common Stock pursuant to
Section 2.1(b) and the Plan of Merger, (A) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Exchange Agent), and (B)
instructions for use in effecting the surrender of the Certificates
in exchange for certificates representing WPL Common Stock.
(ii) Upon surrender of a Certificate to the Exchange Agent
for cancellation (or to such other agent or agents as may be
appointed by agreement of WPL, IES and Interstate), together with a
duly executed letter of transmittal and such other documents as the
Exchange Agent shall require, the holder of such Certificate shall be
entitled to receive a certificate representing that number of whole
shares of WPL Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II and the Plan of Merger.
In the event of a transfer of ownership of Canceled Common Shares
which is not registered in the transfer records of IES or Interstate,
as the case may be, a certificate representing the proper number of
shares of WPL Common Stock may be issued to a transferee if the
Certificate representing such Canceled Common Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid.
(iii) Until surrendered as contemplated by this Section 2.3,
each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the
certificate representing WPL Common Stock and cash in lieu of any
fractional shares of WPL Common Stock contemplated by this
Section 2.3.
(c) Distributions with Respect to Unsurrendered Shares.
(i) No dividends or other distributions declared or made
after the Effective Time with respect to shares of WPL Common Stock
with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of
WPL Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to
Section 2.3(d) until the holder of record of such Certificate (or a
transferee as described in Section 2.3(b)) shall surrender such
Certificate.
(ii) Subject to the effect of unclaimed property, escheat
and other applicable laws, following surrender of any such
Certificate, there shall be paid to the record holders (or a
transferee as described in Section 2.3(b)) of the certificates
representing whole shares of WPL Common Stock issued in consideration
therefor, without interest,
(A) at the time of such surrender, the amount of cash
in lieu of a fractional share of WPL Common Stock to which such
holder (or transferee) is entitled pursuant to Section 2.3(d)
and the amount of dividends or other distributions with a record
date after the Effective Time which theretofore became payable
but which were not paid by reason of Section 2.3(c)(i) with
respect to such whole shares of WPL Common Stock, and
(B) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole
shares of WPL Common Stock.
(d) No Fractional Securities.
(i) Notwithstanding any other provision of this Agreement,
no certificates or scrip representing fractional shares of WPL Common
Stock shall be issued upon the surrender for exchange of Certificates
and such fractional shares shall not entitle the owner thereof to
vote as, or to any other rights of, a holder of WPL Common Stock.
(ii) A holder of IES Common Stock or Interstate Common
Stock who would otherwise have been entitled to receive a fractional
share of WPL Common Stock shall be entitled to receive a cash payment
in lieu of such fractional share in an amount equal to the product
(rounded to the nearest cent) of such fraction (rounded to the
nearest thousandth) multiplied by the average of the last reported
sales price, regular way, per share of WPL Common Stock, on the New
York Stock Exchange ("NYSE") Composite Tape for the ten business days
prior to and including the last business day prior to the Effective
Time on which WPL Common Stock was traded on the NYSE, without any
interest thereon.
(e) Closing of Common Stock Transfer Books. From and after the
Effective Time, the stock transfer books of IES and Interstate with
respect to shares of IES Common Stock and Interstate Common Stock issued
and outstanding prior to the Effective Time shall be closed and no
transfer of any such shares shall thereafter be made. If, after the
Effective Time, Certificates are presented to WPL or Interstate, they
shall be canceled and exchanged for certificates representing the
appropriate number of shares of WPL Common Stock as provided in this
Section 2.3.
(f) Termination of Exchange Agent. Any certificates
representing WPL Common Stock deposited with the Exchange Agent pursuant
to Section 2.3(a) and not exchanged within one year after the Effective
Time pursuant to this Section 2.3 shall be returned by the Exchange Agent
to the Company, which shall thereafter act as Exchange Agent. All funds
held by the Exchange Agent for payment to the holders of unsurrendered
Certificates and unclaimed at the end of one year from the Effective Time
shall be returned to the Company, after which time any holder of
unsurrendered Certificates shall look as a general creditor only to the
Company for payment of such funds to which such holder may be due, subject
to applicable law. The Company shall not be liable to any person for such
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 The Closing. The closing of the Merger (the
"Closing") shall take place at the offices of Foley & Lardner, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin, at 10:00 a.m. (Milwaukee,
Wisconsin local time) on the second business day immediately following the
date on which the last of the conditions set forth in Article IX hereof is
fulfilled or waived, or at such other time and date and place as WPL, IES
and Interstate shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WPL
WPL represents and warrants to IES and Interstate as follows:
Section 4.1 Organization and Qualification. Except as set
forth in Section 4.1 of the Disclosure Schedule to this Agreement prepared
and delivered by WPL (the "WPL Disclosure Schedule"), each of WPL and the
WPL Subsidiaries (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing (to the extent applicable) under the
laws of its respective jurisdiction of incorporation or organization, has
all requisite corporate power and authority, and has been duly authorized
by all necessary approvals and orders to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on
its business as it is now being conducted and is duly qualified and in
good standing (to the extent applicable) to do business in each respective
jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary,
other than in such jurisdictions where the failure to be so qualified and
in good standing would not, when taken together with all other such
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise), or the results of
operations of WPL and the WPL Subsidiaries taken as a whole or on the
consummation of the transactions contemplated hereby (a "WPL Material
Adverse Effect").
Section 4.2 Subsidiaries.
(a) Section 4.2 of the WPL Disclosure Schedule sets forth a
description as of the date hereof, of all WPL Subsidiaries and WPL Joint
Ventures, including (i) the name of each such entity and WPL's interest
therein, and (ii) a brief description of the principal line or lines of
business conducted by each such entity.
(b) Except as set forth in Section 4.2 of the WPL Disclosure
Schedule, none of the WPL Subsidiaries or WPL Joint Ventures is a "public
utility company," a "holding company," a "subsidiary company" or an
"affiliate" of any public utility company within the meaning of
Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), respectively.
(c) Except as set forth in Section 4.2 of the WPL Disclosure
Schedule, all of the issued and outstanding shares of capital stock of
each WPL Subsidiary are duly authorized, validly issued, fully paid,
nonassessable (except as otherwise provided in Section 180.0622(2)(b) of
the WBCL) and free of preemptive rights, and are owned, directly or
indirectly, by WPL free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature
whatsoever, and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any such WPL Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of its capital
stock, or granting to any person other than WPL or a WPL Subsidiary any
right to participate in its dividends or earnings or obligating it to
grant, extend or enter into any such agreement or commitment.
(d) As used in this Agreement,
(i) "Subsidiary" of a person shall mean any corporation or
other entity (including partnerships and other business associations)
of which at least a majority of the outstanding capital stock or
other voting securities having voting power under ordinary
circumstances to elect directors or similar members of the governing
body of such corporation or entity shall at the time be held,
directly or indirectly, by such person or entity;
(ii) "WPL Subsidiary" shall mean any Subsidiary of WPL;
(iii) "Joint Venture" of a person or entity shall mean any
corporation or other entity (including partnerships and other
business associations) that is not a Subsidiary of such person or
entity, in which such person or one or more of its Subsidiaries owns
directly or indirectly an equity interest, other than equity
interests held for passive investment purposes which are less than 5%
of each class of the outstanding voting securities or equity
interests of any such entity; and
(iv) "WPL Joint Venture" shall mean any Joint Venture of
WPL or any WPL Subsidiary.
Section 4.3 Capitalization.
(a) The authorized capital stock of WPL consists of 100,000,000
shares of WPL Common Stock of which 30,773,588 shares were issued and
outstanding as of September 30, 1995;
(b) The authorized capital stock of Wisconsin Power and Light
Company ("WP&LC"), a Wisconsin corporation and a Subsidiary of WPL,
consists of
(A) 18,000,000 shares of Common Stock, $5 par value, of
which 13,236,601 shares were issued and outstanding as of September
30, 1995 (the "WP&LC Common Stock"), and
(B) 3,750,000 shares of Preferred Stock without mandatory
redemption, (4.50% series, 4.80% series, 4.96% series, 4.40% series,
4.76% series, 6.50% series and 6.20% series) of which 1,049,225 were
issued and outstanding as of September 30, 1995 (the classes set
forth in this clause (B) being referred to collectively as, the
"WP&LC Preferred Stock").
(c) All of the issued and outstanding shares of WPL Common
Stock, WP&LC Common Stock and WP&LC Preferred Stock are, and any shares of
WPL Common Stock issued pursuant to the Merger and the WPL/Interstate and
WPL/IES Stock Option Agreements will be duly authorized, validly issued,
fully paid, nonassessable (except as otherwise provided in Section
180.0622(2)(b) of the WBCL) and free of preemptive rights.
(d) Except as set forth in Section 4.3 of the WPL Disclosure
Schedule, as of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating WPL or any of the WPL
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of WPL, or obligating WPL
to grant, extend or enter into any such agreement or commitment, other
than under the WPL/IES and WPL/Interstate Stock Option Agreements.
Section 4.4 Authority; Non-contravention; Statutory Approvals;
Compliance.
(a) Authority.
(i) WPL has all requisite corporate power and authority to
enter into this Agreement and the WPL/IES and WPL/Interstate Stock
Option Agreements, and, subject to the applicable WPL Shareholders'
Approval (as hereinafter defined) and the applicable WPL Required
Statutory Approvals (as hereinafter defined), to consummate the
transactions contemplated hereby or thereby. The execution and
delivery of this Agreement and the WPL/IES and WPL/Interstate Stock
Option Agreements and the consummation by WPL of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of WPL, subject to obtaining
the applicable WPL Shareholders' Approval. Each of this Agreement
and the WPL/IES and WPL/Interstate Stock Option Agreements has been
duly and validly executed and delivered by WPL and, assuming the due
authorization, execution and delivery hereof and thereof by the other
signatories hereto and thereto, constitutes the valid and binding
obligation of WPL enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, and except that the availability of
equitable remedies, including specific performance, may be subject to
the discretion of any court before which any proceeding therefor may
be brought.
(ii) AMW has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by AMW and, assuming the due authorization, execution and
delivery hereof by the other signatories hereto, constitutes the
valid and binding obligation of AMW enforceable against it in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally, and except
that the availability of equitable remedies, including specific
performance, may be subject to the discretion of any court before
which any proceeding may be brought.
(b) Non-contravention. Except as set forth in
Section 4.4(b) of the WPL Disclosure Schedule, the execution and delivery
of this Agreement and the WPL/IES and the WPL/Interstate Stock Option
Agreements by WPL do not, and the consummation of the transactions
contemplated hereby or thereby will not violate, conflict with, or result
in a breach of any provision of, or constitute a default (with or without
notice or lapse of time or both) under, or result in the termination or
modification of, or accelerate the performance required by, or result in a
right of termination, cancellation, or acceleration of any obligation or
the loss of a benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of WPL or any of the WPL Subsidiaries or WPL Joint Ventures (any
such violation, conflict, breach, default, termination, modification,
cancellation, acceleration, loss or creation, a "Violation" with respect
to WPL, such term when used in Articles V and VI having a correlative
meaning with respect to IES and Interstate, respectively) pursuant to any
provisions of:
(i) the Articles of Incorporation, By-laws or similar
governing documents of WPL or any of the WPL Subsidiaries or WPL
Joint Ventures;
(ii) subject to obtaining the WPL Required Statutory
Approvals and the receipt of the WPL Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority (as
hereinafter defined) applicable to WPL or any of the WPL Subsidiaries
or WPL Joint Ventures or any of their respective properties or
assets; or
(iii) subject to obtaining the third-party consents set
forth in Section 4.4(b) of the WPL Disclosure Schedule (the "WPL
Required Consents") any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which WPL or
any of the WPL Subsidiaries or WPL Joint Ventures is a party or by
which it or any of its properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such violations which,
in the aggregate do not, and insofar as reasonably can be foreseen, would
not, have a WPL Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any court, Federal, state, local or foreign governmental or regulatory
body (including a stock exchange or other self-regulatory body) or
authority (each, a "Governmental Authority") is necessary for the
execution and delivery of this Agreement or the WPL/IES and WPL/Interstate
Stock Option Agreements by WPL or the consummation by WPL of the
transactions contemplated hereby or thereby, except as described in
Section 4.4(c) of the WPL Disclosure Schedule (the "WPL Required Statutory
Approvals," it being understood that references in this Agreement to
"obtaining" such WPL Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notices; obtaining
such authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law).
(d) Compliance.
(i) (A) Except as set forth in Section 4.4(d),
Section 4.10 or Section 4.11 of the WPL Disclosure Schedule, or as
disclosed in the WPL SEC Reports (as hereinafter defined) filed prior
to the date hereof, neither WPL nor any of the WPL Subsidiaries nor,
to the knowledge of WPL, any WPL Joint Venture, is in violation of,
is under investigation with respect to any violation of, or has been
given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without
limitation, any applicable environmental law, ordinance or
regulation) of any Governmental Authority, except for violations
which, in the aggregate do not, and insofar as reasonably can be
foreseen, would not, have a WPL Material Adverse Effect.
(B) For purposes of this Agreement "knowledge" shall
mean, with respect to any party hereto, the actual knowledge after
due inquiry of principal executive officers of WPL, IES or
Interstate, respectively set forth in Sections 4.4(d), 5.4(d) and
6.4(d) of the WPL Disclosure Schedule, IES Disclosure Schedule (as
hereinafter defined) and Interstate Disclosure Schedule (as
hereinafter defined).
(ii) Except as set forth in Section 4.4(d) or in
Section 4.11 of the WPL Disclosure Schedule, WPL and the WPL
Subsidiaries and the WPL Joint Ventures have all permits, licenses,
franchises and other governmental authorizations, consents and
approvals (collectively, the "Permits") necessary to conduct their
businesses as presently conducted, except those the failure of which
to obtain, in the aggregate do not, and insofar as reasonably can be
foreseen, would not, have a WPL Material Adverse Effect.
(iii) Except as set forth in Section 4.4(d) of the WPL
Disclosure Schedule, each of WPL and the WPL Subsidiaries and WPL
Joint Ventures is not in breach, violation or default in the
performance or observance of any term or provision of, and no event
has occurred which, with lapse of time or action by a third party,
could result in a default under,
(A) its Articles of Incorporation or By-laws, or
(B) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound or to
which any of its property is subject, except for breaches, violations
or defaults which, in the aggregate do not, and insofar as reasonably
can be foreseen, would not, have a WPL Material Adverse Effect.
Section 4.5 Reports and Financial Statements.
(a) The filings required to be made by WPL and the WPL
Subsidiaries since January 1, 1992 under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the 1935 Act, the Federal Power Act (the
"Power Act"), the Atomic Energy Act of 1954, as amended (the "Atomic
Energy Act") and applicable state laws and regulations have been filed
with the SEC, the Federal Energy Regulatory Commission (the "FERC"), the
Nuclear Regulatory Commission (the "NRC"), the Department of Energy (the
"DOE") or any appropriate state public utilities commission, as the case
may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements
appertaining thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder.
(b) WPL has made available to IES and Interstate a true and
complete copy of each form, report, schedule, registration statement and
definitive proxy statement filed by each of WPL and WP&LC with the SEC
since January 1, 1992 (as such documents have since the time of their
filing been amended or supplemented, the "WPL SEC Reports") and each other
filing described in Section 4.5(a). As of their respective dates, the WPL
SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) The audited consolidated financial statements and unaudited
interim financial statements of WPL and WP&LC, as the case may be,
included in the WPL SEC Reports (collectively, the "WPL Financial
Statements") have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q under the Exchange Act) and
fairly present in all material respects the financial position of WPL or
WP&LC, as the case may be, as of the dates thereof and the results of its
operations and cash flows for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal, recurring audit
adjustments.
(d) True, accurate and complete copies of the Restated Articles
of Incorporation and By-laws of WPL, as in effect on the date hereof, are
included (or incorporated by reference) in the WPL SEC Reports.
Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the WPL SEC Reports filed prior to the date hereof or as set
forth in Section 4.6 of the WPL Disclosure Schedule, since December 31,
1994, WPL and each of the WPL Subsidiaries and the WPL Joint Ventures have
conducted their businesses only in the ordinary course of their respective
businesses consistent with past practice and there has not been, and no
facts or conditions exist (other than facts or conditions of general
applicability to electric utility companies in the region in which WPL,
IES and Interstate operate) which, in the aggregate have, or insofar as
reasonably can be foreseen, would have, a WPL Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the WPL SEC
Reports filed prior to the date hereof or as set forth in Section 4.7,
Section 4.9 or Section 4.11 of the WPL Disclosure Schedule,
(a) there are no claims, suits, actions or proceedings pending
or, to the knowledge of WPL, threatened, nor are there, to the
knowledge of WPL, any investigations or reviews pending or threatened
against, relating to or affecting WPL or any of the WPL Subsidiaries
and, to the knowledge of WPL, the WPL Joint Ventures;
(b) there have not been any developments since December 31, 1994
with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews; and
(c) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to WPL or
any of the WPL Subsidiaries and, to the knowledge of WPL, the WPL
Joint Ventures,
which, when taken together with any other nondisclosures of matters
described in clauses (a), (b) and (c), have, or insofar as reasonably can
be foreseen, would have, a WPL Material Adverse Effect.
Section 4.8 Registration Statement and Proxy Statement.
(a) None of the information supplied or to be supplied by or on
behalf of WPL for inclusion or incorporation by reference in:
(i) the registration statement on Form S-4 to be filed
with the SEC by WPL in connection with the issuance of shares of WPL
Common Stock in the Merger (the "Registration Statement") will, at
the time the Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading; and
(ii) the joint proxy statement, in definitive form,
relating to the meetings of WPL, IES and Interstate shareholders to
be held in connection with the Merger (the "Proxy Statement") will,
at the date(s) mailed to shareholders and at the times of the
meetings of shareholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under
which they are made, not misleading.
(b) The Registration Statement and the Proxy Statement will
comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act, respectively, and the applicable
rules and regulations thereunder.
Section 4.9 Tax Matters. Except as set forth in Section 4.9 of
the WPL Disclosure Schedule:
(a) Filing of Timely Tax Returns. WPL and each of the WPL
Subsidiaries have filed (or there has been filed on its behalf) all Tax
Returns (as hereinafter defined) required to be filed by each of them
under applicable law. All such Tax Returns were and are in all material
respects true, complete and correct and filed on a timely basis.
(b) Payment of Taxes. WPL and each of the WPL Subsidiaries
have, within the time and in the manner prescribed by law, paid all Taxes
(as hereinafter defined) that are currently due and payable except for
those contested in good faith and for which adequate reserves have been
taken.
(c) Tax Reserves. WPL and the WPL Subsidiaries have
established on their books and records reserves adequate to pay all Taxes
and reserves for deferred income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of WPL
or any of the WPL Subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. WPL and each of the WPL Subsidiaries
have complied in all material respects with the provisions of the Code
relating to the withholding of Taxes, as well as similar provisions under
any other laws, and have, within the time and in the manner prescribed by
law, withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither WPL nor
any of the WPL Subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been timely
filed.
(g) Waivers of Statute of Limitations. Neither WPL nor any of
the WPL Subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all Taxes has expired for all applicable
Tax Returns of WPL and each of the WPL Subsidiaries or those Tax Returns
have been examined by the appropriate taxing authorities for all Tax
periods ended before the date hereof, and no deficiency for any Taxes has
been proposed, asserted or assessed against WPL or any of the WPL
Subsidiaries that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of WPL or any of the WPL
Subsidiaries.
(j) Powers of Attorney. No power of attorney currently in
force has been granted by WPL or any of the WPL Subsidiaries concerning
any Tax matter.
(k) Tax Rulings. Neither WPL nor any of the WPL Subsidiaries
has received a Tax Ruling (as hereinafter defined) or entered into a
Closing Agreement (as hereinafter defined) with any taxing authority that
would have a continuing adverse effect after the Closing Date.
(l) Availability of Tax Returns. WPL has made available to IES
and Interstate complete and accurate copies covering the six years ended
December 31, 1994 of (i) all Tax Returns, and any amendments thereto,
filed by WPL or any of the WPL Subsidiaries, (ii) all audit reports
received from any taxing authority relating to any Tax Return filed by WPL
or any of the WPL Subsidiaries, and (iii) any Closing Agreements entered
into by WPL or any of the WPL Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither WPL nor any WPL Subsidiary
is a party to any agreement relating to allocating or sharing of Taxes.
(n) Code Section 280G. Neither WPL nor any of the WPL
Subsidiaries is a party to any agreement, contract, or arrangement that
could result, on account of the transactions contemplated hereunder,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(o) Liability for Others. None of WPL or any of the WPL
Subsidiaries has any liability for Taxes of any person other than WPL and
the WPL Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or foreign law) as a transferee or
successor, (ii) by contract, or (iii) otherwise.
(p) As used in this Agreement:
(i) "Taxes" means any Federal, state, county, local or
foreign taxes, charges, fees, levies, or other assessments, including
all net income, gross income, sales and use, ad valorem, transfer,
gains, profits, excise, franchise, real and personal property, gross
receipts, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties (civil
or criminal) on or additions to any such taxes;
(ii) "Tax Return" means a report, return or other
information required to be supplied to a governmental entity with
respect to Taxes including, where permitted or required, combined or
consolidated returns for a group of entities;
(iii) "Tax Ruling" means a written ruling of a taxing
authority relating to Taxes; and
(iv) "Closing Agreement" means a written and legally
binding agreement with a taxing authority relating to Taxes.
Section 4.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 4.10(a) of the WPL Disclosure
Schedule contains a true and complete list of each employee benefit plan,
program or arrangement covering employees, former employees or directors
of WPL and each of the WPL Subsidiaries or their beneficiaries, or
providing benefits to such persons in respect of services provided to any
such entity, including, but not limited to, employee benefit plans within
the meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and any severance or change in control
agreement (collectively, the "WPL Benefit Plans"). For the purposes of
this Section 4.10 only, the term "WPL" shall be deemed to include the
predecessors of such company.
(b) Contributions. Except as set forth in Section 4.10(b) of
the WPL Disclosure Schedule, all material contributions and other payments
required to be made by WPL or any of the WPL Subsidiaries to any WPL
Benefit Plan (or to any person pursuant to the terms thereof) have been
made or the amount of such payment or contribution obligation has been
reflected in the WPL Financial Statements.
(c) Qualification; Compliance. Except as set forth in Section
4.10(c) of the WPL Disclosure Schedule each of the WPL Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the Internal Revenue Service (the "IRS") to be
so qualified, and, to the knowledge of WPL, no circumstances exist that
are reasonably expected by WPL to result in the revocation of any such
determination. WPL is in compliance in all respects with, and each of the
WPL Benefit Plans is and has been operated in all respects in compliance
with, all applicable laws, rules and regulations governing each such plan,
including, without limitation, ERISA and the Code, except for any
violations that, in the aggregate do not, and insofar as reasonably can be
foreseen, would not, give rise to a WPL Material Adverse Effect. Each WPL
Benefit Plan intended to provide for the deferral of income, the reduction
of salary or other compensation, or to afford other income tax benefits,
complies in all material respects with the requirements of the applicable
provisions of the Code or other laws, rules and regulations required to
provide such income tax benefits.
(d) Liabilities. With respect to the WPL Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the
knowledge of WPL, there does not now exist any condition or set of
circumstances that could subject WPL or any of the WPL Subsidiaries to any
liability arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability of any kind whatsoever,
whether direct or indirect, contingent, inchoate or otherwise, to any such
plan or the Pension Benefit Guaranty Corporation (the "PBGC")), or under
any indemnity agreement to which WPL is subject, which liability,
excluding liability for PBGC premiums, benefit claims and funding
obligations payable in the ordinary course, has, or insofar as reasonably
can be foreseen, would have, a WPL Material Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 4.10(e) of
the WPL Disclosure Schedule, none of the WPL Benefit Plans that are
"welfare plans" within the meaning of Section 3(1) of ERISA, provides for
any benefits payable to or on behalf of any employee or director after
termination of employment or service, as the case may be, other than
elective continuation coverage required to be provided under Section 4980B
of the Code or Part 6 of Title I of ERISA or coverage which expires at the
end of the calendar month following such event.
(f) Documents made Available. WPL has made available to IES
and Interstate a true and correct copy of each collective bargaining
agreement to which WPL or any of the WPL Subsidiaries is a party or under
which WPL or any of the WPL Subsidiaries has obligations and, with respect
to each WPL Benefit Plan, where applicable,
(i) such plan and summary plan description,
(ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract,
service provider or investment management agreement (including all
amendments to each such document),
(iv) the most recent determination of the IRS with respect
to the qualified status of such WPL Benefit Plan, and
(v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. Except as set forth in
Section 4.10(g) of the WPL Disclosure Schedule:
(i) The consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(A) payment (whether of severance pay or otherwise)
becoming due from WPL or any of the WPL Subsidiaries to any
officer, employee, former employee or director thereof or to the
trustee under any "rabbi trust" or similar arrangement that
would not have been paid without regard to such consummation or
announcement, or
(B) benefit under any WPL Benefit Plan being
established or becoming accelerated, vested or payable; and
(ii) neither WPL nor any of the WPL Subsidiaries is a party
to
(A) any management, employment, deferred compensation,
severance (including any payment, right or benefit resulting
from a change in control), bonus or other contract for personal
services with any officer, director or employee,
(B) any consulting contract with any person who prior
to entering into such contract was a director or officer of WPL,
or
(C) any material plan, agreement, arrangement or
understanding similar to any of the foregoing.
(h) Labor Agreements. Except as set forth in Section 4.10(h)
of the WPL Disclosure Schedule, as of the date hereof, neither WPL nor any
of the WPL Subsidiaries is a party to any collective bargaining agreement
or other labor agreement with any union or labor organization. To the
knowledge of WPL, as of the date hereof, there is no current union
representation question involving employees of WPL or any of the WPL
Subsidiaries, nor does WPL know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any
such employees. Except as disclosed in the WPL SEC Reports filed prior to
the date hereof or in Section 4.10(h) of the WPL Disclosure Schedule,
(i) there is no material unfair labor practice, employment
discrimination or other complaint against WPL or any of the WPL
Subsidiaries pending, or to the knowledge of WPL, threatened,
(ii) there is no strike, lockout or material dispute,
slowdown or work stoppage pending, or to the knowledge of WPL,
threatened, against or involving WPL or any of the WPL Subsidiaries,
and
(iii) there is no material proceeding, claim, suit, action
or governmental investigation pending or, to the knowledge of WPL,
threatened, in respect of which any director, officer, employee or
agent of WPL or any of the WPL Subsidiaries is or may be entitled to
claim indemnification from WPL or such WPL Subsidiary pursuant to
their respective Articles of Incorporation or By-laws.
Section 4.11 Environmental Protection. Except as set forth in
Section 4.11 of the WPL Disclosure Schedule or in the WPL SEC Reports
filed prior to the date hereof:
(a) Compliance.
(i) Each of WPL and the WPL Subsidiaries and WPL Joint
Ventures is in compliance with all applicable Environmental Laws (as
hereinafter defined), except where the failure to be in compliance,
in the aggregate does not, and insofar as reasonably can be foreseen,
would not, have a WPL Material Adverse Effect; and
(ii) neither WPL nor any of the WPL Subsidiaries and WPL
Joint Ventures has received any communication (written or oral) from
any person or Governmental Authority that alleges that WPL or any of
the WPL Subsidiaries and WPL Joint Ventures is not in such compliance
with applicable Environmental Laws.
(b) Environmental Permits. Each of WPL and the WPL
Subsidiaries has obtained all material environmental, health and safety
permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the construction of their facilities and the
conduct of their operations, as applicable, and all such Environmental
Permits are in good standing or, where applicable, a renewal application
has been timely filed and is pending agency approval, and WPL and the WPL
Subsidiaries are in compliance with all terms and conditions of the
Environmental Permits, except where the failure to be in such compliance,
in the aggregate does not, and insofar as reasonably can be foreseen,
would not, have a WPL Material Adverse Effect.
(c) Environmental Claims. There is no material Environmental
Claim (as hereinafter defined) pending
(i) against WPL or any of the WPL Subsidiaries or WPL Joint
Ventures,
(ii) against any person or entity whose liability for any
Environmental Claim WPL or any of the WPL Subsidiaries has or may
have retained or assumed either contractually or by operation of law,
or
(iii) against any real or personal property or operations
which WPL or any of the WPL Subsidiaries owns, leases or manages, in
whole or in part.
(d) Releases. To the knowledge of WPL, there have not been any
material Releases (as hereinafter defined) of any Hazardous Material (as
hereinafter defined) that would be reasonably likely to form the basis of
any material Environmental Claim against WPL or any of the WPL
Subsidiaries, or against any person or entity whose liability for any
material Environmental Claim WPL or any of the WPL Subsidiaries has or may
have retained or assumed either contractually or by operation of law.
(e) Predecessors. To the knowledge of WPL, with respect to any
predecessor of WPL or any of the WPL Subsidiaries, there is no material
Environmental Claim pending or threatened, and there has been no Release
of Hazardous Materials that would be reasonably likely to form the basis
of any material Environmental Claim.
(f) Disclosure. To WPL's knowledge, WPL has disclosed to each
of IES and Interstate all material facts which WPL reasonably believes
form the basis of a material Environmental Claim arising from
(i) the cost of WPL pollution control equipment currently
required or known to be required in the future;
(ii) current WPL remediation costs or WPL remediation costs
known to be required in the future; or
(iii) any other environmental matter affecting WPL or the
WPL Subsidiaries or WPL Joint Ventures.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance, liability or violation
(written or oral) by any person or entity (including any Governmental
Authority) alleging potential liability (including, without
limitation, potential responsibility or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
resulting from
(A) the presence, or Release or threatened Release
into the environment, of any Hazardous Materials at any
location, whether or not owned, operated, leased or managed by
WPL or any of the WPL Subsidiaries or WPL Joint Ventures (for
purposes of this Section 4.11), or by IES or any of the IES
Subsidiaries or IES Joint Ventures (as hereinafter defined) (for
purposes of Section 5.11) or by Interstate or any of the
Interstate Subsidiaries or Interstate Joint Ventures (as
hereinafter defined) (for the purposes of Section 6.11); or
(B) circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law; or
(C) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials;
(ii) "Environmental Laws" means all Federal, state and
local laws, rules and regulations relating to pollution, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection
of human health as it relates to the environment including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials;
(iii) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls; and (b) any chemicals,
materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar
import, under any Environmental Law; and (c) any other chemical,
material, substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a jurisdiction in
which WPL or any of the WPL Subsidiaries or WPL Joint Ventures
operates (for purposes of this Section 4.11) or in which IES or any
of the IES Subsidiaries or IES Joint Ventures operates (for purposes
of Section 5.11) or in which Interstate or any of the Interstate
Subsidiaries or Interstate Joint Ventures operates (for purposes of
Section 6.11); and
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property.
Section 4.12 Regulation as a Utility. (a) WP&LC is regulated
as a public utility in the State of Wisconsin and in no other state.
WP&LC's Subsidiary, South Beloit Water, Gas and Electric Company, an
Illinois corporation, is a public utility supplying electric, gas and
water service, principally in Winnebago County, Illinois. Except as set
forth in Section 4.12 of the WPL Disclosure Schedule, neither WPL nor any
"subsidiary company" or "affiliate" of WPL is subject to regulation as a
public utility or public service company (or similar designation) by any
other state in the United States or any foreign country. WPL is an exempt
holding company under Section 3(a)(1) of the 1935 Act.
(b) As used in this Section 4.12 and in Sections 5.12 and 6.12,
the terms "subsidiary company" and "affiliate" shall have the respective
meanings ascribed to them in the 1935 Act.
Section 4.13 Vote Required. The approval by the holders of a
majority of the votes entitled to be cast by all holders of WPL Common
Stock (the "WPL Shareholders' Approval") to approve the IES Merger, the
issuance of the shares of WPL Common Stock in the Merger and the charter
amendments as described in Section 8.19 of the WPL Disclosure Schedule is
the only vote of the holders of any class or series of the capital stock
of WPL required for any of the transactions contemplated by this Agreement
or the Stock Option Agreements to which WPL is a party; provided, however,
that the approval of shareholders of WPL may be required for the
repurchase of shares of WPL Common Stock pursuant to Section 8(a) of each
of the WPL/IES and WPL/Interstate Stock Option Agreements under
circumstances where Section 180.1134 of the WBCL would be applicable.
Section 4.14 Accounting Matters.
(a) Neither WPL nor, to WPL's knowledge, any of its Affiliates
(as hereinafter defined) has taken or agreed to take any action that would
prevent WPL from accounting for the transactions to be effected pursuant
to this Agreement as a pooling of interests in accordance with GAAP and
applicable SEC regulations.
(b) As used in this Agreement (except as specifically otherwise
defined):
(i) "Affiliate" means, as to any person, any other person
which directly or indirectly controls, or is under common control
with, or is controlled by, such person; and
(ii) "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
Section 4.15 Applicability of Certain Provisions of Wisconsin
Law, Etc. Assuming the representations and warranties of IES and
Interstate made in Sections 5.18 and 6.18, respectively, are correct, none
of the "control share voting" provisions of Section 180.1150 of the WBCL,
the "business combination" provisions of Sections 180.1140 to 180.1144 of
the WBCL, the "fair price" provisions of Sections 180.1130 to 180.1133 of
the WBCL, or any other takeover related provisions of the WBCL (or, to the
knowledge of WPL, any other similar state statute) or the Restated
Articles of Incorporation or By-laws of WPL, are applicable to the
transactions contemplated by this Agreement, including the granting or
exercise of the WPL/IES and WPL/Interstate Stock Option Agreements (except
as set forth in Section 4.15 of the WPL Disclosure Schedule).
Section 4.16 Opinion of Financial Advisor. As of the date
hereof, WPL has received the opinion of Merrill Lynch & Co. ("Merrill"),
to the effect that, as of the date hereof, the IES Ratio and the
Interstate Ratio are fair to WPL from a financial point of view.
Section 4.17 Insurance. Except as set forth in Section 4.17 of
the WPL Disclosure Schedule, each of WPL and the WPL Subsidiaries is, and
has been continuously since January 1, 1990, insured with financially
responsible insurers in such amounts and against such risks and losses as
are customary in all material respects for companies conducting the
business conducted by WPL and the WPL Subsidiaries during such time
period. Except as set forth in Section 4.17 of the WPL Disclosure
Schedule, neither WPL nor any of the WPL Subsidiaries has received any
notice of cancellation or termination with respect to any material
insurance policy of WPL or any of the WPL Subsidiaries. The insurance
policies of WPL and each of the WPL Subsidiaries are valid and enforceable
policies in all material respects.
Section 4.18 Ownership of IES and Interstate Common Stock.
Except as set forth in Section 4.18 of the WPL Disclosure Schedule, and
except pursuant to the terms of the IES/WPL Stock Option Agreement and the
Interstate/WPL Stock Option Agreement, WPL does not "beneficially own" (as
such term is defined for purposes of Section 13(d) of the Exchange Act)
any shares of IES Common Stock or Interstate Common Stock.
Section 4.19 WPL Rights Agreement. Assuming the accuracy of
the representations contained in Sections 5.18 and 6.18, the consummation
of the transactions contemplated by this Agreement will not result in the
triggering of any right or entitlement of WPL shareholders under the WPL
Rights Agreement.
Section 4.20 Operations of Nuclear Power Plant. Except as set
forth in Section 4.20 of the WPL Disclosure Schedule, the operations of
the Kewaunee Nuclear Facility ("Kewaunee") owned by WPL (together with
Wisconsin Public Service Corporation ("WPS") and Madison Gas & Electric
Company, as tenants in common) and operated by WPS, have at all times been
conducted in compliance with applicable health, safety, regulatory and
other legal requirements, except where the failure to be in compliance in
the aggregate does not, and insofar as can reasonably be foreseen, would
not, have a WPL Material Adverse Effect. Kewaunee maintains emergency
plans designed to respond to an unplanned release from Kewaunee of
radioactive materials into the environment. Customary liability insurance
consistent with industry practice and consistent with WPL's view of the
risks inherent in the operation of a nuclear power facility currently
exists with respect to Kewaunee. Plans for the decommissioning of
Kewaunee and for the short-term storage of spent nuclear fuel conform with
the requirements of applicable law, and such plans have at all times been
funded consistently with budget projections for such plans.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IES
IES represents and warrants to WPL and Interstate as follows:
Section 5.1 Organization and Qualification. Except as set
forth in Section 5.1 of the Disclosure Schedule to this Agreement prepared
and delivered by IES (the "IES Disclosure Schedule"), each of IES and the
IES Subsidiaries (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing (to the extent applicable under the
laws of its respective jurisdiction of incorporation or organization, has
all requisite corporate power and authority, and has been duly authorized
by all necessary approvals and orders to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on
its business as it is now being conducted and is duly qualified and in
good standing (to the extent applicable) to do business in each respective
jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary,
other than in such jurisdictions where the failure to be so qualified and
in good standing would not, when taken together with all other such
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise), or the results of
operations of IES and the IES Subsidiaries taken as a whole or on the
consummation of the transaction contemplated hereby (an "IES Material
Adverse Effect").
Section 5.2 Subsidiaries.
(a) Section 5.2 of the IES Disclosure Schedule sets forth a
description as of the date hereof, of all IES Subsidiaries and IES Joint
Ventures, including (i) the name of each such entity and IES's interest
therein, and (ii) a brief description of the principal line or lines of
business conducted by each such entity.
(b) Except as set forth in Section 5.2 of the IES Disclosure
Schedule, none of the IES Subsidiaries is a "public utility company," a
"holding company," a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or
2(a)(11) of the 1935 Act, respectively.
(c) Except as set forth in Section 5.2 of the IES Disclosure
Schedule, all of the issued and outstanding shares of capital stock of
each IES Subsidiary are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by IES free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature
whatsoever, and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any such IES Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of its capital
stock, or granting to any person other than IES or an IES Subsidiary any
right to participate in its dividends or earnings or obligating it to
grant, extend or enter into any such agreement or commitment.
(d) As used in this Agreement,
(i) "IES Subsidiary" shall mean any Subsidiary of IES; and
(ii) "IES Joint Venture" shall mean any Joint Venture of IES
or any IES Subsidiary.
Section 5.3 Capitalization.
(a) The authorized capital stock of IES consists of
(i) 48,000,000 shares of IES Common Stock of which
29,345,573 shares were issued and outstanding as of September 30,
1995, and
(ii) 5,000,000 shares of IES Cumulative Preferred Stock, no
par value ("IES Preferred Stock"), of which none were issued or
outstanding as of September 30, 1995.
(b) The authorized capital stock of IES's Subsidiary, IES
Utilities Inc., an Iowa corporation ("Utilities") consists of
(i) 24,000,000 shares of common stock, par value $2.50 per
share of which 13,370,788 shares were issued and outstanding as
of September 30, 1995 ("Utilities Common Stock"),
(ii) 466,406 shares of Cumulative Preferred Stock, $50 par
value (4.30% series, 4.80% series, and 6.10% series) of which
120,000 of the 4.30% series, 146,354 of the 4.80% series, and
100,000 of the 6.10% series were issued and outstanding as of
September 30, 1995 ("Utilities Preferred Stock"), and
(iii) 700,000 shares of Cumulative Preference Stock, $100
par value, of which none were outstanding as of September 30,
1995.
(c) All of the issued and outstanding shares of IES Common
Stock, Utilities Common Stock and Utilities Preferred Stock are, and any
shares of IES Common Stock issued pursuant to the IES/WPL and
IES/Interstate Stock Option Agreements will be, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
(d) Except as set forth in Section 5.3 of the IES Disclosure
Schedule, as of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating IES or any of the IES
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of IES, or obligating IES
to grant, extend or enter into any such agreement or commitment, other
than under the IES/WPL and IES/Interstate Stock Option Agreements.
Section 5.4 Authority; Non-contravention; Statutory Approvals;
Compliance.
(a) Authority. IES has all requisite corporate power and
authority to enter into this Agreement and the IES/WPL and IES/Interstate
Stock Option Agreements, and, subject to the applicable IES Shareholders'
Approval (as hereinafter defined) and the applicable IES Required
Statutory Approvals (as hereinafter defined), to consummate the
transactions contemplated hereby or thereby. The execution and delivery
of this Agreement and the IES/WPL and IES/Interstate Stock Option
Agreements and the consummation by IES of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of IES, subject to obtaining the applicable IES
Shareholders' Approval. Each of this Agreement and the IES/WPL and
IES/Interstate Stock Option Agreements has been duly and validly executed
and delivered by IES and, assuming the due authorization, execution and
delivery hereof and thereof by the other signatories hereto and thereto,
constitutes the valid and binding obligation of IES enforceable against it
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceeding
therefor may be brought.
(b) Non-contravention. Except as set forth in
Section 5.4(b) of the IES Disclosure Schedule, the execution and delivery
of this Agreement and the IES/WPL and IES/Interstate Stock Option
Agreements by IES do not, and the consummation of the transactions
contemplated hereby or thereby will not, result in a Violation pursuant to
any provisions of:
(i) the Articles of Incorporation, By-laws or similar
governing documents of IES or any of the IES Subsidiaries or the IES
Joint Ventures;
(ii) subject to obtaining the IES Required Statutory
Approvals and the receipt of the IES Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority
applicable to IES or any of IES Subsidiaries or IES Joint Ventures or
any of their respective properties or assets, or
(iii) subject to obtaining the third-party consents set
forth in Section 5.4(b) of the IES Disclosure Schedule (the "IES
Required Consents"), any material note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to
which IES or any of the IES Subsidiaries or IES Joint Ventures is a
party or by which it or any of its properties or assets may be bound
or affected,
excluding from the foregoing clauses (ii) and (iii) such violations which,
in the aggregate do not, and insofar as reasonably can be foreseen, would
not, have an IES Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any Governmental Authority is necessary for the execution and delivery of
this Agreement or the IES/WPL and IES/Interstate Stock Option Agreements
by IES or the consummation by IES of the transactions contemplated hereby
or thereby, except as described in Section 5.4(c) of the IES Disclosure
Schedule (the "IES Required Statutory Approvals", it being understood that
references in this Agreement to "obtaining" such IES Required Statutory
Approvals shall mean making such declarations, filings or registrations;
giving such notices; obtaining such authorizations, consents or approvals;
and having such waiting periods expire as are necessary to avoid a
violation of law).
(d) Compliance.
(i) Except as set forth in Section 5.4(d), Section 5.10 or
Section 5.11 of the IES Disclosure Schedule, or as disclosed in the
IES SEC Reports (as hereinafter defined) filed prior to the date
hereof, neither IES nor any of the IES Subsidiaries nor, to the
knowledge of IES, any IES Joint Venture, is in violation of, is under
investigation with respect to any violation of, or has been given
notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without
limitation, any applicable environmental law, ordinance or
regulation) of any Governmental Authority, except for violations
which, in the aggregate do not, and insofar as reasonably can be
foreseen, would not, have an IES Material Adverse Effect.
(ii) Except as set forth in Section 5.4(d) or in
Section 5.11 of the IES Disclosure Schedule, IES and the IES
Subsidiaries and IES Joint Ventures have all Permits necessary to
conduct their businesses as presently conducted, except those the
failure of which to obtain, in the aggregate do not, and insofar as
reasonably can be foreseen, would not, have an IES Material Adverse
Effect.
(iii) Except as set forth in Section 5.4(d) of the IES
Disclosure Schedule, each of IES and the IES Subsidiaries and IES
Joint Ventures is not in breach, violation, or default in the
performance or observance of any term or provision of, and no event
has occurred which, with lapse of time or action by a third party,
could result in a default under,
(A) its Articles of Incorporation or By-laws, or
(B) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval
or other instrument to which it is a party or by which it is
bound or to which any of its property is subject, except for
breaches, violations or defaults which, in the aggregate do not,
and insofar as reasonably can be foreseen, would not, have an
IES Material Adverse Effect.
Section 5.5 Reports and Financial Statements.
(a) The filings required to be made by IES and the IES
Subsidiaries since January 1, 1992 under the Securities Act, the Exchange
Act, the 1935 Act, the Power Act, the Atomic Energy Act and applicable
state laws and regulations have been filed with the SEC, the FERC, the
NRC, the DOE or any appropriate state public utilities commission, as the
case may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements
appertaining thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder.
(b) IES has made available to WPL and Interstate a true and
complete copy of each form, report, schedule, registration statement and
definitive proxy statement filed by each of IES and Utilities with the SEC
since January 1, 1992 (as such documents have since the time of their
filing been amended or supplemented, the "IES SEC Reports") and each other
filing described in Section 5.5(a). As of their respective dates, the IES
SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) The audited consolidated financial statements and unaudited
interim financial statements of IES and Utilities, as the case may be,
included in the IES SEC Reports (collectively, the "IES Financial
Statements") have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q under the Exchange Act) and
fairly present in all material respects the financial position of IES or
Utilities, as the case may be, as of the dates thereof and the results of
its operations and cash flows for the periods then ended, subject, in the
case of the unaudited interim financial statements, to normal, recurring
audit adjustments.
(d) True, accurate and complete copies of the Restated Articles
of Incorporation and By-laws of IES, as in effect on the date hereof, are
included (or incorporated by reference) in the IES SEC Reports.
Section 5.6 Absence of Certain Changes or Events. Except as
disclosed in the IES SEC Reports filed prior to the date hereof or as set
forth in Section 5.6 of the IES Disclosure Schedule, since December 31,
1994, IES and each of the IES Subsidiaries and IES Joint Ventures have
conducted their businesses only in the ordinary course of their respective
businesses consistent with past practice and there has not been, and no
facts or conditions exist (other than facts or conditions of general
applicability to electric utility companies in the region in which WPL,
IES and Interstate operate) which, in the aggregate have or, insofar as
reasonably can be foreseen, would have, an IES Material Adverse Effect.
Section 5.7 Litigation. Except as disclosed in the IES SEC
Reports filed prior to the date hereof or as set forth in Section 5.7,
Section 5.9 or Section 5.11 of the IES Disclosure Schedule,
(a) there are no claims, suits, actions or proceedings pending
or, to the knowledge of IES, threatened, nor are there, to the
knowledge of IES, any investigations or reviews pending or threatened
against, relating to or affecting IES or any of the IES Subsidiaries
and, to the knowledge of IES, the IES Joint Ventures;
(b) there have not been any developments since December 31, 1994
with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews; and
(c) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to IES or
any of the IES Subsidiaries and, to the knowledge of IES, or the IES
Joint Ventures,
which, when taken together with any other nondisclosures of matters
described in clauses (a), (b) and (c), have, or insofar as reasonably can
be foreseen, would have, an IES Material Adverse Effect.
Section 5.8 Registration Statement and Proxy Statement.
(a) None of the information supplied or to be supplied by or on
behalf of IES for inclusion or incorporation by reference in:
(i) the Registration Statement will, at the time the
Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, not misleading, and
(ii) the Proxy Statement will, at the date mailed to
shareholders and at the times of the meetings of shareholders to be
held in connection with the IES Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading.
(b) The Registration Statement and the Proxy Statement will
comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act, respectively, and the applicable
rules and regulations thereunder.
Section 5.9 Tax Matters. Except as set forth in Section 5.9 of
the IES Disclosure Schedule:
(a) Filing of Timely Tax Returns. IES and each of the IES
Subsidiaries have filed (or there has been filed on its behalf) all Tax
Returns required to be filed by each of them under applicable law. All
such Tax Returns were and are in all material respects true, complete and
correct and filed on a timely basis.
(b) Payment of Taxes. IES and each of the IES Subsidiaries
have, within the time and in the manner prescribed by law, paid all Taxes
that are currently due and payable except for those contested in good
faith and for which adequate reserves have been taken.
(c) Tax Reserves. IES and the IES Subsidiaries have
established on their books and records reserves adequate to pay all Taxes
and reserves for deferred income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of IES
or any of the IES Subsidiaries except liens for Taxes not yet due.
(e) Withholding Taxes. IES and each of the IES Subsidiaries
have complied in all material respects with the provisions of the Code
relating to the withholding of Taxes, as well as similar provisions under
any other laws, and have, within the time and in the manner prescribed by
law, withheld from employee wages and paid over to the proper governmental
authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither IES nor
any of the IES Subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been timely
filed.
(g) Waivers of Statute of Limitations. Neither IES nor any of
the IES Subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all Taxes has expired for all applicable
Tax Returns of IES and each of the IES Subsidiaries or those Tax Returns
have been examined by the appropriate taxing authorities for all Tax
periods ended before the date hereof, and no deficiency for any Taxes has
been proposed, asserted or assessed against IES or any of the IES
Subsidiaries that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of IES or any of the IES
Subsidiaries.
(j) Powers of Attorney. No power of attorney currently in
force has been granted by IES or any of the IES Subsidiaries concerning
any Tax matter.
(k) Tax Rulings. Neither IES nor any of the IES Subsidiaries
has received a Tax Ruling or entered into a Closing Agreement with any
taxing authority that would have a continuing adverse effect after the
Closing Date.
(l) Availability of Tax Returns. IES has made available to WPL
and Interstate complete and accurate copies covering the six years ended
December 31, 1994 of (i) all Tax Returns, and any amendments thereto,
filed by IES or any of the IES Subsidiaries, (ii) all audit reports
received from any taxing authority relating to any Tax Return filed by IES
or any of the IES Subsidiaries, and (iii) any Closing Agreements entered
into by IES or any of the IES Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither IES nor any IES Subsidiary
is a party to any agreement relating to allocating or sharing of Taxes.
(n) Code Section 280G. Except as set forth in Section 5.9(n)
of the IES Disclosure Schedule, neither IES nor any of the IES
Subsidiaries is a party to any agreement, contract, or arrangement that
could result, on account of the transactions contemplated hereunder,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(o) Liability for Others. None of IES or any of the IES
Subsidiaries has any liability for Taxes of any person other than IES and
the IES Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or foreign law) as a transferee or
successor, (ii) by contract, or (iii) otherwise.
Section 5.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 5.10(a) of the IES Disclosure
Schedule contains a true and complete list of each employee benefit plan,
program or arrangement covering employees, former employees or directors
of IES and each of the IES Subsidiaries or their beneficiaries, or
providing benefits to such persons in respect of services provided to any
such entity, including, but not limited to, employee benefit plans within
the meaning of Section 3(3) of ERISA and any severance or change in
control agreement (collectively, the "IES Benefit Plans"). For the
purposes of this Section 5.10 only, the term "IES" shall be deemed to
include the predecessors of such company.
(b) Contributions. Except as set forth in Section 5.10(b) of
the IES Disclosure Schedule, all material contributions and other payments
required to be made by IES or any of the IES Subsidiaries to any IES
Benefit Plan (or to any person pursuant to the terms thereof) have been
made or the amount of such payment or contribution obligation has been
reflected in the IES Financial Statements.
(c) Qualification; Compliance. Except as set forth in Section
5.10(c) of the IES Disclosure Schedule, each of the IES Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so qualified, and, to the
knowledge of IES, no circumstances exist that are reasonably expected by
IES to result in the revocation of any such determination. IES is in
compliance in all respects with, and each of the IES Benefit Plans is and
has been operated in all respects in compliance with, all applicable laws,
rules and regulations governing each such plan, including, without
limitation, ERISA and the Code, except for any violations that, in the
aggregate do not, and insofar as reasonably can be foreseen, would not,
give rise to an IES Material Adverse Effect. Each IES Benefit Plan
intended to provide for the deferral of income, the reduction of salary or
other compensation, or to afford other income tax benefits, complies in
all material respects with the requirements of the applicable provisions
of the Code or other laws, rules and regulations required to provide such
income tax benefits.
(d) Liabilities. With respect to the IES Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the
knowledge of IES, there does not now exist any condition or set of
circumstances that could subject IES or any of the IES Subsidiaries to any
liability arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability of any kind whatsoever,
whether direct or indirect, contingent, inchoate or otherwise, to any such
plan or the PBGC), or under any indemnity agreement to which IES is
subject, which liability, excluding liability for PBGC premiums, benefit
claims and funding obligations payable in the ordinary course, has, or
insofar as reasonably can be foreseen, would have, an IES Material Adverse
Effect.
(e) Welfare Plans. Except a set forth in Section 5.10(e) of
the IES Disclosure Schedule, none of the IES Benefit Plans that are
"welfare plans" within the meaning of Section 3(1) of ERISA, provides for
any benefits payable to or on behalf of any employee or director after
termination of employment or service, as the case may be, other than
elective continuation coverage required to be provided under Section 4980B
of the Code or Part 6 of Title I of ERISA or coverage which expires at the
end of the calendar month following such event.
(f) Documents made Available. IES has made available to WPL
and Interstate a true and correct copy of each collective bargaining
agreement to which IES or any of the IES Subsidiaries is a party or under
which IES or any of the IES Subsidiaries has obligations and, with respect
to each IES Benefit Plan, where applicable,
(i) such plan and summary plan description,
(ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract,
service provider or investment management agreement (including all
amendments to each such document),
(iv) the most recent determination of the IRS with respect
to the qualified status of such IES Benefit Plan, and
(v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. Except as set forth in
Section 5.10(g) of the IES Disclosure Schedule:
(i) The consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(A) payment (whether of severance pay or otherwise)
becoming due from IES or any of the IES Subsidiaries to any
officer, employee, former employee or director thereof or to the
trustee under any "rabbi trust" or similar arrangement that
would not have been paid without regard to such consummation or
announcement or
(B) benefit under any IES Benefit Plan being
established or becoming accelerated, vested or payable; and
(ii) neither IES nor any of the IES Subsidiaries is a party
to
(A) any management, employment, deferred compensation,
severance (including any payment, right or benefit resulting
from a change in control), bonus or other contract for personal
services with any officer, director or employee,
(B) any consulting contract with any person who prior
to entering into such contract was a director or officer of IES,
or
(C) any material plan, agreement, arrangement or
understanding similar to any of the foregoing.
(h) Labor Agreements. Except as set forth in Section 5.10(h)
of the IES Disclosure Schedule, as of the date hereof, neither IES nor any
of the IES Subsidiaries is a party to any collective bargaining agreement
or other labor agreement with any union or labor organization. To the
knowledge of IES, as of the date hereof, there is no current union
representation question involving employees of IES or any of the IES
Subsidiaries, nor does IES know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any
such employees. Except as disclosed in the IES SEC Reports filed prior to
the date hereof or in Section 5.10(h) of the IES Disclosure Schedule,
(i) there is no material unfair labor practice, employment
discrimination or other complaint against IES or any of the IES
Subsidiaries pending, or to the knowledge of IES, threatened,
(ii) there is no strike, lockout or material dispute,
slowdown or work stoppage pending, or to the knowledge of IES,
threatened, against or involving IES or any of the IES Subsidiaries,
and
(iii) there is no material proceeding, claim, suit, action
or governmental investigation pending or, to the knowledge of IES,
threatened, in respect of which any director, officer, employee or
agent of IES or any of the IES Subsidiaries is or may be entitled to
claim indemnification from IES or such IES Subsidiary pursuant to
their respective Articles of Incorporation or By-laws.
Section 5.11 Environmental Protection. Except as set forth in
Section 5.11 of the IES Disclosure Schedule or in the IES SEC Reports
filed prior to the date hereof:
(a) Compliance.
(i) Each of IES and the IES Subsidiaries and IES Joint
Ventures is in compliance with all applicable Environmental Laws,
except where the failure to be in compliance, in the aggregate does
not, and insofar as reasonably can be foreseen, would not, have a IES
Material Adverse Effect; and
(ii) neither IES nor any of the IES Subsidiaries and IES
Joint Ventures has received any communication (written or oral) from
any person or Governmental Authority that alleges that IES or any of
the IES Subsidiaries and IES Joint Ventures is not in such compliance
with applicable Environmental Laws.
(b) Environmental Permits. Each of IES and the IES
Subsidiaries has obtained all Environmental Permits necessary for the
construction of their facilities and the conduct of their operations, as
applicable, and all such Environmental Permits are in good standing or,
where applicable, a renewal application has been timely filed and is
pending agency approval, and IES and the IES Subsidiaries are in
compliance with all terms and conditions of the Environmental Permits,
except where the failure to be in such compliance, in the aggregate does
not, and insofar as reasonably can be foreseen, would not, have an IES
Material Adverse Effect.
(c) Environmental Claims. There is no material Environmental
Claim pending
(i) against IES or any of the IES Subsidiaries or IES Joint
Ventures,
(ii) against any person or entity whose liability for any
Environmental Claim IES or any of the IES Subsidiaries has or may
have retained or assumed either contractually or by operation of law,
or
(iii) against any real or personal property or operations
which IES or any of the IES Subsidiaries owns, leases or manages, in
whole or in part.
(d) Releases. To the knowledge of IES, there have not been any
material Releases of any Hazardous Material that would be reasonably
likely to form the basis of any material Environmental Claim against IES
or any of the IES Subsidiaries, or against any person or entity whose
liability for any material Environmental Claim IES or any of the IES
Subsidiaries has or may have retained or assumed either contractually or
by operation of law.
(e) Predecessors. To the knowledge of IES, with respect to any
predecessor of IES or any of the IES Subsidiaries, there is no material
Environmental Claim pending or threatened, and there has been no Release
of Hazardous Materials that would be reasonably likely to form the basis
of any material Environmental Claim.
(f) Disclosure. To IES's knowledge, IES has disclosed to each
of WPL and Interstate all material facts which IES reasonably believes
form the basis of a material Environmental Claim arising from
(i) the cost of IES pollution control equipment currently
required or known to be required in the future;
(ii) current IES remediation costs or IES remediation costs
known to be required in the future; or
(iii) any other environmental matter affecting IES or the
IES Subsidiaries or IES Joint Ventures.
Section 5.12 Regulation as a Utility. Utilities is regulated
as a public utility in the State of Iowa and in no other state. Except as
set forth in Section 5.12 of the IES Disclosure Schedule, neither IES nor
any "subsidiary company" or "affiliate" of IES is subject to regulation as
a public utility or public service company (or similar designation) by any
other state in the United States or any foreign country. IES is an exempt
holding company under Section 3(a)(1) of the 1935 Act.
Section 5.13 Vote Required. The approval by the holders of a
majority of the votes entitled to be cast by all holders of IES Common
Stock (the "IES Shareholders' Approval") to approve the IES Merger, is the
only vote of the holders of any class or series of capital stock of IES
required for any of the transactions required by this Agreement or the
Stock Option Agreements to which IES is a party.
Section 5.14 Accounting Matters. Neither IES nor, to IES's
knowledge, any of its Affiliates has taken or agreed to take any action
that would prevent IES from accounting for the transactions to be effected
pursuant to this Agreement as a pooling of interests in accordance with
GAAP and applicable SEC regulations.
Section 5.15 Applicability of Certain Iowa Law, Etc. Assuming
the representations and warranties of WPL and Interstate made in Sections
4.18 and 6.18, respectively, are correct, none of the "fair price"
provisions of Section 502.214.7 of the IBCA, or any other takeover related
provisions of the IBCA (or, to the knowledge of IES, any other similar
state statute) or the Restated Articles of Incorporation or By-laws of IES
is applicable to the transaction contemplated by this Agreement, including
the granting or exercise of the IES/WPL and IES/Interstate Stock Option
Agreements (except as set forth on Schedule 5.15 of the IES Disclosure
Schedule).
Section 5.16 Opinion of Financial Advisor. As of the date
hereof, IES has received the opinion of Morgan Stanley & Co. Incorporated
("Morgan"), to the effect that, as of the date hereof, the IES Ratio,
taking into account the Interstate Ratio, is fair from a financial point
of view to the holders of IES Common Stock.
Section 5.17 Insurance. Except as set forth in Section 5.17 of
the IES Disclosure Schedule, each of IES and the IES Subsidiaries is, and
has been continuously since January 1, 1990, insured with financially
responsible insurers in such amounts and against such risks and losses as
are customary in all material respects for companies conducting the
business conducted by IES and the IES Subsidiaries during such time
period. Except as set forth in Section 5.17 of the IES Disclosure
Schedule, neither IES nor any of the IES Subsidiaries has received any
notice of cancellation or termination with respect to any material
insurance policy of IES or any of the IES Subsidiaries. The insurance
policies of IES and each of the IES Subsidiaries are valid and enforceable
policies in all material respects.
Section 5.18 Ownership of WPL and Interstate Common Stock.
Except as set forth in Section 5.18 of the IES Disclosure Schedule, and
except pursuant to the terms of the WPL/IES Stock Option Agreement and the
Interstate/IES Stock Option Agreement, IES does not "beneficially own" (as
such term is defined for purposes of Section 13(d) of the Exchange Act)
any shares of WPL Common Stock or Interstate Common Stock.
Section 5.19 IES Rights Agreement. Assuming the accuracy of
the representations contained in Sections 4.18 and 6.18, the consummation
of the transactions contemplated by this Agreement will not result in the
triggering of any right or entitlement of IES shareholders under the
Rights Agreement, dated as of November 6, 1991, between IES and IES, as
rights agent (the "IES Rights Agreement").
Section 5.20 Operations of Nuclear Power Plant. Except as set
forth in Section 5.20 of the IES Disclosure Schedule, the operations of
the Duane Arnold Energy Center ("DAEC") owned by IES (together with
Central Iowa Power Cooperative and Cornbelt Power Cooperative, as tenants
in common) and operated by IES, have at all times been conducted in
compliance with applicable health, safety, regulatory and other legal
requirements, except where the failure to be in compliance in the
aggregate does not, and insofar as can reasonably be foreseen, would not,
have an IES Material Adverse Effect. DAEC maintains emergency plans
designed to respond to an unplanned release from DAEC of radioactive
materials into the environment. Customary liability insurance consistent
with industry practice and consistent with IES's view of the risks
inherent in the operation of a nuclear power facility currently exists
with respect to DAEC. Plans for the decommissioning of DAEC and for the
short-term storage of spent nuclear fuel conform with the requirements of
applicable law, and such plans have at all times been funded consistently
with budget projections for such plans.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF INTERSTATE
Interstate represents and warrants to WPL and IES as follows:
Section 6.1 Organization and Qualification. Except as set
forth in Section 6.1 of the Disclosure Schedule to this Agreement prepared
and delivered by Interstate (the "Interstate Disclosure Schedule"), each
of Interstate and the Interstate Subsidiaries (as hereinafter defined) is
a corporation duly organized, validly existing and in good standing (to
the extent applicable) under the laws of its respective jurisdiction of
incorporation or organization, has all requisite corporate power and
authority, and has been duly authorized by all necessary approvals and
orders to own, lease and operate its assets and properties to the extent
owned, leased and operated and to carry on its business as it is now being
conducted and is duly qualified and in good standing (to the extent
applicable) to do business in each respective jurisdiction in which the
nature of its business or the ownership or leasing of its assets and
properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified and in good standing
would not, when taken together with all other such failures, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or otherwise), or the results of operations of
Interstate and the Interstate Subsidiaries taken as a whole or on the
consummations of the transactions contemplated hereby (an "Interstate
Material Adverse Effect").
Section 6.2 Subsidiaries.
(a) Section 6.2 of the Interstate Disclosure Schedule sets
forth a description as of the date hereof, of all Interstate Subsidiaries
and Interstate Joint Ventures, including (i) the name of each such entity
and Interstate's interest therein, and (ii) a brief description of the
principal line or lines of business conducted by each such entity.
(b) Except as set forth in Section 6.2 of the Interstate
Disclosure Schedule, none of the Interstate Subsidiaries is a "public
utility company," a "holding company," a "subsidiary company" or an
"affiliate" of any public utility company within the meaning of
Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the 1935 Act,
respectively.
(c) Except as set forth in Section 6.2 of the Interstate
Disclosure Schedule, all of the issued and outstanding shares of capital
stock of each Interstate Subsidiary are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights, and are owned,
directly or indirectly, by Interstate free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such Interstate Subsidiary
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of its capital stock or granting to any person other
than Interstate or any Interstate Subsidiary any right to participate in
its dividends or earnings or obligating it to grant, extend or enter into
any such agreement or commitment.
(d) As used in this Agreement,
(i) "Interstate Subsidiary" shall mean any Subsidiary of
Interstate; and
(ii) "Interstate Joint Venture" shall mean any Joint
Venture of Interstate or any Interstate Subsidiary.
Section 6.3 Capitalization.
(a) The authorized capital stock of Interstate consists of
(i) 30,000,000 shares of Interstate Common Stock of which
9,564,287 shares were issued and outstanding as of September 30,
1995,
(ii) 2,000,000 shares of Interstate Preferred Stock were
authorized, of which 761,381 shares of the 4.36% series, 4.68%
series, 6.40% series and 7.76% series were issued and outstanding as
of September 30, 1995, and
(iii) 2,000,000 shares of Interstate Preference Stock, $1.00
par value, of which none were issued and outstanding as of September
30, 1995.
(b) All of the issued and outstanding shares of Interstate
Common Stock and Interstate Preferred Stock are, and any shares of
Interstate Common Stock issued pursuant to the Interstate/WPL and
Interstate/IES Stock Option Agreements will be, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
(c) Except as set forth in Section 6.3 of the Interstate
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating Interstate
or any of the Interstate Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of the capital stock of
Interstate, or obligating Interstate to grant, extend or enter into any
such agreement or commitment, other than under the Interstate/WPL and
Interstate/IES Stock Option Agreements.
Section 6.4 Authority; Non-contravention; Statutory Approvals;
Compliance.
(a) Authority. Interstate has all requisite corporate power
and authority to enter into this Agreement and the Interstate/WPL and
Interstate/IES Stock Option Agreements, and, subject to the applicable
Interstate Shareholders' Approval (as hereinafter defined) and the
applicable Interstate Required Statutory Approvals (as hereinafter
defined), to consummate the transactions contemplated hereby or thereby.
The execution and delivery of this Agreement and the Interstate/WPL and
Interstate/IES Stock Option Agreements and the consummation by Interstate
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Interstate,
subject to obtaining the applicable Interstate Shareholders' Approval.
Each of this Agreement and the Interstate/WPL and Interstate/IES Stock
Option Agreements has been duly and validly executed and delivered by
Interstate and, assuming the due authorization, execution and delivery
hereof and thereof by the other signatories hereto and thereto,
constitutes the valid and binding obligation of Interstate enforceable
against it in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, and except that
the availability of equitable remedies, including specific performance,
may be subject to the discretion of any court before which any proceeding
therefor may be brought.
(b) Non-contravention. Except as set forth in
Section 6.4(b) of the Interstate Disclosure Schedule, the execution and
delivery of this Agreement and the Interstate/WPL and Interstate/IES Stock
Option Agreements by Interstate do not, and the consummation of the
transactions contemplated hereby or thereby will not, result in a
Violation pursuant to any provisions of:
(i) the Articles of Incorporation, By-laws or similar
governing documents of Interstate or any of the Interstate
Subsidiaries or Interstate Joint Ventures;
(ii) subject to obtaining the Interstate Required Statutory
Approvals and the receipt of the Interstate Shareholders' Approval,
any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental
Authority applicable to Interstate or any of the Interstate
Subsidiaries or Interstate Joint Ventures or any of their respective
properties or assets; or
(iii) subject to obtaining the third-party consents set
forth in Section 6.4(b) of the Interstate Disclosure Schedule (the
"Interstate Required Consents"), any material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any
kind to which Interstate or any of the Interstate Subsidiaries or the
Interstate Joint Ventures is a party or by which it or any of its
properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such violations which,
in the aggregate do not, and insofar as reasonably can be foreseen, would
not, have an Interstate Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any Governmental Authority is necessary for the execution and delivery of
this Agreement or the Interstate/WPL and Interstate/IES Stock Option
Agreements by Interstate or the consummation by Interstate of the
transactions contemplated hereby or thereby, except as described in
Section 6.4(c) of the Interstate Disclosure Schedule (the "Interstate
Required Statutory Approvals", it being understood that references in this
Agreement to "obtaining" such Interstate Required Statutory Approvals
shall mean making such declarations, filings or registrations; giving such
notices; obtaining such authorizations, consents or approvals; and having
such waiting periods expire as are necessary to avoid a violation of law).
(d) Compliance.
(i) Except as set forth in Section 6.4(d), Section 6.10 or
Section 6.11 of the Interstate Disclosure Schedule, or as disclosed
in the Interstate SEC Reports (as hereinafter defined) filed prior to
the date hereof, neither Interstate nor any of the Interstate
Subsidiaries nor, to the knowledge of Interstate, any Interstate
Joint Venture is in violation of, is under investigation with respect
to any violation of, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any Governmental
Authority, except for violations which, in the aggregate do not, and
insofar as reasonably can be foreseen, would not, have an Interstate
Material Adverse Effect.
(ii) Except as set forth in Section 6.4(d) or in
Section 6.11 of the Interstate Disclosure Schedule, Interstate and
the Interstate Subsidiaries and Interstate Joint Ventures have all
Permits necessary to conduct their businesses as presently conducted,
except those the failure of which to obtain, in the aggregate do not,
and insofar as reasonably can be foreseen, would not, have an
Interstate Material Adverse Effect.
(iii) Except as set forth in Section 6.4(d) of the
Interstate Disclosure Schedule, each of Interstate and the Interstate
Subsidiaries and Interstate Joint Ventures is not in breach,
violation or default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default under,
(A) its Articles of Incorporation or By-laws, or
(B) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval
or other instrument to which it is a party or by which it is
bound or to which any of its property is subject, except for
breaches, violations or defaults which, in the aggregate do not,
and insofar as can be reasonably foreseen, would not, have an
Interstate Material Adverse Effect.
Section 6.5 Reports and Financial Statements.
(a) The filings required to be made by Interstate and the
Interstate Subsidiaries since January 1, 1992 under the Securities Act,
the Exchange Act, the Power Act, and applicable state laws and regulations
have been filed with the SEC, the FERC, or any appropriate state public
utilities commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, and complied, as of their
respective dates, in all material respects with all applicable
requirements of the appropriate statute and the rules and regulations
thereunder.
(b) Interstate has made available to WPL and IES a true and
complete copy of each form, report, schedule, registration statement and
definitive proxy statement filed by Interstate with the SEC since January
1, 1992 (as such documents have since the time of their filing been
amended or supplemented, the "Interstate SEC Reports") and each other
filing described in Section 6.5(a). As of their respective dates, the
Interstate SEC Reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) The audited consolidated financial statements and unaudited
interim financial statements of Interstate included in the Interstate SEC
Reports (collectively, the "Interstate Financial Statements") have been
prepared in accordance with GAAP (except as may be indicated therein or in
the notes thereto and except with respect to unaudited statements as
permitted by Form 10-Q under the Exchange Act) and fairly present in all
material respects the financial position of Interstate as of the dates
thereof and the results of its operations and cash flows for the periods
then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring audit adjustments.
(d) True, accurate and complete copies of the Restated Articles
of Incorporation and By-laws of Interstate, as in effect on the date
hereof, are included (or incorporated by reference) in the Interstate SEC
Reports.
Section 6.6 Absence of Certain Changes or Events. Except as
disclosed in the Interstate SEC Reports filed prior to the date hereof or
as set forth in Section 6.6 of the Interstate Disclosure Schedule, since
December 31, 1994, Interstate and each of the Interstate Subsidiaries and
Interstate Joint Ventures have conducted their businesses only in the
ordinary course of their respective businesses consistent with past
practice and there has not been, and no facts or conditions exist (other
than facts or conditions of general applicability to electric utility
companies in the region in which WPL, IES and Interstate operate) which,
in the aggregate have or, insofar as reasonably can be foreseen, would
have, an Interstate Material Adverse Effect.
Section 6.7 Litigation. Except as disclosed in the Interstate
SEC Reports filed prior to the date hereof or as set forth in Section 6.7,
Section 6.9 or Section 6.11 of the Interstate Disclosure Schedule,
(a) there are no claims, suits, actions or proceedings pending
or, to the knowledge of Interstate, threatened, nor are there, to the
knowledge of Interstate, any investigations or reviews pending or
threatened against, relating to or affecting Interstate or any of the
Interstate Subsidiaries and, to the knowledge of Interstate, the
Interstate Joint Ventures;
(b) there have not been any developments since December 31, 1994
with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews; and
(c) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to
Interstate or any of the Interstate Subsidiaries and, to the
knowledge of Interstate, the Interstate Joint Ventures,
which, when taken together with any other nondisclosures of matters
described in clauses (a), (b) and (c), have, or insofar as reasonably can
be foreseen, would have, an Interstate Material Adverse Effect.
Section 6.8 Registration Statement and Proxy Statement.
(a) None of the information supplied or to be supplied by or on
behalf of Interstate for inclusion or incorporation by reference in
(i) the Registration Statement will, at the time the
Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and
(ii) the Proxy Statement will, at the date mailed to
shareholders and at the times of the meetings of shareholders to be
held in connection with the Interstate Merger, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading.
(b) The Registration Statement and the Proxy Statement will
comply as to form in all material respects with the provisions of the
Securities Act and the Exchange Act, respectively, and the applicable
rules and regulations thereunder.
Section 6.9 Tax Matters. Except as set forth in Section 6.9 of
the Interstate Disclosure Schedule:
(a) Filing of Timely Tax Returns. Interstate and each of the
Interstate Subsidiaries have filed (or there has been filed on its behalf)
all Tax Returns required to be filed by each of them under applicable law.
All such Tax Returns were and are in all material respects true, complete
and correct and filed on a timely basis.
(b) Payment of Taxes. Interstate and each of the Interstate
Subsidiaries have, within the time and in the manner prescribed by law,
paid all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken.
(c) Tax Reserves. Interstate and the Interstate Subsidiaries
have established on their books and records reserves adequate to pay all
Taxes and reserves for deferred income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of
Interstate or any of the Interstate Subsidiaries except liens for Taxes
not yet due.
(e) Withholding Taxes. Interstate and each of the Interstate
Subsidiaries have complied in all material respects with the provisions of
the Code relating to the withholding of Taxes, as well as similar
provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither
Interstate nor any of the Interstate Subsidiaries has requested any
extension of time within which to file any Tax Return, which Tax Return
has not since been timely filed.
(g) Waivers of Statute of Limitations. Neither Interstate nor
any of the Interstate Subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all Taxes has expired for all applicable
Tax Returns of Interstate and each of the Interstate Subsidiaries or those
Tax Returns have been examined by the appropriate taxing authorities for
all Tax periods ended before the date hereof, and no deficiency for any
Taxes has been proposed, asserted or assessed against Interstate or any of
the Interstate Subsidiaries that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of Interstate or any of
the Interstate Subsidiaries.
(j) Powers of Attorney. No power of attorney currently in
force has been granted by Interstate or any of the Interstate Subsidiaries
concerning any Tax matter.
(k) Tax Rulings. Neither Interstate nor any of the Interstate
Subsidiaries has received a Tax Ruling or entered into a Closing Agreement
with any taxing authority that would have a continuing adverse effect
after the Closing Date.
(l) Availability of Tax Returns. Interstate has made available
to WPL and IES complete and accurate copies covering the six years ended
December 31, 1994 of (i) all Tax Returns, and any amendments thereto,
filed by Interstate or any of the Interstate Subsidiaries, (ii) all audit
reports received from any taxing authority relating to any Tax Return
filed by Interstate or any of the Interstate Subsidiaries, and (iii) any
Closing Agreements entered into by Interstate or any of the Interstate
Subsidiaries with any taxing authority.
(m) Tax Sharing Agreements. Neither Interstate nor any
Interstate Subsidiary is a party to any agreement relating to allocating
or sharing of Taxes.
(n) Code Section 280G. Neither Interstate nor any of the
Interstate Subsidiaries is a party to any agreement, contract, or
arrangement that could result, on account of the transactions contemplated
hereunder, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(o) Liability for Others. None of Interstate or any of the
Interstate Subsidiaries has any liability for Taxes of any person other
than Interstate and the Interstate Subsidiaries (i) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, (ii) by contract, or
(iii) otherwise.
Section 6.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 6.10(a) of the Interstate
Disclosure Schedule contains a true and complete list of each employee
benefit plan, program or arrangement covering employees, former employees
or directors of Interstate and each of the Interstate Subsidiaries or
their beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity, including, but not limited to,
employee benefit plans within the meaning of Section 3(3) of ERISA and any
severance or change in control agreement (collectively, the "Interstate
Benefit Plans"). For the purposes of this Section 6.10 only, the term
"Interstate" shall be deemed to include the predecessors of such company.
(b) Contributions. Except as set forth in Section 6.10(b) of
the Interstate Disclosure Schedule, all material contributions and other
payments required to be made by Interstate or any of the Interstate
Subsidiaries to any Interstate Benefit Plan (or to any person pursuant to
the terms thereof) have been made or the amount of such payment or
contribution obligation has been reflected in the Interstate Financial
Statements.
(c) Qualification; Compliance. Except as set forth in Section
6.10(b) of the Interstate Disclosure Schedule, each of the Interstate
Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be so
qualified, and, to the knowledge of Interstate, no circumstances exist
that are reasonably expected by Interstate to result in the revocation of
any such determination. Interstate is in compliance in all respects with,
and each of the Interstate Benefit Plans is and has been operated in all
respects in compliance with, all applicable laws, rules and regulations
governing each such plan, including, without limitation, ERISA and the
Code except for any violations that, in the aggregate do not, and insofar
as reasonably can be foreseen, would not, give rise to an Interstate
Material Adverse Effect. Each Interstate Benefit Plan intended to provide
for the deferral of income, the reduction of salary or other compensation,
or to afford other income tax benefits, complies in all material respects
with the requirements of the applicable provisions of the Code or other
laws, rules and regulations required to provide such income tax benefits.
(d) Liabilities. With respect to the Interstate Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the
knowledge of Interstate, there does not now exist any condition or set of
circumstances that could subject Interstate or any of the Interstate
Subsidiaries to any liability arising under the Code, ERISA or any other
applicable law (including, without limitation, any liability of any kind
whatsoever, whether direct or indirect, contingent, inchoate or otherwise
to any such plan or the PBGC), or under any indemnity agreement to which
Interstate is subject, which liability, excluding liability for PBGC
premiums, benefit claims and funding obligations payable in the ordinary
course, has, or insofar as reasonably can be foreseen, would have, an
Interstate Material Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 6.10(e) of
the Interstate Disclosure Schedule, none of the Interstate Benefit Plans
that are "welfare plans" within the meaning of Section 3(1) of ERISA
provides for any benefits payable to or on behalf of any employee or
director after termination of employment or service, as the case may be,
other than elective continuation coverage required to be provided under
Section 4980B of the Code or Part 6 of Title I of ERISA or coverage which
expires at the end of the calendar month following such event.
(f) Documents made Available. Interstate has made available to
WPL and IES a true and correct copy of each collective bargaining
agreement to which Interstate or any of the Interstate Subsidiaries is a
party or under which Interstate or any of the Interstate Subsidiaries has
obligations and, with respect to each Interstate Benefit Plan, where
applicable,
(i) such plan and summary plan description,
(ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract,
service provider or investment management agreement (including all
amendments to each such document),
(iv) the most recent determination of the IRS with respect
to the qualified status of such Interstate Benefit Plan, and
(v) the most recent actuarial report or valuation.
(g) Payments Resulting from Merger. Except as set forth in
Section 6.10(g) of the Interstate Disclosure Schedule:
(i) The consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(A) payment (whether of severance pay or otherwise)
becoming due from Interstate or any of the Interstate
Subsidiaries to any officer, employee, former employee or
director thereof or to the trustee under any "rabbi trust" or
similar arrangement that would not have been paid without regard
to such consummation or announcement, or
(B) benefit under any Interstate Benefit Plan being
established or becoming accelerated, vested or payable; and
(ii) neither Interstate nor any of the Interstate
Subsidiaries is a party to
(A) any management, employment, deferred compensation,
severance (including any payment, right or benefit resulting
from a change in control), bonus or other contract for personal
services with any officer, director or employee,
(B) any consulting contract with any person who prior
to entering into such contract was a director or officer of
Interstate, or
(C) any material plan, agreement, arrangement or
understanding similar to any of the foregoing.
(h) Labor Agreements. Except as set forth in Section 6.10(h)
of the Interstate Disclosure Schedule, as of the date hereof, neither
Interstate nor any of the Interstate Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any union or
labor organization. To the knowledge of Interstate, as of the date
hereof, there is no current union representation question involving
employees of Interstate or any of the Interstate Subsidiaries, nor does
Interstate know of any activity or proceeding of any labor organization
(or representative thereof) or employee group to organize any such
employees. Except as disclosed in the Interstate SEC Reports filed prior
to the date hereof or in Section 6.10(h) of the Interstate Disclosure
Schedule,
(i) there is no material unfair labor practice, employment
discrimination or other complaint against Interstate or any of the
Interstate Subsidiaries pending, or to the knowledge of Interstate,
threatened,
(ii) there is no strike, lockout or material dispute,
slowdown or work stoppage pending, or to the knowledge of Interstate
threatened, against or involving Interstate or any of the Interstate
Subsidiaries, and
(iii) there is no material proceeding, claim, suit, action
or governmental investigation pending or, to the knowledge of
Interstate, threatened, in respect of which any director, officer,
employee or agent of Interstate or any of the Interstate Subsidiaries
is or may be entitled to claim indemnification from Interstate or
such Interstate Subsidiary pursuant to their respective Articles of
Incorporation or by-laws.
Section 6.11 Environmental Protection. Except as set forth in
Section 6.11 of the Interstate Disclosure Schedule or in the Interstate
SEC Reports filed prior to the date hereof:
(a) Compliance.
(i) Each of Interstate and the Interstate Subsidiaries and
Interstate Joint Ventures is in compliance with all applicable
Environmental Laws, except where the failure to be in compliance, in
the aggregate does not, and insofar as reasonably can be foreseen,
would not, have an Interstate Material Adverse Effect; and
(ii) neither Interstate nor any of the Interstate
Subsidiaries and Interstate Joint Ventures has received any
communication (written or oral) from any person or Governmental
Authority that alleges that Interstate or any of the Interstate
Subsidiaries and Interstate Joint Ventures is not in compliance, as
required by clause (i) above, with applicable Environmental Laws.
(b) Environmental Permits. Each of Interstate and the
Interstate Subsidiaries has obtained all Environmental Permits necessary
for the construction of their facilities and the conduct of their
operations, as applicable, and all such Environmental Permits are in good
standing or, where applicable, a renewal application has been timely filed
and is pending agency approval, and Interstate and the Interstate
Subsidiaries are in compliance with all terms and conditions of the
Environmental Permits, except where the failure to be in such compliance,
in the aggregate does not, and insofar as reasonably can be foreseen,
would not, have an Interstate Material Adverse Effect.
(c) Environmental Claims. There is no material Environmental
Claim pending
(i) against Interstate or any of the Interstate
Subsidiaries or Interstate Joint Ventures,
(ii) against any person or entity whose liability for any
Environmental Claim Interstate or any of the Interstate Subsidiaries
has or may have retained or assumed either contractually or by
operation of law, or
(iii) against any real or personal property or operations
which Interstate or any of the Interstate Subsidiaries owns, leases
or manages, in whole or in part.
(d) Releases. To the knowledge of Interstate, there has not
been any material Releases of any Hazardous Material that would be
reasonably likely to form the basis of any material Environmental Claim
against Interstate or any of the Interstate Subsidiaries, or against any
person or entity whose liability for any material Environmental Claim
Interstate or any of the Interstate Subsidiaries has or may have retained
or assumed either contractually or by operation of law.
(e) Predecessors. To the knowledge of Interstate, with respect
to any predecessor of Interstate or any of the Interstate Subsidiaries,
there is no material Environmental Claim pending or threatened, and there
has been no Release of Hazardous Materials that would be reasonably likely
to form the basis of any material Environmental Claim.
(f) Disclosure. To Interstate's knowledge, Interstate has
disclosed to each of WPL and IES all material facts which Interstate
reasonably believes form the basis of a material Environmental Claim
arising from
(i) the cost of Interstate pollution control equipment
currently required or known to be required in the future;
(ii) current Interstate remediation costs or Interstate
remediation costs known to be required in the future; or
(iii) any other environmental matter affecting Interstate
or the Interstate Subsidiaries or Interstate Joint Ventures.
Section 6.12 Regulation as a Utility. Interstate is regulated
as a public utility in the States of Iowa, Illinois and Minnesota and in
no other state. Except as set forth in Section 6.12 of the Interstate
Disclosure Schedule, no "subsidiary company" or "affiliate" of Interstate
is subject to regulation as a public utility or public service company (or
similar designation) by any other state in the United States or any
foreign country.
Section 6.13 Vote Required. The approval by the holders of a
majority of the outstanding shares of Interstate Common Stock (the
"Interstate Shareholders' Approval") to approve the Interstate Merger is
the only vote of the holders of any class or series of capital stock of
Interstate required for any of the transactions required by this Agreement
or the Stock Option Agreements to which Interstate is a party. The
approval by the holders of shares of Interstate Preferred Stock is not
required to approve the Interstate Merger.
Section 6.14 Accounting Matters. Neither Interstate nor, to
Interstate's knowledge, any of its Affiliates has taken or agreed to take
any action that would prevent Interstate from accounting for the
transactions to be effected pursuant to this Agreement as a pooling of
interests in accordance with GAAP and applicable SEC regulations.
Section 6.15 Applicability of Certain Delaware Law, Etc.
Assuming the representations and warranties of WPL and IES made in
Sections 4.18 and 5.18, respectively, are correct, none of the provisions
of Section 203 of the DGCL, or any other takeover related provisions of
the DGCL (or to the knowledge of Interstate, any other similar State
statute) or the Restated Articles of Incorporation or By-laws of
Interstate are applicable to the transactions contemplated by this
Agreement, including the granting or exercise of the Interstate/WPL and
Interstate/IES Stock Option Agreements (except as set forth in Section
6.15 of the Interstate Disclosure Schedule.
Section 6.16 Opinion of Financial Advisor. Interstate has
received the opinion of Salomon Brothers Inc ("Salomon") dated November
10, 1995, to the effect that, as of the date thereof, the consideration to
be received by the holders of Interstate Common Stock in the Interstate
Merger is fair from a financial point of view to the holders of Interstate
Common Stock.
Section 6.17 Insurance. Except as set forth in Section 6.17 of
the Interstate Disclosure Schedule, each of Interstate and the Interstate
Subsidiaries is, and has been continuously since January 1, 1990, insured
with financially responsible insurers in such amounts and against such
risks and losses as are customary in all material respects for companies
conducting the business conducted by Interstate and the Interstate
Subsidiaries during such time period. Except as set forth in Section 6.17
of the Interstate Disclosure Schedule, neither Interstate nor any of the
Interstate Subsidiaries has received any notice of cancellation or
termination with respect to any material insurance policy of Interstate or
any of the Interstate Subsidiaries. The insurance policies of Interstate
and each of the Interstate Subsidiaries are valid and enforceable policies
in all material respects.
Section 6.18 Ownership of WPL and IES Common Stock. Except
pursuant to the terms of the WPL/Interstate and IES/Interstate Stock
Option Agreements, Interstate does not "beneficially own" (as such term is
defined for purposes of Section 13(d) of the Exchange Act) any shares of
WPL Common Stock or IES Common Stock.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 Covenants of the Parties. After the date hereof
and prior to the Effective Time or earlier termination of this Agreement,
WPL, IES and Interstate each agree as set forth in this Article VII, each
as to itself and to each of the WPL Subsidiaries, the IES Subsidiaries and
the Interstate Subsidiaries, respectively, except as expressly
contemplated or permitted in this Agreement, the Stock Option Agreements,
or to the extent the other parties hereto shall otherwise consent in
writing.
Section 7.2 Ordinary Course of Business. Each party hereto
shall, and shall cause its Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and use all commercially reasonable
efforts to preserve intact their present business organizations and
goodwill, preserve the goodwill and relationships with customers,
suppliers and others having business dealings with them and, subject to
prudent management of workforce needs and ongoing programs currently in
force, keep available the services of their present officers and
employees. Except as set forth in Section 7.2 of the WPL Disclosure
Schedule, the IES Disclosure Schedule or the Interstate Disclosure
Schedule, respectively, no party shall, nor shall any party permit any of
its Subsidiaries to, enter into a new line of business, or make any change
in the line of business it engages in as of the date hereof involving any
material investment of assets or resources or any material exposure to
liability or loss, in the case of WPL, to WPL and its Subsidiaries taken
as a whole, in the case of IES, to IES and its Subsidiaries taken as a
whole, and in the case of Interstate, to Interstate and its Subsidiaries
taken as a whole.
Section 7.3 Dividends. No party shall, nor shall any party
permit any of its Subsidiaries to,
(a)(i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than
(A) to such party or its wholly-owned Subsidiaries,
(B) dividends required to be paid on any IES
Preferred Stock, Utilities Preferred Stock, WP&LC Preferred
Stock or Interstate Preferred Stock in accordance with the
respective terms thereof, and
(C) regular quarterly dividends on IES Common Stock
and Interstate Common Stock, with usual record and payment
dates, during any fiscal year, which dividends shall not exceed
100% of the prior year in the case of IES and 100% of the prior
year in the case of Interstate, and
(D) regular quarterly dividends on WPL Common Stock,
with usual record and payment dates, during any fiscal year,
which dividends shall not exceed 105% of the dividends for the
prior fiscal year; and
(ii) split, combine or reclassify any of their capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares
of their capital stock; or
(iii) redeem, repurchase or otherwise acquire any shares of
their capital stock, other than
(A) redemptions, purchases or acquisitions required by
the respective terms of any series of IES Preferred Stock,
Utilities Preferred Stock, WP&LC Preferred Stock, or Interstate
Preferred Stock,
(B) in connection with refunding of IES Preferred
Stock, Utilities Preferred Stock, WP&LC Preferred Stock or
Interstate Preferred Stock with preferred stock or debt at a
lower cost of funds (calculating such cost on an after-tax
basis),
(C) in connection with intercompany purchases of
capital stock,
(D) for the purpose of funding employee stock
ownership or dividend reinvestment and stock purchase plans in
accordance with past practice, or
(E) as set forth on Section 7.3(a)(iii) of the WPL
Disclosure Schedule, IES Disclosure Schedule or Interstate
Disclosure Schedule.
(b) Each of WPL, IES, and Interstate shall declare a dividend
on each share of its Common Stock to holders of record of such shares
as of the close of business on the business day next preceding the
Effective Time in an amount equal to the product of
(i) a fraction,
(A) the numerator of which equals the number of days
between the payment date with respect to the most recent regular
dividend paid by WPL, IES, or Interstate, as the case may be,
and the Effective Time, and
(B) the denominator of which equals 91, and
(ii) the amount of the regular cash dividend most recently
paid by WPL, IES or Interstate, as the case may be;
provided, however, that if any one or more of WPL, IES or Interstate has
declared a regular quarterly dividend on shares of its Common Stock with a
payment date (the "Payment Date") after the Effective Time, then no
dividend as provided for in this Section 7.3(b) shall be declared or paid
with respect to such shares and the dividend of the other party or parties
shall be calculated by substituting "Payment Date" for "Effective Time" in
clause (i)(A) of this Section 7.3(b).
(c) Notwithstanding the foregoing,
(i) WPL may redeem all or any portion of the WP&LC
Preferred Stock if the Board of Directors of WPL in good faith
determines such course of action will facilitate the transactions
contemplated hereby,
(ii) IES may redeem all or any portion of the IES
Preferred Stock or Utilities Preferred Stock if the IES Board of
Directors in good faith determines such course of action will
facilitate the transactions contemplated hereby, and
(iii) Interstate may redeem all or any portion of the
Interstate Preferred Stock, if the Interstate Board of Directors in
good faith determines such course of action will facilitate the
transactions contemplated hereby.
Section 7.4 Issuance of Securities. (a) No party shall, nor
shall any party permit any of its Subsidiaries to, issue, agree to issue,
deliver, sell, award, pledge, dispose of or otherwise encumber or
authorize or propose the issuance, delivery, sale, award, pledge, disposal
or other encumbrance of, any shares of their capital stock of any class or
any securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or convertible or
exchangeable securities, other than (w) pursuant to the Stock Option
Agreements, (x) pursuant to the Benefit Plans relating to the WPL
Subsidiaries listed in (and in amounts no greater than those set forth in)
Section 7.4 of the WPL Disclosure Schedule, (y) issuances by a Subsidiary
of a party hereto to the party that directly or indirectly controls such
Subsidiary or to a wholly-owned Subsidiary of such party, and (z)
issuances:
(i) in the case of IES and the IES Subsidiaries
(A) in connection with refunding IES Preferred Stock
or Utilities Preferred Stock with preferred stock or debt at a
lower cost of funds (calculating such cost on an after-tax
basis); and
(B) up to 450,000 shares of IES Common Stock to be
issued for general corporate purposes, including issuances in
connection with acquisitions and financing and issuances
pursuant to employee benefit plans, stock option and other
incentive compensation plans, directors plans and stock purchase
plans;
(C) issuances of IES Common Stock pursuant to IES
dividend reinvestment plans; and
(D) issuances of securities pursuant to the IES Rights
Agreement.
(ii) in the case of WPL and the WPL Subsidiaries
(A) in connection with refunding of WP&LC Preferred
Stock with preferred stock or debt at a lower cost of funds
(calculating such cost on an after-tax basis); and
(B) up to 1 million shares of WPL Common Stock to be
issued for general corporate purposes, including issuances in
connection with acquisitions and financing and issuances
pursuant to employee benefit plans, stock option and other
incentive compensation plans, directors plans and stock purchase
plans;
(C) issuances of WPL Common Stock pursuant to WPL
dividend reinvestment plans; and
(D) issuances of securities pursuant to the WPL Rights
Agreement.
(iii) in the case of Interstate and the Interstate
Subsidiaries
(A) in connection with refunding of Interstate
Preferred Stock with preferred stock or debt at a lower cost of
funds (calculating such cost on an after-tax basis); and
(B) up to 200,000 shares of Interstate Common Stock to
be issued for general corporate purposes, including issuances in
connection with acquisitions and financing and issuances
pursuant to employee benefit plans, stock option and other
incentive compensation plans, directors plans and stock purchase
plans; and
(C) issuances of Interstate Common Stock
pursuant to Interstate's dividend reinvestment plans.
(b) The parties shall promptly furnish to each other such
information as may be reasonably requested including financial information
and take such action as may be reasonably necessary and otherwise fully
cooperate with each other in the preparation of any registration statement
under the Securities Act and other documents necessary in connection with
issuance of securities as contemplated by this Section 7.4, subject to
obtaining customary indemnities.
Section 7.5 Charter Documents. Except as set forth in
Section 7.5 of the WPL Disclosure Schedule, the IES Disclosure Schedule or
the Interstate Disclosure Schedule, except as contemplated herein, no
party shall amend or propose to amend its respective articles of
incorporation, by-laws or regulations, or similar organic documents.
Section 7.6 No Acquisitions. Except as set forth in Section
7.6 of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, other than acquisitions by a party and its
Subsidiaries not in excess of $10 million in the case of WPL, $10 million
in the case of IES and $5 million in the case of Interstate, over the
amount budgeted or forecasted by each party for acquisition expenditures,
as set forth in such Section 7.6 of the WPL Disclosure Schedule, the IES
Disclosure Schedule or the Interstate Disclosure Schedule, singularly or
in the aggregate, no party shall, nor shall any party permit any of its
Subsidiaries to, acquire, or publicly propose to acquire, or agree to
acquire, by merger or consolidation with, or by purchase or otherwise, a
substantial equity interest in or a substantial portion of the assets of,
any business or any corporation, partnership, association or other
business organization or division thereof, nor shall any party acquire or
agree to acquire a material amount of assets other than in the ordinary
course of business consistent with past practice.
Section 7.7 Capital Expenditures and Emission Allowances.
Except as set forth in Section 7.7 of the WPL Disclosure Schedule, the IES
Disclosure Schedule or the Interstate Disclosure Schedule, or as required
by law, no party shall, nor shall any party permit any of its Subsidiaries
to, (i) make capital expenditures in excess of $50 million in the case of
WPL, $80 million in the case of IES, and $16 million in the case of
Interstate over the amount budgeted by each such party for capital
expenditures as set forth in such Section 7.7 of the WPL Disclosure
Schedule, the IES Disclosure Schedule or the Interstate Disclosure
Schedule, or (ii) enter into written commitments for the purchase of
sulfur dioxide emission allowances as provided for by the Clean Air Act
Amendments of 1990, in excess (singularly or in the aggregate) of $1
million in the case of WPL, $500,000 in the case of IES, and $250,000 in
the case of Interstate.
Section 7.8 No Dispositions. Except as set forth in Section
7.8 of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, other than dispositions by a party and its
Subsidiaries of assets having a fair market value (singularly or in the
aggregate) of less than $10 million in the case of WPL, $10 million in the
case of IES, and $2 million in the case of Interstate, no party shall, nor
shall any party permit any of its Subsidiaries to, sell, lease, license,
encumber or otherwise dispose of, any of its assets, other than
encumbrances or dispositions in the ordinary course of its business
consistent with past practice.
Section 7.9 Indebtedness. Except as contemplated by this
Agreement, no party shall, nor shall any party permit any of its
Subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or
enter into any "keep well" or other agreement to maintain any financial
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing other than (i) short-term
indebtedness in the ordinary course of business consistent with past
practice (such as the issuance of commercial paper or the use of existing
credit facilities); (ii) long-term indebtedness not aggregating more than
$40 million in the case of WPL, $60 million in the case of IES, and $20
million in the case of Interstate; (iii) arrangements between such party
and its Subsidiaries or among its Subsidiaries; (iv) as set forth in
Section 7.9 of the WPL Disclosure Schedule, the IES Disclosure Schedule or
the Interstate Disclosure Schedule; (v) in connection with the refunding
of existing indebtedness at a lower cost of funds; or (vi) in connection
with the refunding of IES Preferred Stock, Utilities Preferred Stock,
WP&LC Preferred Stock or Interstate Preferred Stock, as permitted in
Section 7.3.
Section 7.10 Compensation, Benefits. Except as set forth in
Section 7.10 of the WPL Disclosure Schedule, the IES Disclosure Schedule
or the Interstate Disclosure Schedule, as may be required by applicable
law or as contemplated by this Agreement, no party shall, nor shall any
party permit any of its Subsidiaries to
(a) enter into, adopt or amend or increase the amount or
accelerate the payment or vesting of any benefit or amount payable under,
any employee benefit plan or other contract, agreement, commitment,
arrangement, plan or policy maintained by, contributed to or entered into
by such party or any of its Subsidiaries, or increase, or enter into any
contract, agreement, commitment or arrangement to increase in any manner,
the compensation or fringe benefits, or otherwise to extend, expand or
enhance the engagement, employment or any related rights, of any director,
officer or other employee of such party or any of its Subsidiaries, except
for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to such party or any of its
Subsidiaries, or
(b) enter into or amend any employment, severance or special pay
arrangement with respect to the termination of employment or other similar
contract, agreement or arrangement with any director or officer or other
employee, except as set forth in Section 7.10 of the WPL Disclosure
Schedule, the IES Disclosure Schedule or the Interstate Disclosure
Schedule or otherwise in the ordinary course of business consistent with
past practice.
Section 7.11 1935 Act. Except as set forth in Section 7.11 of
the WPL Disclosure Schedule, the IES Disclosure Schedule or the Interstate
Disclosure Schedule, no party shall, nor shall any party permit any of its
Subsidiaries to, except as required or contemplated by this Agreement,
engage in any activities which would cause a change in its status, or that
of its Subsidiaries, under the 1935 Act, or that would impair the ability
of WPL to claim an exemption pursuant to its order under Section 3(a)(1)
of the 1935 Act or that would impair the ability of IES to claim an
exemption pursuant to its order under Section 3(a)(1) of the 1935 Act
prior to the Effective Time, other than (i) the application to the SEC
under the 1935 Act contemplated by this Agreement for approval to the
extent required of the transactions contemplated hereby and (ii) the
registration of the Company pursuant to the 1935 Act.
Section 7.12 Transmission, Generation. Except as required
pursuant to tariffs on file with the FERC as of the date hereof, in the
ordinary course of business consistent with past practice, or as set forth
in Section 7.12 of the WPL Disclosure Schedule, the IES Disclosure
Schedule or the Interstate Disclosure Schedule, no party shall, nor shall
any party permit any of its Subsidiaries to, (i) commence construction of
any additional generating, transmission or delivery capacity, or
(ii) obligate itself to purchase or otherwise acquire, or to sell or
otherwise dispose of, or to share, any additional generating, transmission
or delivery capacity in an amount in excess of $30 million in the case of
WPL, $80 million in the case of IES, and $16 million in the case of
Interstate, except as set forth in the budgets or forecasts of WPL dated
November 10, 1995, IES dated October 16, 1995 and Interstate dated
February 27, 1995, respectively, which budgets or forecasts have been
shared with each other party hereto .
Section 7.13 Accounting. Except as set forth in Section 7.13
of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, no party shall, nor shall any party permit
any of its Subsidiaries to, make any changes in their accounting methods,
except as required by law, rule, regulation or GAAP.
Section 7.14 Pooling. No party shall, nor shall any party
permit any of its Subsidiaries or, within the exercise of its best
efforts, its Joint Ventures to, take any action which would, or would be
reasonably likely to, prevent the Company from accounting for the
transactions to be effected pursuant to this Agreement as a pooling of
interests in accordance with GAAP and applicable SEC regulations, and each
party hereto shall use all reasonable efforts to achieve such result
(including taking such actions as may be necessary to cure any facts or
circumstances that could prevent such transactions from qualifying for
pooling-of-interests accounting treatment).
Section 7.15 Tax-free Status. No party shall, nor shall any
party permit any of its Subsidiaries or, within the exercise of its best
efforts, its Joint Ventures to, take any actions which would, or would be
reasonably likely to, adversely affect the status of the Merger as a
tax-free transaction (except as to dissenters' rights and fractional
shares) under Section 368(a) of the Code, and each party hereto shall use
all reasonable efforts to achieve such result.
Section 7.16 Affiliate Transactions. Except as set forth in
Section 7.16 of the WPL Disclosure Schedule, the IES Disclosure Schedule
or the Interstate Disclosure Schedule, no party shall, nor shall any party
permit any of its Subsidiaries or, within the exercise of its best
efforts, its Joint Ventures to, enter into any material agreement or
arrangement with any of their respective Affiliates (other than
wholly-owned Subsidiaries) on terms materially less favorable to such
party than could reasonably be expected to have been obtained with an
unaffiliated third party on an arm's-length basis.
Section 7.17 Cooperation, Notification. Each party shall, and
shall cause its Subsidiaries and shall use its best efforts to cause, its
Joint Ventures to
(a) cause its appropriate representatives to confer on a
regular and frequent basis with one or more representatives of each other
party to discuss, subject to applicable law, material operational matters
and the general status of its ongoing operations;
(b) promptly notify each other party of any significant changes
in its business, properties, assets, condition (financial or other),
results of operations or prospects;
(c) advise each other party of any change or event which has,
had or, insofar as reasonably can be foreseen, is reasonably likely to
result in, in the case of WPL, a WPL Material Adverse Effect, in the case
of IES, an IES Material Adverse Effect, or in the case of Interstate, an
Interstate Material Adverse Effect; and
(d) promptly provide each other party with copies of all
filings made by such party or any of its Subsidiaries with any state or
Federal court, administrative agency, commission or other Governmental
Authority in connection with this Agreement and the transactions
contemplated hereby.
Section 7.18 Third-party Consents.
(a) WPL shall, and shall cause its Subsidiaries to, use all
commercially reasonable efforts to obtain all WPL Required Consents. WPL
shall promptly notify IES and Interstate of any failure or prospective
failure to obtain any such consents and, if requested by IES or
Interstate, shall provide copies of all WPL Required Consents obtained by
WPL to IES and Interstate.
(b) IES shall, and shall cause its Subsidiaries to, use all
commercially reasonable efforts to obtain all IES Required Consents. IES
shall promptly notify WPL and Interstate of any failure or prospective
failure to obtain any such consents and, if requested by WPL or
Interstate, shall provide copies of all IES Required Consents obtained by
IES to WPL and Interstate.
(c) Interstate shall, and shall cause its Subsidiaries to, use
all commercially reasonable efforts to obtain all Interstate Required
Consents. Interstate shall promptly notify WPL and IES of any failure or
prospective failure to obtain any such consents and, if requested by WPL
or IES, shall provide copies of all Interstate Required Consents obtained
by Interstate to WPL and IES.
Section 7.19 No Breach. No party shall, nor shall any party
permit any of its Subsidiaries to, willfully take any action that would or
is reasonably likely to result
(a) in a material breach of any provision of this Agreement or
the Stock Option Agreements, or
(b) in any of its representations and warranties set forth in
this Agreement or the Stock Option Agreements being untrue on and as of
the Closing Date.
Section 7.20 Tax-exempt Status. No party shall, nor shall any
party permit any Subsidiary to take any action that would be reasonably
likely to jeopardize the qualification of WP&LC's, Utilities's or
Interstate's outstanding revenue bonds which qualify on the date hereof
under Section 142(a) of the Code as "exempt facility bonds" or as
tax-exempt industrial development bonds under Section 103(b)(4) of the
Internal Revenue Code of 1954, as amended, prior to the enactment of the
Tax Reform Act of 1986.
Section 7.21 Transition Steering Team. As soon as practicable
after the date hereof, the parties shall create a special transition
steering team (the "Transition Team") reporting to Erroll B. Davis, Jr.
("Mr. Davis") which shall be chaired by Wayne H. Stoppelmoor ("Mr.
Stoppelmoor") and include a designee of each of IES, WPL and Interstate.
The Transition Team shall develop recommendations concerning the future
structure and operations of the Company after the Effective Time, subject
to applicable law.
Section 7.22 Company Actions. IES, WPL and Interstate shall,
and shall cause their respective Subsidiaries and shall use their best
efforts to cause their respective Joint Ventures to, take only those
actions, from the date hereof until the Effective Time, that are required,
permitted or contemplated by this Agreement to be taken by any of them,
including, without limitation, the declaration, filing or registration
with, or notice to or authorization, consent or approval of, any
Governmental Authority, as set forth in Section 7.22 of the WPL Disclosure
Schedule, the IES Disclosure Schedule and the Interstate Disclosure
Schedule, respectively.
Section 7.23 Tax Matters. Except as set forth in Section 7.23
of the WPL Disclosure Schedule, the IES Disclosure Schedule or the
Interstate Disclosure Schedule, no party shall make or rescind any
material express or deemed election relating to taxes, settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or
change any of its methods of reporting income or deductions for Federal
income tax purposes from those employed in the preparation of its Federal
income tax return for the taxable year ending December 31, 1994, except as
may be required by applicable law.
Section 7.24 Discharge of Liabilities. No party shall, nor
shall any party permit its Subsidiaries to, pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction, in the ordinary course of business consistent with past
practice (which includes the payment of final and unappealable judgments)
or in accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of such party included in such party's
reports filed with the SEC, or incurred in the ordinary course of business
consistent with past practice.
Section 7.25 Contracts. No party shall, nor shall any party
permit its Subsidiaries or, within the exercise of its best efforts, its
Joint Ventures to, except in the ordinary course of business consistent
with past practice, modify, amend, terminate, renew or fail to use
reasonable business efforts to renew any material contract or agreement to
which such party or any Subsidiary of such party is a party or waive,
release or assign any material rights or claims.
Section 7.26 Insurance. Each party shall, and shall cause its
Subsidiaries to, maintain with financially responsible insurance companies
insurance coverage in such amounts and against such risks and losses as
are customary for companies engaged in the electric and gas utility
industry and employing methods of generating electric power and fuel
sources similar to those methods employed and fuels used by such party or
its Subsidiaries.
Section 7.27 Permits. Each party shall, and shall cause its
Subsidiaries to, use reasonable efforts to maintain in effect all existing
Permits pursuant to which such party or its Subsidiaries operate.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access to Information.
(a) Upon reasonable notice, each party shall, and shall
cause its Subsidiaries and, shall use its best efforts to cause, its Joint
Ventures to, afford to the officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other representatives
of the other parties (collectively, "Representatives") reasonable access,
during normal business hours throughout the period prior to the Effective
Time, to all of its properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) and, during such period, each
party shall, and shall cause its Subsidiaries to, furnish promptly to the
other parties
(i) access to each report, schedule and other document
filed or received by it or any of its Subsidiaries and, within the
exercise of its best efforts, its Joint Ventures pursuant to the
requirements of Federal or state securities laws or filed with or
sent to the SEC, the FERC, the NRC, the DOE, the Department of
Justice, the Federal Trade Commission, the Iowa Utilities Board, the
Public Service Commission of Wisconsin, the Illinois Commerce
Commission, the Minnesota Public Utilities Commission or any other
Federal or state regulatory agency or commission, and
(ii) access to all information concerning itself, its
Subsidiaries and, within the exercise of its best efforts, its Joint
Ventures, directors, officers and shareholders and such other matters
as may be reasonably requested by any other party in connection with
any filings, applications or approvals required or contemplated by
this Agreement or for any other reason related to the transactions
contemplated by this Agreement.
(b) Each party shall, and shall cause its Subsidiaries and
Representatives, and shall use its best efforts to cause its Joint
Ventures to, hold in strict confidence all documents and information
concerning the others furnished to it in connection with the transactions
contemplated by this Agreement in accordance with the Confidentiality
Agreement, dated September 19, 1995, among WPL, IES and Interstate, as it
may be amended from time to time (the "Confidentiality Agreement").
Section 8.2 Joint Proxy Statement and Registration Statement.
(a) Preparation and Filing. The parties will prepare and file
with the SEC as soon as reasonably practicable after the date hereof the
Registration Statement and the Proxy Statement (together, the "Joint
Proxy/Registration Statement"). The parties hereto shall each use
reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as practicable after such
filing. Each party hereto shall also take such action as may reasonably
be required to cause the shares of WPL Common Stock issuable in connection
with the Merger to be registered (or to obtain an exemption from
registration) under applicable state "blue sky" or securities laws;
provided, however, that no party shall be required to register or qualify
as a foreign corporation or to take other action which would subject it to
service of process in any jurisdiction where it will not be, following the
Merger, so subject. Each of the parties hereto shall furnish all
information concerning itself which is required or customary for inclusion
in the Joint Proxy/Registration Statement. The parties shall use
reasonable efforts to cause the shares of WPL Common Stock issuable in the
Merger to be approved for listing on the NYSE subject only to official
notice of issuance. The information provided by any party hereto for use
in the Joint Proxy/Registration Statement shall be true and correct in all
material respects without omission of any material fact which is required
to make such information not false or misleading. No representation,
covenant or agreement is made by any party hereto with respect to
information supplied by any other party for inclusion in the Joint
Proxy/Registration Statement.
(b) Letter of WPL's Accountants. WPL shall use best efforts to
cause to be delivered to IES and Interstate a letter of Arthur Andersen
LLP, dated a date within two business days before the date of the Joint
Proxy/Registration Statement, and addressed to IES and Interstate, in form
and substance reasonably satisfactory to IES and Interstate, and customary
in scope and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements on Form S-4.
(c) Letter of IES's Accountants. IES shall use best efforts to
cause to be delivered to WPL and Interstate a letter of Arthur Andersen
LLP, dated a date within two business days before the date of the Joint
Proxy/Registration Statement, and addressed to WPL and Interstate, in form
and substance reasonably satisfactory to WPL and Interstate and customary
in scope and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements on Form S-4.
(d) Letter of Interstate's Accountants. Interstate shall use
best efforts to cause to be delivered to WPL and IES a letter of Deloitte
& Touche LLP, dated a date within two business days before the date of the
Joint Proxy/Registration Statement, and addressed to WPL and IES, in form
and substance reasonably satisfactory to WPL and IES and customary in
scope and substance for "cold comfort" letters delivered by independent
public accountants in connection with registration statements on Form S-4.
(e) Fairness Opinions. It shall be a condition to the mailing
of the Joint Proxy/Registration Statement to the shareholders of WPL, IES
and Interstate that
(i) WPL shall have received an opinion from Merrill, dated
the date of the Joint Proxy/Registration Statement, to the effect
that, as of the date thereof, the IES Ratio and the Interstate Ratio
are fair to WPL from a financial point of view,
(ii) IES shall have received an opinion from Morgan, dated
the date of the Joint Proxy/Registration Statement, to the effect
that, as of the date thereof, the IES Ratio, taking into account the
Interstate Ratio, is fair from a financial point of view to the
holders of IES Common Stock, and
(iii) Interstate shall have received an opinion from
Salomon, dated the date of the Joint Proxy/Registration Statement, to
the effect that, as of the date thereof, the consideration to be
received by the holders of Interstate Common Stock in the Interstate
Merger is fair from a financial point of view to the holders of
Interstate Common Stock.
Section 8.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or cause to be
filed with the Federal Trade Commission and the Department of Justice any
notifications required to be filed by itself or its respective "ultimate
parent" company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations
promulgated thereunder with respect to the transactions contemplated
hereby. Such parties will use all commercially reasonable efforts to make
such filings within 200 days after the date hereof, and to respond
promptly to any requests for additional information made by either of such
agencies.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its best efforts to promptly prepare and file all
necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to use all commercially
reasonable efforts to obtain all necessary permits, consents, approvals
and authorizations of all Governmental Authorities necessary or advisable
to consummate the Merger, including, without limitation, the WPL Required
Statutory Approvals, the IES Required Statutory Approvals and the
Interstate Required Statutory Approvals.
Section 8.4 Shareholder Approval.
(a) Approval of IES Shareholders. Subject to the provisions of
Section 8.4(d) and Section 8.4(e), IES shall, as soon as reasonably
practicable after the date hereof
(i) take all steps necessary to duly call, give notice of,
convene and hold a special meeting of its shareholders (the "IES
Special Meeting") for the purpose of securing the IES Shareholders'
Approval,
(ii) distribute to its shareholders the Proxy Statement in
accordance with applicable Federal and state law and with its
Restated Articles of Incorporation and By-laws,
(iii) subject to the fiduciary duties of its Board of
Directors, recommend to its shareholders the approval of the IES
Merger, this Agreement and the transactions contemplated hereby, and
(iv) cooperate and consult with WPL and Interstate with
respect to each of the foregoing matters.
(b) Approval of WPL Shareholders. Subject to the provisions of
Section 8.4(d) and Section 8.4(e), WPL shall, as soon as reasonably
practicable after the date hereof
(i) take all steps necessary to duly call, give notice of,
convene and hold a special meeting of its shareholders (the "WPL
Special Meeting") for the purpose of securing the WPL Shareholders'
Approval,
(ii) distribute to its shareholders the Proxy Statement in
accordance with applicable Federal and state law and with its
Restated Articles of Incorporation and By-laws,
(iii) subject to the fiduciary duties of its Board of
Directors, recommend to its shareholders the approval of the Merger,
this Agreement and the transactions contemplated hereby, and
(iv) cooperate and consult with IES and Interstate with
respect to each of the foregoing matters.
(c) Approval of Interstate Shareholders. Subject to the
provisions of Section 8.4(d) and Section 8.4(e), Interstate shall, as soon
as reasonably practicable after the date hereof
(i) take all steps necessary to duly call, give notice of,
convene and hold a special meeting of its shareholders (the
"Interstate Special Meeting") for the purpose of securing the
Interstate Shareholders' Approval,
(ii) distribute to its shareholders the Proxy Statement in
accordance with applicable Federal and state law and with its
Restated Certificate of Incorporation and By-laws,
(iii) subject to the fiduciary duties of its Board of
Directors, recommend to its shareholders the approval of the
Interstate Merger, this Agreement and the transactions contemplated
hereby, and
(iv) cooperate and consult with IES and WPL with respect to
each of the foregoing matters.
(d) Meeting Date. The IES Special Meeting, the WPL Special
Meeting and the Interstate Special Meeting shall be held on such dates as
WPL, IES and Interstate shall mutually determine.
(e) Fairness Opinions Not Withdrawn. It shall be a condition
to the obligation of WPL to hold the WPL Special Meeting that the opinion
of Merrill, referred to in Section 8.2(e), shall not have been withdrawn,
it shall be a condition to the obligation of IES to hold the IES Special
Meeting that the opinion of Morgan, referred to in Section 8.2(e), shall
not have been withdrawn, and it shall be a condition to the obligation of
Interstate to hold the Interstate Special Meeting that the opinion of
Salomon, referred to in Section 8.2(e), shall not have been withdrawn.
Section 8.5 Director and Officer Indemnification.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from and
after the Effective Time, the Company shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, an officer, director or employee
of any of the parties hereto or any Subsidiary (each an "Indemnified
Party" and collectively, the "Indemnified Parties") against
(i) all losses, expenses (including reasonable attorney's
fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement,
arising out of actions or omissions occurring at or prior to the
Effective Time (and whether asserted or claimed prior to, at or after
the Effective Time) that are, in whole or in part, based on or
arising out of the fact that such person is or was a director,
officer or employee of such party (the "Indemnified Liabilities"),
and
(ii) all Indemnified Liabilities to the extent that they
are based on or arise out of or pertain to the transactions
contemplated by this Agreement.
In the event of any such loss, expense, claim, damage or liability
(whether or not arising before the Effective Time),
(A) the Company shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to the Company,
promptly after statements therefor are received and otherwise
advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred,
(B) the Company will cooperate in the defense of any
such matter, and
(C) any determination required to be made with
respect to whether an Indemnified Party's conduct complies with
the standards set forth under Sections 180.0850 through 180.0859
of the WBCL and the Restated Articles of Incorporation or
By-laws of the Company (as the same shall be amended from time
to time) shall be made by independent counsel mutually
acceptable to the Company and the Indemnified Party; provided,
however, that the Company shall not be liable for any settlement
effected without its written consent (which consent shall not be
unreasonably withheld).
The Indemnified Parties as a group may retain only one law firm
with respect to each related matter except to the extent that there is, in
the opinion of counsel to an Indemnified Party, under applicable standards
of professional conduct, a conflict on any significant issue between
positions of such Indemnified Party and any other Indemnified Party or
Indemnified Parties.
(b) Insurance. For a period of six years after the Effective
Time, the Company shall cause to be maintained in effect policies of
directors' and officers' liability insurance maintained by WPL, IES and
Interstate for the benefit of those persons who are currently covered by
such policies on terms no less favorable than the terms of such current
insurance coverage; provided, however, that the Company shall not be
required to expend in any year an amount in excess of 150% of the annual
aggregate premiums currently paid by WPL, IES and Interstate for such
insurance; and provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Company shall be obligated to
obtain a policy with the best coverage available, in the reasonable
judgment of the Board of Directors of the Company, for a cost not
exceeding such amount.
(c) Successors. In the event the Company or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) transfers all or substantially
all of its properties and assets to any person, then and in either such
case, proper provisions shall be made so that the successors and assigns
of the Company shall assume the obligations set forth in this Section 8.5.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of WPL, IES and Interstate and their respective
Subsidiaries with respect to their activities as such prior to the
Effective Time, as provided in their respective articles of incorporation
and by-laws in effect on the date thereof, or otherwise in effect on the
date hereof, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time.
(e) Benefit. The provisions of this Section 8.5 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives.
Section 8.6 Disclosure Schedules. On the date hereof,
(a) IES has delivered to WPL and Interstate an IES Disclosure
Schedule, accompanied by a certificate signed by the chief financial
officer of IES stating the IES Disclosure Schedule is being delivered
pursuant to this Section 8.6(a),
(b) WPL has delivered to IES and Interstate a WPL Disclosure
Schedule, accompanied by a certificate signed by the Vice President,
Corporate Secretary and Treasurer of WPL stating the WPL Disclosure
Schedule is being delivered pursuant to this Section 8.6(b), and
(c) Interstate has delivered to WPL and IES an Interstate
Disclosure Schedule, accompanied by a certificate signed by the principal
financial officer of Interstate stating the Interstate Disclosure Schedule
is being delivered pursuant to this Section 8.6(c).
(d) The WPL Disclosure Schedule, the IES Disclosure Schedule
and the Interstate Disclosure Schedule are collectively referred to herein
as the "Disclosure Schedules."
(e) The Disclosure Schedules constitute an integral part of
this Agreement and modify the respective representations, warranties,
covenants or agreements of the parties hereto contained herein to the
extent that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedules. Anything to the contrary
contained herein or in the Disclosure Schedules notwithstanding, any and
all statements, representations, warranties or disclosures set forth in
the Disclosure Schedules shall be deemed to have been made on and as of
the date hereof.
Section 8.7 Public Announcements. Subject to each party's
disclosure obligations imposed by law, WPL, IES and Interstate will
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby and shall not
issue any public announcement or statement with respect hereto or thereto
without the consent of the other parties (which consent shall not be
unreasonably withheld).
Section 8.8 Rule 145 Affiliates. Within 30 days before the
Closing Date, WPL shall identify in a letter to IES and Interstate, IES
shall identify in a letter to WPL and Interstate, and Interstate shall
identify in a letter to WPL and IES, all persons who are, and to such
person's knowledge who will be at the Closing Date, "affiliates" of WPL,
IES and Interstate, respectively, as such term is used in Rule 145 under
the Securities Act (or otherwise under applicable SEC accounting releases
with respect to pooling-of-interests accounting treatment). Each of WPL,
IES and Interstate shall use all reasonable efforts to cause their
respective affiliates (including any person who may be deemed to have
become an affiliate after the date of the letter referred to in the prior
sentence) to deliver to the Company on or prior to the Closing Date a
written agreement substantially in the form attached as Exhibit 8.8(a)
with respect to affiliates of WPL and Exhibit 8.8(b) with respect to
affiliates of IES and Interstate (each, an "Affiliate Agreement").
Section 8.9 Employee Agreements and Workforce Matters.
(a) Certain Employee Agreements. Subject to Section 8.10,
Section 8.14 and Section 8.15, the Company and its Subsidiaries shall
honor, without modification, all contracts, agreements, collective
bargaining agreements and commitments of the parties prior to the date
hereof which apply to any current or former employee or current or former
director of the parties hereto; provided, however, that this undertaking
is not intended to prevent the Company from enforcing such contracts,
agreements, collective bargaining agreements and commitments in accordance
with their terms, including, without limitation, any reserved right to
amend, modify, suspend, revoke or terminate any such contract, agreement,
collective bargaining agreement or commitment.
(b) Workforce Matters.
(i) Subject to applicable collective bargaining
agreements, for a period of three years following the Effective Time,
any reductions in workforce in respect to employees of the Company
(except as provided in subparagraph (ii) below) shall be made on a
fair and equitable basis, in light of the circumstances and the
objectives to be achieved, giving consideration to previous work
history, job experience and qualifications, without regard to whether
employment was with WPL or its Subsidiaries, IES or its Subsidiaries,
or Interstate or its Subsidiaries, and any employees whose employment
is terminated or jobs are eliminated by the Company or any of its
Subsidiaries during such period shall be entitled to participate on a
fair and equitable basis in the job opportunity and employment
placement programs offered by the Company or any of its Subsidiaries.
Any workforce reductions carried out following the Effective Time by
the Company and its Subsidiaries shall be done in accordance with all
applicable collective bargaining agreements, and all laws and
regulations governing the employment relationship and termination
thereof including, without limitation, the Worker Adjustment and
Retraining Notification Act and regulations promulgated thereunder,
and any comparable state or local law.
(ii) During the three-year period ending on the third
anniversary of the Closing Date, the overall employment levels of the
Company in the greater Dubuque area as measured against such levels
as of the Closing Date will not fall (for any reason whatsoever,
including attrition of all types) below the following levels,
(A) prior to the first anniversary of the Closing
Date, 90%,
(B) prior to the second anniversary of the Closing
Date, 75%, and
(C) prior to the third anniversary of the Closing
Date, 60%.
Section 8.10 Employee Benefit Plans. Subject to Section 7.10,
each of the WPL Benefit Plans, the IES Benefit Plans and the Interstate
Benefit Plans in effect at the date hereof shall be maintained in effect
with respect to the employees or former employees of WPL and any of its
Subsidiaries, IES and any of its Subsidiaries, and Interstate and any of
its Subsidiaries, respectively, who are covered by any such Benefit Plan
immediately prior to the Closing Date (the "Affiliated Employees") until
the Company otherwise determines after the Effective Time; provided,
however, that nothing herein contained shall limit any reserved right
contained in any such WPL Benefit Plan, IES Benefit Plan or Interstate
Benefit Plan, to amend, modify, suspend, revoke or terminate any such
plan; provided, further, however, that the Company or its Subsidiaries
shall provide to the Affiliated Employees for a period of not less than
one year following the Effective Time benefits, other than with respect to
plans referred to in Section 8.11, which are no less favorable in the
aggregate than those provided under the WPL Benefit Plans, the IES Benefit
Plans or the Interstate Benefit Plans, as the case may be. Without
limitation of the foregoing, each participant of any such WPL Benefit
Plan, IES Benefit Plan or Interstate Benefit Plan shall receive credit for
purposes of eligibility to participate, vesting, benefit accrual and
eligibility to receive benefits under a benefit plan of the Company or any
of its Subsidiaries or Affiliates for service credited for the
corresponding purpose under such benefit plan; provided, however, that
such crediting of service shall not operate to duplicate any benefit to
any such participant or the funding for any such benefit. Any person
hired by the Company or any of its Subsidiaries after the Closing Date who
was not employed by any party hereto or its Subsidiaries immediately prior
to the Closing Date shall be eligible to participate in such benefit plans
maintained, or contributed to, by the Company or the Subsidiary, division
or operation by which such person is employed, provided that such person
meets the eligibility requirements of the applicable plan.
Section 8.11 Stock Option and Other Stock Plans.
(a) Amendment of Stock Plans and Agreements. Prior to the
Effective Time, IES shall amend its Stock Plan (as hereinafter defined)
and each underlying award agreement to provide that (i) each outstanding
option to purchase shares of IES Common Stock (a "IES Stock Option"),
along with any tandem stock appreciation right, shall constitute an option
to acquire shares of WPL Common Stock, on the same terms and conditions as
were applicable under such IES Stock Option, based on the same number of
shares of WPL Common Stock as the holder of such IES Stock Option would
have been entitled to receive pursuant to the Merger in accordance with
Article II had such holder exercised such option in full immediately prior
to the Effective Time; provided, however, that the number of shares, the
option price, and the terms and conditions of exercise of such option,
shall be determined in a manner that preserves both (A) the aggregate gain
(or loss) on the IES Stock Option immediately prior to the Effective Time
and (B) the ratio of the exercise price per share of the IES Stock to the
fair market value (determined immediately prior to Effective Time) per
share subject to such option; and provided, further, that in the case of
any option to which Section 421 of the Code applies by reason of its
qualification under any of Sections 422-424 of the Code, the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to
comply with Section 424(a) of the Code; and (ii) each other outstanding
award under the IES Stock Plan (the "IES Stock Awards") shall constitute
an award based upon the same number of shares of WPL Common Stock as the
holder of such IES Stock Award would have been entitled to receive
pursuant to the Merger in accordance with Article II had such holder been
the absolute owner, immediately before the Effective Time, of the shares
of IES Common Stock on which such IES Stock Award is based, and otherwise
on the same terms and conditions as governed by such IES Stock Award
immediately before the Effective Time. At the Effective Time, the Company
shall assume each stock award agreement relating to the IES Stock Plan, as
amended as previously provided. As soon as practicable after the
Effective Time, the Company shall deliver to the holders of IES Stock
Options and IES Stock Awards appropriate notices setting forth such
holders' rights with respect to such options and awards after the
Effective Time and each underlying stock award agreement, each as assumed
by the Company.
(b) Company Action. After the Effective Time, with respect to
the IES Stock Plan, and any other plans under which the delivery of WPL
Common Stock is required upon payment of benefits, grant of awards or
exercise of options (the "Stock Plans"), the Company shall take all
corporate action necessary or appropriate to
(i) obtain shareholder approval with respect to such Stock
Plan to the extent such approval is required for purposes of the Code
or other applicable law, or to enable such Stock Plan to comply with
Rule 16b-3 promulgated under the Exchange Act,
(ii) reserve for issuance under such plan or otherwise
provide a sufficient number of shares of WPL Common Stock for
delivery upon payment of benefits, grant of awards or exercise of
options under such Stock Plan, and
(iii) as soon as practicable after the Effective Time, file
registration statements on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the
shares of WPL Common Stock subject to such Stock Plan to the extent
such registration statement is required under applicable law, and the
Company shall use its best efforts to maintain the effectiveness of
such registration statements (and maintain the current status of the
prospectuses contained therein) for so long as such benefits and
grants remain payable and such options remain outstanding.
With respect to those individuals who subsequent to the Merger will be
subject to the reporting requirements under Section 16(a) of the Exchange
Act, the Company shall administer the Stock Plans, where applicable, in a
manner that complies with Rule 16b-3 promulgated under the Exchange Act.
Section 8.12 No Solicitations.
(a) No party hereto shall, and each such party shall use its
best efforts to cause its Subsidiaries not to, permit any of its
Representatives, directly or indirectly initiate, solicit or encourage, or
take any action to facilitate the making of any offer or proposal which
constitutes or is reasonably likely to lead to, any Business Combination
Proposal (as hereinafter defined), or, in the event of an unsolicited
Business Combination Proposal, except to the extent required by their
fiduciary duties under applicable law if so advised in a written opinion
of outside counsel, engage in negotiations or provide any information or
data to any person relating to any Business Combination Proposal.
(b) Each party hereto shall notify the other parties orally and
in writing of any such inquiries, offers or proposals (including, without
limitation, the terms and conditions of any such proposal and the identity
of the person making it), within 24 hours of the receipt thereof, shall
keep the other parties informed of the status and details of any such
inquiry, offer or proposal, and shall give the other parties five days'
advance notice of any agreement to be entered into with or any information
to be supplied to any person making such inquiry, offer or proposal. Each
party hereto shall immediately cease and cause to be terminated all
existing discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Business Combination Proposal.
(c) As used in this Section 8.12, "Business Combination
Proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving any party to this
Agreement or any of its material Subsidiaries, or any proposal or offer
(in each case, whether or not in writing and whether or not delivered to
the shareholders of a party generally) to acquire in any manner, directly
or indirectly, a substantial equity interest in or a substantial portion
of the assets of any party to this Agreement or any of its material
Subsidiaries, other than pursuant to the transactions contemplated by this
Agreement.
(d) Nothing contained herein shall prohibit a party from taking
and disclosing to its shareholders a position contemplated by Rule
14e-2(a) under the Exchange Act with respect to a Business Combination
Proposal made by means of a tender offer.
Section 8.13 Company Board of Directors.
(a) WPL's, IES's and Interstate's respective Boards of
Directors will take such action as may be necessary to cause the number of
directors comprising the full Board of Directors of the Company at the
Effective Time to be fifteen (15) persons. The directors shall be divided
into three classes (hereafter referred to as "Class I," "Class II" and
"Class III") of five directors each. Class I directors shall be appointed
for a term expiring at the first annual meeting of shareholders of the
Company following the Effective Time, Class II directors shall be
appointed for a term expiring at the second annual meeting of shareholders
of the Company following the Effective Time, and Class III directors shall
be appointed for a term expiring at the third annual meeting of
shareholders of the Company following the Effective Time, and in each case
until their respective successors have been duly elected and qualified.
Of the directors comprising Class I, two shall be designated by each of
IES and WPL and one shall be designated by Interstate prior to the
Effective Time. Of the directors comprising Class II, two shall be
designated by each of IES and WPL, and one shall be designated by
Interstate prior to the Effective Time. Class III directors shall consist
of Lee Liu ("Mr. Liu"), Mr. Davis and Mr. Stoppelmoor as well as two
additional directors, one director designated by each of IES and WPL prior
to the Effective Time. Directors designated by IES, WPL and Interstate
(including their successors) are hereinafter sometimes referred to as the
"IES Directors," "WPL Directors" and "Interstate Directors," respectively.
Notwithstanding the foregoing, if, prior to the Effective Time, any of
such designees shall decline or be unable to serve, the respective party
which designated such person shall designate another person to serve in
such person's stead. In addition, subject to the limitations set forth in
Section 8.13(b), for a period commencing as of the Effective Time and
expiring on the date of the third annual meeting of shareholders of the
Company following the Effective Time, the IES, WPL and Interstate
Directors (each as a separate group) shall be entitled to nominate those
persons who will be eligible to be appointed, elected or re-elected as
IES, WPL and Interstate Directors, respectively. For purposes of this
Agreement, Messrs. Liu, Davis and Stoppelmoor shall be deemed to have been
designated by IES, WPL and Interstate, respectively. WPL's, IES's and
Interstate's respective Boards of Directors will also take such action as
may be necessary to cause the Nominating, Audit and Compensation
Committees of the Board of Directors of the Company at the Effective Time
to consist proportionally (to the extent reasonably practicable) of
designees of each of WPL, IES and Interstate.
(b) For a period of five years following the Effective Time, no
person who is an executive officer or employee of the Company or any of
its Subsidiaries shall be eligible to serve as a director of the Company,
except for Messrs. Liu, Davis and Stoppelmoor; provided, however, that if
Mr. Davis is not then serving as Chief Executive Officer of the Company,
the individual serving in such capacity shall be eligible to serve as a
director of the Company.
(c) Meetings of the Board of Directors of the Company shall be
reasonably rotated among the WPL, IES and Interstate cities for so long as
separate utility headquarters exist in those cities.
Section 8.14 Company Officers. At the Effective Time, pursuant
to the terms hereof and of the employment contracts referred to in Section
8.15:
(a) Mr. Liu shall hold the position of Chairman of the Board of
Directors and shall be entitled to serve in such capacity for a period of
two years from the Effective Time, after which time he will retire as
Chairman of the Board of Directors of the Company but he shall continue to
be eligible to serve as a director.
(b) Mr. Davis shall hold the positions of Chief Executive
Officer and President for a period of at least five years from the
Effective Time. When Mr. Liu no longer serves as Chairman of the Board of
Directors, Mr. Davis shall be entitled to continue to serve in his
capacity as Chief Executive Officer and President, and shall also serve as
Chairman of the Board of Directors for at least the remainder of the five
year term specified above. Subject to the five-year term specified above,
Mr. Davis shall be entitled to serve in all of the above-referenced
capacities until his successor is elected or appointed and shall have
qualified in accordance with the WBCL and the Restated Articles of
Incorporation and By-laws of the Company (as the same shall be amended
pursuant to Section 8.19). In addition, Mr. Davis shall hold the
positions of Chief Executive Officer of each of Utilities, WP&LC,
Interstate and the Nonregulated Company (as hereinafter defined), and
shall be entitled to serve in such capacities for a period of three years
from the Effective Time and until his successor is duly elected or
appointed and qualified in accordance with applicable charter documents
and law.
(c) Mr. Stoppelmoor shall hold the position of Vice Chairman of
the Board of Directors of the Company and shall be entitled to serve in
such capacity for a period of two years after the Effective Time, after
which time he shall retire as Vice Chairman, but he shall continue to be
eligible to serve as a director.
(d) Mr. Michael R. Chase ("Mr. Chase") shall hold the position
of President of Interstate and shall be entitled to serve in such capacity
for a period of at least three years after the Effective Time.
(e) Mr. Blake O. Fisher ("Mr. Fisher") shall hold the position
of President of Utilities and shall be entitled to serve in such capacity
for a period of time subject to the discretion of its Chief Executive
Officer. After such time as Mr. Fisher ceases to be President of
Utilities, Mr. Fisher shall assume responsibility for the Nonregulated
Company, reporting to Mr. Davis. In addition, Mr. Fisher shall be elected
to the positions of Executive Vice President and Chief Financial Officer
of the Company as of the Effective Time and shall be entitled to serve in
such capacities until his successor is duly elected or appointed and
qualified in accordance with the WBCL and the Restated Articles of
Incorporation and By-laws of the Company (as the same shall be amended
pursuant to Section 8.19).
(f) Mr. Lance W. Ahearn ("Mr. Ahearn") shall be appointed to
the position of President and Chief Operating Officer of the Nonregulated
Company as of the Effective Time.
(g) Subject to Section 8.14(h), if any of the foregoing persons
is unable or unwilling to hold such offices for the periods set forth
above, his successor shall be selected by the Board of Directors of the
Company in accordance with its By-laws.
(h) For a period of five years following the Effective Time, a
majority vote of the WPL Directors or the successors thereto shall, in
addition to any other vote required by law, be required to appoint or
elect any person other than Mr. Davis as Chief Executive Officer of the
Company.
Section 8.15 Employment Contracts. WPL shall, as of or prior
to the Effective Time, enter into employment contracts with each of
Messrs. Liu, Davis, Stoppelmoor, Chase and Fisher in the forms set forth
in Exhibit 8.15.1, 8.15.2, 8.15.3, 8.15.4 and 8.15.5, respectively.
Section 8.16 Post-Merger Operations. Following the Effective
Time, the Company shall conduct its operations or take such action in
accordance with the following:
(a) the Company shall maintain its headquarters in Madison,
Wisconsin, but this location will be evaluated over time as future
business needs dictate.
(b) during the three-year period following the Effective Time,
Utilities, WP&LC, and Interstate shall maintain their separate corporate
existences and shall maintain their headquarters in their present
locations of Cedar Rapids, Iowa, Madison, Wisconsin and Dubuque, Iowa,
respectively;
(c) immediately following the Effective Time, the Company shall
cause the IES nonregulated holding company to merge with and into the WPL
nonregulated holding company, with the WPL nonregulated holding company
being the surviving corporation (the combined company is herein referred
to as the "Nonregulated Company"); and
(d) during the five-year period following the Effective Time or
for such shorter period as the following entities maintain their separate
corporate existences, the Company shall use its best efforts to insure
that the composition of the Board of Directors of each of Utilities, WP&LC
and Interstate and Nonregulated Company will be identical to the
composition of the Board of Directors of the Company.
Section 8.17 Expenses. Subject to Section 10.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
except that those expenses incurred in connection with printing the Joint
Proxy/Registration Statement, as well as the filing fee relating thereto,
shall be shared by the parties in the following proportions: 43% by WPL,
14% by Interstate and 43% by IES.
Section 8.18 Further Assurances. Each party will, and will
cause its Subsidiaries and, will use its best efforts to cause its Joint
Ventures to, execute such further documents and instruments and take such
further actions as may reasonably be requested by the terms hereof. The
parties expressly acknowledge and agree that, although it is their current
intention to effect a business combination among themselves in the form
contemplated by this Agreement, it may be preferable to effectuate such a
business combination by means of an alternative structure in light of the
conditions set forth in Section 9.1(e), Section 9.2(e), Section 9.2(f),
Section 9.3(e), Section 9.3(f), Section 9.4(e) and Section 9.4(f).
Accordingly, if the only conditions to the parties' obligations to
consummate the Merger which are not satisfied or waived are receipt of any
one or more of the WPL Required Consents, WPL Required Statutory
Approvals, IES Required Consents, IES Required Statutory Approvals,
Interstate Required Consents, Interstate Required Statutory Approvals or
the opinions referred to in Sections 9.2(e), 9.3(e), and 9.4(e), and the
adoption of an alternative structure (that otherwise substantially
preserves for WPL, IES and Interstate the economic and other material
benefits of the Merger) would result in such conditions being satisfied or
waived, then the parties shall use their respective best efforts to effect
a business combination among themselves by means of a mutually agreed upon
structure other than the Merger that so preserves such benefits; provided
that, prior to closing any such restructured transaction, all material
third party and Governmental Authority declarations, filings,
registrations, notices, authorizations, consents or approvals necessary to
effect such alternative business combination shall have been obtained and
all other conditions to the parties' obligations to consummate the Merger,
as applied to such alternative business combination, shall have been
satisfied or waived.
Section 8.19 Charter and By-law Amendments. Prior to the
Closing, WPL shall cause its Articles of Incorporation and By-laws to be
amended as contemplated in Section 8.19 of the WPL Disclosure Schedule.
Section 8.20 IES Rights Agreement. Prior to or at the time of
the Closing, IES shall amend the IES Rights Agreement to cause it to
terminate effective as of the Effective Time.
ARTICLE IX
CONDITIONS
Section 9.1 Conditions to each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions, except, to the extent permitted by applicable
law, that such conditions may be waived in writing pursuant to Section
10.5 by the joint action of the parties hereto:
(a) Shareholder Approvals. The IES Shareholders' Approval, the
Interstate Shareholders' Approval and the WPL Shareholders' Approval shall
have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any Federal or state
court preventing consummation of the Merger (including either or both of
the IES Merger and the Interstate Merger) shall have been issued and be
continuing in effect, and the Merger (including either or both of the IES
Merger and the Interstate Merger) and the other transactions contemplated
hereby shall not have been prohibited under any applicable Federal or
state law or regulation.
(c) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities
Act, and no stop order suspending such effectiveness shall have been
issued and remain in effect.
(d) Listing of Shares. The shares of WPL Common Stock issuable
in the Merger pursuant to Article II shall have been approved for listing
on the NYSE subject only to official notice of issuance.
(e) Statutory Approvals.
(i) The WPL Required Statutory Approvals, the IES Required
Statutory Approvals and the Interstate Required Statutory Approvals
shall have been obtained at or prior to the Effective Time, such
approvals shall have become Final Orders (as hereinafter defined) and
such Final Orders shall not impose terms or conditions which, in the
aggregate have, or insofar as reasonably can be foreseen, would have,
a material adverse effect on the business, assets, financial
condition or results of operations or prospects of the Company or
which would be materially inconsistent with the agreements of the
parties contained herein.
(ii) As used in this Agreement, "Final Order" means action
by the relevant regulatory authority which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, with respect to
which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which
all conditions to the consummation of such transactions prescribed by
law, regulation or order have been satisfied.
(f) Pooling. Each of WPL, IES and Interstate shall have
received a letter of its independent public accountants, dated the Closing
Date, in form and substance reasonably satisfactory, in each case, to WPL,
IES and Interstate, stating that the transactions effected pursuant to
this Agreement will qualify as a pooling of interests transaction pursuant
to GAAP and applicable SEC regulations.
Section 9.2 Further Conditions to Obligation of IES to Effect
the IES Merger. The obligation of IES to effect the IES Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, except as may be waived by IES in writing
pursuant to Section 10.5:
(a) Performance of Obligations. WPL (and/or its appropriate
Subsidiaries) and Interstate (and/or its appropriate Subsidiaries) will
have performed their agreements and covenants contained in Sections
7.3 and 7.4 and will have performed in all material respects their other
agreements and covenants contained in or contemplated by this Agreement,
and the WPL/IES and Interstate/IES Stock Option Agreements required to be
performed by each of them at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of WPL and Interstate set forth in this Agreement shall be true
and correct (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific
date or time other than the date hereof or the Closing Date which need
only be true and correct as of such date or time) except in each of cases
(i) and (ii) for such failures of representations or warranties to be true
and correct (without regard to any materiality qualifications contained
therein) which, individually or in the aggregate do not, and insofar as
reasonably can be foreseen, would not, result in a WPL Material Adverse
Effect or an Interstate Material Adverse Effect, as the case may be.
(c) Closing Certificates. IES shall have received a
certificate signed by the chief financial officer of each of WPL and
Interstate, dated the Closing Date, to the effect that, to such officer's
knowledge, the conditions set forth in Section 9.2(a) and Section 9.2(b)
with respect to WPL or Interstate, as the case may be, have been
satisfied.
(d) Material Adverse Effect. No WPL Material Adverse Effect or
Interstate Material Adverse Effect shall have occurred, and there shall
exist no facts or conditions (other than facts or conditions of general
applicability to electric utility companies in the region in which WPL,
IES and Interstate conduct their utility operations) which have, or
insofar as reasonably can be foreseen, would have a WPL Material Adverse
Effect or an Interstate Material Adverse Effect, as the case may be.
(e) Tax Opinions.
(i) IES shall have received an opinion of Winthrop,
Stimson, Putnam & Roberts dated as of the Closing Date, to the effect
that the IES Merger will be treated as a tax-free reorganization
under Section 368(a) of the Code, and
(ii) IES and Winthrop, Stimson, Putnam & Roberts shall
have had the opportunity to review the tax opinions of Interstate's
and WPL's special tax counsel received pursuant to Sections 9.3(e)(i)
and 9.4(e)(i), respectively, including the representations, covenants
or other matters in reliance on which the opinions are being
rendered, and shall be reasonably satisfied with the completeness and
accuracy of said opinions.
(f) Required Consents. The WPL Required Consents and the
Interstate Required Consents, the failure of which to obtain would have a
WPL Material Adverse Effect or an Interstate Material Adverse Effect,
shall have been obtained.
(g) Affiliate Agreements. WPL shall have received Affiliate
Agreements, duly executed by each Affiliate of WPL and Interstate,
substantially in the form of Exhibit 8.8(a) or 8.8(b), as provided in
Section 8.8.
Section 9.3 Further Conditions to Obligation of Interstate to
Effect the Interstate Merger. The obligation of Interstate to effect the
Interstate Merger shall be further subject to the satisfaction, on or
prior to the Closing Date, of the following conditions, except as may be
waived by Interstate in writing pursuant to Section 10.5:
(a) Performance of Obligations. IES (and/or its appropriate
Subsidiaries) and WPL (and/or its appropriate Subsidiaries) will have
performed their agreements and covenants contained in Sections 7.3 and 7.4
and will have performed in all material respects their other agreements
and covenants contained in or contemplated by this Agreement and the
IES/Interstate and WPL/Interstate Stock Option Agreement required to be
performed by each of them at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of IES and WPL set forth in this Agreement shall be true and
correct (i) on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations
and warranties that expressly speak only as of a specific date or time
other than the date hereof or the Closing Date which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for
such failures of representations or warranties to be true and correct
(without regard to any materiality qualifications contained therein)
which, individually or in the aggregate do not, and insofar as reasonably
can be foreseen, would not, result in an IES Material Adverse Effect or a
WPL Material Adverse Effect, as the case may be.
(c) Closing Certificates. Interstate shall have received a
certificate signed by the chief financial officer of each of IES and WPL,
dated the Closing Date, to the effect that, to such officer's knowledge,
the conditions set forth in Section 9.3(a) and Section 9.3(b) with respect
to WPL or IES, as the case may be, have been satisfied.
(d) Material Adverse Effect. No IES Material Adverse Effect or
WPL Material Adverse Effect shall have occurred, and there shall exist no
facts or conditions (other than facts or conditions of general
applicability to electric utility companies in the region in which WPL,
IES and Interstate conduct their utility operations) which have, or
insofar as reasonably can be foreseen, would have an IES Material Adverse
Effect or a WPL Material Adverse Effect, as the case may be.
(e) Tax Opinions.
(i) Interstate shall have received an opinion of Milbank,
Tweed, Hadley & McCloy dated as of the Closing Date, to the effect
that the Interstate Merger will be treated as a tax-free
reorganization under Section 368(a) of the Code; and
(ii) Interstate and Milbank, Tweed, Hadley & McCloy shall
have had the opportunity to review the tax opinions of IES's and
WPL's special tax counsel received pursuant to Sections 9.2(e)(i) and
9.4(e)(i), respectively, including the representations, covenants or
other matters in reliance on which the opinions are being rendered,
and shall be reasonably satisfied with the completeness and accuracy
of said opinions.
(f) Required Consents. The IES Required Consents and the WPL
Required Consents, the failure of which to obtain would have an IES
Material Adverse Effect or a WPL Material Adverse Effect, shall have been
obtained.
(g) Affiliate Agreements. WPL shall have received Affiliate
Agreements, duly executed by each Affiliate of IES and WPL, substantially
in the form of Exhibit 8.8(a) and 8.8(b), as provided in Section 8.8.
Section 9.4 Further Conditions to Obligation of WPL to Effect
the Merger. The obligation of WPL to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by WPL in writing pursuant
to Section 10.5:
(a) Performance of Obligations. IES (and/or its appropriate
Subsidiaries) and Interstate (and/or its appropriate Subsidiaries) will
have performed their agreements and covenants contained in Sections
7.3 and 7.4 and will have performed in all material respects their other
agreements and covenants contained in or contemplated by this Agreement
and the IES/WPL and Interstate/WPL Stock Option Agreements required to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of IES and Interstate set forth in this Agreement shall be true
and correct (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific
date or time other than the date hereof or the Closing Date which need
only be true and correct as of such date or time) except in each of cases
(i) and (ii) for such failures of representations or warranties to be true
and correct (without regard to any materiality qualifications contained
therein) which, individually or in the aggregate do not, and insofar as
reasonably can be foreseen, would not, result in an IES Material Adverse
Effect or an Interstate Material Adverse Effect, as the case may be.
(c) Closing Certificates. WPL shall have received a
certificate signed by the chief financial officer of each of IES and
Interstate, dated the Closing Date, to the effect that, to such officer's
knowledge, the conditions set forth in Section 9.4(a) and Section 9.4(b)
with respect to IES or Interstate, as the case may be, have been
satisfied.
(d) Material Adverse Effect. No IES Material Adverse Effect or
Interstate Material Adverse Effect shall have occurred, and there shall
exist no facts or conditions (other than facts or conditions of general
applicability to electric utility companies in the region in which WPL,
IES and Interstate conduct their utility operations) which have, or
insofar as reasonably can be foreseen, would have an IES Material Adverse
Effect or an Interstate Material Adverse Effect, as the case may be.
(e) Tax Opinions.
(i) WPL shall have received an opinion of Foley & Lardner
dated as of the Closing Date, to the effect that the Merger will be
treated as a tax-free reorganization under Section 368(a) of the
Code; and
(ii) WPL and Foley & Lardner shall have had the
opportunity to review the tax opinions of IES's and Interstate's
special tax counsel, as set forth in Sections 9.2(e)(i) and
9.3(e)(i), respectively, including the representations, covenants or
other matters in reliance on which the opinions are being rendered,
and shall be reasonably satisfied with the completeness and accuracy
of said opinions.
(f) Required Consents. The IES Required Consents and the
Interstate Required Consents, the failure of which to obtain would have an
IES Material Adverse Effect or an Interstate Material Adverse Effect,
shall have been obtained.
(g) Affiliate Agreements. WPL shall have received Affiliate
Agreements, duly executed by each Affiliate of IES and Interstate,
substantially in the form of Exhibit 8.8(b), as provided in Section 8.8.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date, whether before or after approval by
the shareholders of the respective parties hereto contemplated by this
Agreement:
(a) by mutual written consent of WPL, IES and Interstate;
(b) by any party hereto, by written notice to the other
parties, if the Effective Time shall not have occurred on or before May
10, 1997 (the "Initial Termination Date"); provided, however, that the
right to terminate the Agreement under this Section 10.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Initial Termination Date; and
provided, further, that if on the Initial Termination Date the conditions
to the Closing set forth in Sections 9.1(e), 9.2(f), 9.3(f) and/or 9.4(f)
shall not have been fulfilled but all other conditions to the Closing
shall be fulfilled or shall be capable of being fulfilled, then the
Initial Termination Date shall be extended to May 10, 1998;
(c) by any party hereto, by written notice to the other
parties, if
(i) the WPL Shareholders' Approval shall not have been
obtained at a duly held WPL Special Meeting, including any
adjournments thereof, or
(ii) the IES Shareholders' Approval shall not have been
obtained at a duly held IES Special Meeting, including any
adjournments thereof, or
(iii) the Interstate Shareholders' Approval shall not have
been obtained at a duly held Interstate Special Meeting, including
any adjournments thereof;
(d) by any party hereto, if any state or Federal law, order,
rule or regulation is adopted or issued, which has the effect, as
supported by the written opinion of outside counsel for such party, of
prohibiting the Merger (including either or both the IES Merger and the
Interstate Merger), or by any party hereto if any court of competent
jurisdiction in the United States or any State shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Merger (including either or both the IES Merger and the
Interstate Merger), and such order, judgment or decree shall have become
final and nonappealable;
(e) by IES, upon two days' prior notice to WPL and Interstate,
if, as a result of a tender offer by a party other than WPL or Interstate
or any of their respective Affiliates or any written offer or proposal
with respect to a merger, sale of a material portion of its assets or
other business combination (each, a "Business Combination") by a party
other than WPL or Interstate or any of their respective Affiliates, the
Board of Directors of IES determines in good faith that its fiduciary
obligations under applicable law require that such tender offer or other
written offer or proposal be accepted; provided, however, that
(i) the Board of Directors of IES shall have been advised
in a written opinion of outside counsel that notwithstanding a
binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of its applicable
fiduciary duties, and notwithstanding all concessions which may be
offered by WPL and Interstate in negotiations entered into pursuant
to clause (ii) below, such fiduciary duties would require the
directors to reconsider such commitment as a result of such tender
offer or other written offer or proposal; and
(ii) prior to any such termination, IES shall, and shall
cause its respective financial and legal advisors to, negotiate with
WPL and Interstate to make such adjustments in the terms and
conditions of this Agreement as would enable IES to proceed with the
transactions contemplated herein on such adjusted terms;
(f) by Interstate, upon two days' prior notice to WPL and IES,
if, as a result of a tender offer by a party other than WPL or IES or any
of their respective Affiliates or any written offer or proposal with
respect to a Business Combination by a party other than WPL or IES or any
of their respective Affiliates, the Board of Directors of Interstate
determines in good faith that its fiduciary obligations under applicable
law require that such tender offer or other written offer or proposal be
accepted; provided, however, that
(i) the Board of Directors of Interstate shall have been
advised in a written opinion of outside counsel that notwithstanding
a binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of its applicable
fiduciary duties, and notwithstanding all concessions which may be
offered by WPL and IES in negotiations entered into pursuant to
clause (ii) below, such fiduciary duties would require the directors
to reconsider such commitment as a result of such tender offer or
other written offer or proposal; and
(ii) prior to any such termination, Interstate shall, and
shall cause its respective financial and legal advisors to, negotiate
with WPL and IES to make such adjustments in the terms and conditions
of this Agreement as would enable Interstate to proceed with the
transactions contemplated herein on such adjusted terms;
(g) by WPL, upon two days' prior notice to IES and Interstate,
if, as a result of a tender offer by a party other than IES or Interstate
or any of their respective Affiliates or any written offer or proposal
with respect to a Business Combination by a party other than IES or
Interstate or any of their respective Affiliates, the Board of Directors
of WPL determines in good faith that its fiduciary obligations under
applicable law require that such tender offer or other written offer or
proposal be accepted; provided, however, that
(i) the Board of Directors of WPL shall have been advised
in a written opinion of outside counsel that notwithstanding a
binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of its applicable
fiduciary duties, and notwithstanding all concessions which may be
offered by IES and Interstate in negotiations entered into pursuant
to clause (ii) below, such fiduciary duties would require the
directors to reconsider such commitment as a result of such tender
offer or other written offer or proposal; and
(ii) prior to any such termination, WPL shall, and shall
cause its respective financial and legal advisors to, negotiate with
IES and Interstate to make such adjustments in the terms and
conditions of this Agreement as would enable WPL to proceed with the
transactions contemplated herein on such adjusted terms;
(h) by IES, by written notice to WPL and Interstate, if
(i) there exists any breach or breaches of the
representations and warranties of WPL or Interstate made herein or in
any of the Stock Option Agreements pursuant to which either of them
is a grantor of options, which breaches, individually or in the
aggregate have or, insofar as reasonably can be foreseen, would have,
a WPL Material Adverse Effect or an Interstate Material Adverse
Effect, and such breaches shall not have been remedied within 20 days
after receipt by WPL or Interstate, as the case may be, of notice in
writing from IES, specifying the nature of such breaches and
requesting that they be remedied;
(ii) WPL or Interstate (and/or its appropriate Subsidiaries)
shall not have performed and complied with its agreements and
covenants contained in Sections 7.3 and 7.4 or shall have failed to
perform and comply with, in all material respects, their other
agreements and covenants hereunder or under the Stock Option
Agreements and such failure to perform or comply shall not have been
remedied within 20 days after receipt by WPL or Interstate, as the
case may be, of notice in writing from IES, specifying the nature of
such failure and requesting that it be remedied; or
(iii) the Board of Directors of WPL or Interstate or any
committee thereof:
(A) shall withdraw or modify in any manner adverse to
IES its approval or recommendation of this Agreement, or the IES
Merger or the Interstate Merger,
(B) shall fail to reaffirm such approval or
recommendation upon IES's request,
(C) shall approve or recommend any Business
Combination involving WPL or Interstate other than the Merger
involving WPL and Interstate or any tender offer for shares of
capital stock of WPL or Interstate, in each case, by or
involving a party other than IES or any of its Affiliates or
(D) shall resolve to take any of the actions
specified in clause (A), (B) or (C);
(i) by Interstate, by written notice to WPL and IES, if
(i) there exists any breach or breaches of the
representations and warranties of WPL or IES made herein or in any of
the Stock Option Agreements pursuant to which either of them is a
grantor of options, which breaches, individually or in the aggregate
have, or insofar as reasonably can be foreseen, would have, a WPL
Material Adverse Effect or an IES Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by
WPL or IES, as the case may be, of notice in writing from Interstate,
specifying the nature of such breaches and requesting that they be
remedied;
(ii) WPL or IES (and/or its appropriate Subsidiaries) shall
not have performed and complied with its agreements and covenants
contained in Sections 7.3 and 7.4 or shall have failed to perform and
comply with, in all material respects, its other agreements and
covenants hereunder or under the Stock Option Agreements and such
failure to perform or comply shall not have been remedied within 20
days after receipt by WPL or IES, as the case may be, of notice in
writing from Interstate, specifying the nature of such failure and
requesting that it be remedied; or
(iii) the Board of Directors of WPL or IES or any committee
thereof:
(A) shall withdraw or modify in any manner adverse to
Interstate its approval or recommendation of this Agreement, the
IES Merger or the Interstate Merger,
(B) shall fail to reaffirm such approval or
recommendation upon Interstate's request,
(C) shall approve or recommend any Business
Combination involving WPL or IES other than the Merger involving
WPL and IES or any tender offer for shares of capital stock of
WPL or IES, in each case, by or involving a party other than
Interstate or any of its Affiliates or
(D) shall resolve to take any of the actions
specified in clause (A), (B) or (C); or
(j) by WPL, by written notice to Interstate and IES, if
(i) there exists any breach or breaches of the
representations and warranties of Interstate or IES made herein or in
any of the Stock Option Agreements pursuant to which either of them
is a grantor of options, which breaches, individually or in the
aggregate have or, insofar as reasonably can be foreseen, would have,
an Interstate Material Adverse Effect or an IES Material Adverse
Effect, and such breaches shall not have been remedied within 20 days
after receipt by Interstate or IES, as the case may be, of notice in
writing from WPL, specifying the nature of such breaches and
requesting that they be remedied;
(ii) Interstate or IES (and/or its appropriate
Subsidiaries) shall not have performed and complied with its
agreements and covenants contained in Sections 7.3 and 7.4 or shall
have failed to perform and comply with, in all material respects, its
other agreements and covenants hereunder or under the Stock Option
Agreements, and such failure to perform or comply shall not have been
remedied within 20 days after receipt by Interstate or IES, as the
case may be, of notice in writing from WPL, specifying the nature of
such failure and requesting that it be remedied; and
(iii) the Board of Directors of Interstate or IES or any
committee thereof:
(A) shall withdraw or modify in any manner adverse to
WPL its approval or recommendation of this Agreement, or the IES
Merger or the Interstate Merger,
(B) shall fail to reaffirm such approval or
recommendation upon WPL's request,
(C) shall approve or recommend any Business
Combination involving Interstate or IES other than the Merger
involving Interstate and IES or any tender offer for the shares
of capital stock of Interstate or IES, in each case by or
involving a party other than WPL or any of its Affiliates or
(D) shall resolve to take any of the actions
specified in clause (A), (B) or (C).
Section 10.2 Effect of Termination. Subject to Section
11.1(b), in the event of termination of this Agreement by WPL, IES or
Interstate pursuant to Section 10.1 there shall be no liability on the
part of either WPL, IES or Interstate or their respective officers or
directors hereunder, except that Section 8.1(b), Section 8.17, Section
10.3, Section 11.2 and Section 11.8 shall survive the termination.
Section 10.3 Termination Fee; Expenses.
(a) Termination Fee Upon Breach or Withdrawal of Approval. If
this Agreement is terminated at such time that this Agreement is
terminable pursuant to one or two (but not three) of (x) Section
10.1(h)(i) or (ii), (y) Section 10.1(i)(i) or (ii) or (z) Section
10.1(j)(i) or (ii), then:
(i) each breaching party shall promptly (but no later than
five business days after receipt of notice from the non-breaching
party or parties (other than AMW)) pay to the non-breaching party or
parties in cash such breaching party's Participation Percentage (as
hereinafter defined) of an amount equal to all documented out-of-
pocket expenses and fees incurred by the non-breaching party or
parties (including, without limitation, fees and expenses payable to
all legal, accounting, financial, public relations and other
professional advisors arising out of, in connection with or related
to the Merger or the transactions contemplated by this Agreement) not
in excess of $5 million for any non-breaching party; provided,
however, that, if this Agreement is terminated by a party as a result
of a willful breach by any other party, each non-breaching party may
pursue any remedies available to it at law or in equity and shall, in
addition to its documented out-of-pocket expenses and fees (which
shall be paid as specified above and shall not be limited to $5
million for any non-breaching party), be entitled to retain such
additional amounts as such non-breaching party may be entitled to
receive at law or in equity; and
(ii) if
(A) at the time of a breaching party's willful breach
of this Agreement, there shall have been a third party tender
offer for shares of, or a third party offer or proposal with
respect to a Business Combination involving, such party or any
of its Affiliates which at the time of such termination shall
not have been rejected by such party and its board of directors
or withdrawn by the third party, and
(B) within two and one-half years of any termination
by a non-breaching party, the breaching party or an Affiliate
thereof becomes a Subsidiary of such offeror or a Subsidiary of
an Affiliate of such offeror or accepts a written offer to
consummate or consummates a Business Combination with such
offeror or an Affiliate thereof,
then such breaching party (jointly and severally with its
Affiliates), at the closing (and as a condition to the closing) of
such breaching party becoming such a Subsidiary or of such Business
Combination, will pay to each non-breaching party (other than AMW) in
cash such non-breaching party's Participation Percentage of an
additional aggregate fee equal to $25 million, if WPL is the
breaching party, $25 million, if IES is the breaching party, or $12.5
million, if Interstate is the breaching party.
(b) Additional Termination Fee. If
(i) this Agreement
(A) is terminated by any party pursuant to Section
10.1(e), (f) or (g),
(B) is terminated following a failure of the
shareholders of any one of the necessary parties to grant the
necessary approvals described in Section 4.13, Section 5.13 and
Section 6.13 or
(C) is terminated as a result of any party's material
breach of Section 8.4, and
(ii) at the time of such termination or prior to the meeting
of such party's shareholders there shall have been a third-party
tender offer for shares of, or a third-party offer or proposal with
respect to a Business Combination involving, such party or any of its
Affiliates which at the time of such termination or of the meeting of
such party's shareholders shall not have been (A) rejected by such
party and its board of directors or (B) withdrawn by the third party,
and
(iii) within two and one-half years of any such termination
described in clause (i) above, a Target Party (as defined herein)
becomes a Subsidiary of such offeror or a Subsidiary of an Affiliate
of such offeror or accepts a written offer to consummate or
consummates a Business Combination with such offeror or an Affiliate
thereof,
then such Target Party (jointly and severally with its Affiliates),
at the closing (and as a condition to the closing) of such Target
Party becoming such a Subsidiary or of such Business Combination,
will pay to each other party (other than AMW) in cash such other
party's Participation Percentage of an aggregate termination fee
equal to $25 million, if WPL is the Target Party, $25 million, if IES
is the Target Party, or $12.5 million, if Interstate is the Target
Party, plus, in each case, the documented out-of-pocket fees and
expenses incurred by each such non-breaching party (including,
without limitation, fees and expenses payable to all legal,
accounting, financial, public relations and other professional
advisors arising out of, in connection with or related to the Merger
or the transactions contemplated by this Agreement).
(c) Second Termination Fee. If this Agreement is terminated
under circumstances that give rise to the payment of any fee pursuant to
Section 10.3(b) by any party, and thereafter, within nine (9) months of
such termination, either of the parties that was not a Target Party at the
time of such termination becomes a Target Party (a "Second Target Party")
of the same entity, or an Affiliate thereof, that caused the original
Target Party to become such, then such Second Target Party (jointly and
severally with its Affiliates), upon the signing of a definitive agreement
relating to such a Business Combination, or, if no such agreement is
signed, then at the closing (and as a condition to the closing) of such
Second Target Party becoming such a Subsidiary or of such Business
Combination, will pay to the remaining party (other than AMW) that is
neither a Target Party nor a Second Target Party (a "Non-Target Party")
(i) a termination fee in cash equal to $25 million, if WPL
is the Second Target Party, $25 million, if IES is the Second Target
Party, or $12.5 million, if Interstate is the Second Target Party,
plus, in each case, any additional documented out-of-pocket fees and
expenses incurred by the Non-Target Party (including, without
limitation, fees and expenses payable to all legal, accounting,
financial, public relations and other professional advisors arising
out of, in connection with or related to the Merger or the
transactions contemplated by this Agreement); and
(ii) the full amount of any termination fee paid to it by
the first Target Party.
(d) Expenses. The parties agree that the agreements contained
in this Section 10.3 are an integral part of the transactions contemplated
by the Agreement and constitute liquidated damages and not a penalty. If
one party fails to promptly pay to any other party any fee due hereunder,
the defaulting party shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid.
(e) Limitation on Termination Fees. Notwithstanding anything
herein to the contrary,
(i) the aggregate amount payable by WPL and its Affiliates
to IES and/or Interstate pursuant to Section 10.3(a), Section 10.3(b)
and the terms of the WPL/IES Stock Option Agreement and the
WPL/Interstate Stock Option Agreement shall not exceed $40 million,
(ii) the aggregate amount payable by IES and its Affiliates
pursuant to Section 10.3(a), Section 10.3(b) and the terms of the
IES/WPL Stock Option Agreement and the IES/Interstate Stock Option
Agreement shall not exceed $40 million, and
(iii) the aggregate amount payable by Interstate and its
Affiliates under Section 10.3(a), Section 10.3(b) and the terms of
the Interstate/WPL Stock Option Agreement and the Interstate/IES
Stock Option Agreement shall not exceed $20 million
(exclusive, in each case, of reimbursement for fees and expenses payable
pursuant to this Section 10.3). For purposes of this Section 10.3(d), the
amount payable pursuant to the terms of the Stock Option Agreements shall
be the amount paid pursuant to Section 5 and/or Section 8(a)(i) and
8(a)(ii) thereof.
(f) Certain Definitions.
(i) Participation Percentage. A party's participation
percentage ("Participation Percentage") shall be one hundred percent
(100%) if only one party is required to pay or entitled to receive
its Participation Percentage pursuant to the terms of this Section
10.3. If two parties are required to pay or entitled to receive
their respective Participation Percentages, each party's
Participation Percentage shall equal a fraction (expressed as a
percentage), the numerator of which shall be, in the case of IES or
Interstate, the number of shares of WPL Common Stock which would be
issuable (on a fully diluted basis) to such party's shareholders, or,
in the case of WPL, the number of shares of WPL Common Stock (on a
fully diluted basis) that would have been retained by its
shareholders, had the Effective Time occurred at the time this
Agreement is terminated and the denominator of which shall be, the
aggregate number of shares of WPL Common Stock that would be issuable
to or retained by (in either case on a fully diluted basis) the
shareholders of the two parties required to pay or entitled to
receive their Participation Percentages, had the Effective time
occurred at the time this Agreement is terminated.
(ii) Target Party. The term "Target Party" shall mean any
of WPL, IES or Interstate, or their respective Affiliates, that is
the subject of a tender offer or offer or proposal with respect to a
Business Combination.
Section 10.4 Amendment.
(a) This Agreement may be amended by the Boards of Directors of
the parties hereto, at any time before or after approval hereof by the
shareholders of WPL, IES and Interstate and prior to the Effective Time,
but after such approvals, no such amendment shall
(i) alter or change the amount or kind of shares, rights
or any of the proceedings of the treatment of shares under Article
II,
(ii) alter or change any of the terms and conditions of
this Agreement if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the rights of holders of
WPL, IES and Interstate Common Stock, or
(iii) alter or change any term of the Restated Articles of
Incorporation of WPL, IES or Interstate as approved by the
shareholders of WPL, IES and Interstate, respectively, except for
alterations or changes that could otherwise be adopted by the Board
of Directors of the Company, without the further approval of such
shareholders, as applicable.
(b) This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 10.5 Waiver.
(a) At any time prior to the Effective Time, the parties hereto
may
(i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto and
(iii) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable
law.
(b) Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-survival; Effect of Representations and
Warranties.
(a) All representations, warranties and agreements in this
Agreement shall not survive the Merger, except as otherwise provided in
this Agreement and except for the agreements contained in this Section
11.1 and in Article II, Section 8.5 (Director and Officer
Indemnification), Section 8.9 (Employee Agreements and Workforce Matters),
Section 8.10 (Employee Benefit Plans), Section 8.11 (Stock Option and
Other Stock Plans), Section 8.13 (Company Board of Directors), Section
8.14 (Company Officers), Section 8.15 (Employment Contracts), Section 8.16
(Post-Merger Operations), Section 8.17 (Expenses), Section 11.2 (Brokers)
and Section 11.7 (Parties in Interest).
(b) No party may assert a claim for breach of any
representation or warranty contained in this Agreement (whether by direct
claim or counterclaim) except in connection with the termination of this
Agreement pursuant to Section 10.1(h)(i), Section 10.1(i)(i), or Section
10.1(j)(i) (or pursuant to any other subsection of Section 10.1, if the
terminating party would have been entitled to terminate this Agreement
pursuant to Section 10.1(h)(i), Section 10.1(i)(i) or Section 10.1(j)(i)).
Section 11.2 Brokers.
(a) WPL represents and warrants that, except for Merrill, whose
fees have been disclosed to IES and Interstate prior to the date hereof,
no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger, or the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of WPL.
(b) IES represents and warrants that, except for Morgan, whose
fees have been disclosed to WPL and Interstate prior to the date hereof,
no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the IES Merger or
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of IES.
(c) Interstate represents and warrants that, except for
Salomon, whose fees have been disclosed to WPL and IES prior to the date
hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Interstate Merger or the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Interstate.
Section 11.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if (i) delivered
personally, (ii) sent by reputable overnight courier service,
(iii) telecopied (which is confirmed), or (iv) five days after being
mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) If to WPL, to: WPL Holdings, Inc.
222 West Washington Avenue
P.O. Box 2568
Madison, WI 53701-2568
Attention: Erroll B. Davis, Jr.
President and Chief Executive Officer
Telephone: (608) 252-3137
Telecopy: (608) 252-5059
with a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attention: Benjamin F. Garmer, III, Esq.
Telephone: (414) 297-5675
Telecopy: (414) 297-4900
(b) If to IES, to: IES Industries Inc.
IES Tower
200 First Street S.E.
Cedar Rapids, IO 52401
Attention: Stephen W. Southwick
Vice President, General Counsel and
Secretary
Telephone: (319) 398-8147
Telecopy: (319) 398-4204
with a copy to: Winthrop, Stimson, Putnam
& Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Stephen R. Rusmisel, Esq.
Telephone: (212) 858-1442
Telecopy: (212) 858-1500
(c) If to Interstate,
to: Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, IO 52004-0789
Attention: Wayne H. Stoppelmoor
Chairman of the Board
Telephone: (319) 557-2200
Telecopy: (319) 557-2202
with a copy to: Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005-1413
Attention: John T. O'Connor, Esq.
Telephone: (212) 530-5548
Telecopy: (212) 530-0283
Section 11.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein)
(a) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof other
than the Confidentiality Agreement and the Stock Option Agreements;
(b) shall not be assigned by operation of law or otherwise; and
(c) shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts executed in and to
be fully performed in such State, without giving effect to its conflicts
of law rules or principles or to any requirement as to jurisdiction or
service of process contained in Section 2708 of Title 6 of the Delaware
Code, and except to the extent the provisions of this Agreement (including
the documents or instruments referred to herein) are expressly governed by
or derive their authority from the WBCL, IBCA or the DGCL.
Section 11.5 Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
Section 11.6 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
Section 11.7 Parties in Interest.
(a) A majority of the IES Directors (or their successors)
serving on the Board of Directors of the Company who are designated by IES
pursuant to Section 8.13 (Company Board of Directors) shall be entitled to
enforce or waive compliance with the provisions of Section 8.13 during the
time such provisions are, by their specific terms, applicable and shall
also be entitled during the three-year period commencing at the Effective
Time (the "Three-Year Period") to enforce the provisions of Section 8.9
(Employee Agreements and Workforce Matters), Section 8.10 (Employee
Benefits Plans), Section 8.11 (Stock Option and Other Stock Plans),
Section 8.14(a) (Company Officers), Section 8.15 (Employment Contracts)
and Section 8.16(b) and (d) (Post-Merger Operations), and the agreements
referred to in Schedules 4.10 (Employee Matters; ERISA), 5.10 (Employee
Matters; ERISA), 6.10 (Employee Matters; ERISA) and 7.10 (Compensation
Benefits), in each instance on behalf of the IES officers, directors and
employees, as the case may be;
(b) A majority of the WPL Directors (or their successors)
serving on the Board of Directors of the Company who are designated by WPL
pursuant to Section 8.13 shall be entitled to enforce or waive compliance
with the provisions of Section 8.13 during the time such provisions are,
by their specific terms, applicable and shall also be entitled during the
five-year period following the Effective Time to enforce the provisions of
Section 8.14(b) and (h) and Section 8.16(a) and during the Three-Year
Period to enforce the provisions of Section 8.9, Section 8.10, Section
8.11 and Section 8.15, and the agreements referred to in Schedules 4.10,
5.10, 6.10 and 7.10, in each instance on behalf of WPL officers, directors
and employees, as the case may be; and
(c) A majority of the Interstate Directors (or their
successors) serving on the Board of Directors of the Company who are
designated by Interstate pursuant to Section 8.13 shall be entitled to
enforce or waive compliance with the provisions of Section 8.13 during the
time such provisions are, by their specific terms, applicable and shall
also be entitled during the Three-Year Period to enforce the provisions of
Section 8.9, Section 8.10, Section 8.11, Section 8.14(c), Section 8.15 and
Section 8.16(b) and (d), and the agreements referred to in Schedules 4.10,
5.10, 6.10 and 7.10, in each instance on behalf of the Interstate
officers, directors and employees, as the case may be.
Section 11.8 Binding Effect; Benefits. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns; except as provided in Section 8.5(e)
and Section 11.7, nothing in this Agreement, express or implied, shall
confer upon any person, other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 11.9 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. EACH
PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW,
(a) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND
(b) WITHOUT LIMITATION TO SECTION 10.3, ANY RIGHT IT MAY
HAVE TO RECEIVE DAMAGES FROM ANY OTHER PARTY BASED ON ANY THEORY OF
LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL (INCLUDING LOST
PROFITS) OR PUNITIVE DAMAGES.
Section 11.10 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which they are entitled at
law or in equity.
IN WITNESS WHEREOF, WPL, IES, Interstate and AMW have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
WPL HOLDINGS, INC.
Attest:
By: /s/ Edward M. Gleason By: /s/ Erroll B. Davis, Jr.
Edward M. Gleason Name: Erroll B. Davis, Jr.
Corporate Secretary Title: President and Chief
Executive Officer
IES INDUSTRIES INC.
Attest:
By: /s/ Stephen W. Southwick By: /s/ Lee Liu
Stephen W. Southwick Name: Lee Liu
Secretary and General Title: Chairman of the Board,
Counsel President and Chief
Executive Officer
INTERSTATE POWER COMPANY
Attest:
By: /s/ Joseph C. McGowan By: /s/ Wayne H. Stoppelmoor
Joseph C. McGowan Name: Wayne H. Stoppelmoor
Secretary and Treasurer Title: Chairman of the Board,
President and Chief
Executive Officer
AMW ACQUISITION, INC.
Attest:
By: /s/ Edward M. Gleason By: /s/ Erroll B. Davis, Jr.
Edward M. Gleason Name: Erroll B. Davis, Jr.
Secretary Title: President
